Apple’s App Store app market saw a 5 percent year-on-year decline in net revenue in September, according to a note from Morgan Stanley analyst Erik Woodring. This is the biggest drop in App Store revenue since the financial services company started tracking its data.
Woodring stated that the biggest reason for this decrease was the gaming industry and that the revenues of the industry fell by 14 percent on an annual basis. Woodring noted that net revenue growth in the App Store’s top 10 markets has slowed, except in regions that are growing or holding steady, such as China, Taiwan and South Korea. These top 10 markets account for almost 87 percent of App Store revenues.
The analyst’s statements are based on data from Sensor Tower, which tells TechCrunch that Apple’s September revenue fell from $7.2 billion last year to about $6.9 billion. Sensor Tower said the percentage difference between its analysis and Morgan Stanley’s rating was likely due to rounding.
Sensor Tower also stated that Google Play experienced an 8 percent decrease in revenue compared to the previous year and its gaming spending decreased by 14 percent. In a report released earlier this week, the company stated that its global app revenues decreased by 5 percent compared to the previous year.
Responsible, the global downturn in the economy
Morgan Stanley blamed the global downturn in the economy for the decline in App Store revenues. As a result, people are shifting their spending from digital products to more essential products.
“We believe the recent App Store results make it clear that with the reallocation of discretionary revenue to areas of suppressed demand, the global consumer is placing slightly less emphasis on App Store spending in the near term,” Woodring wrote in his note.
Morgan Stanley believes that the 4th quarter of the year may yield better results due to the extra week of sales (New Year’s shopping) and currency fluctuations. Notably, Apple recently raised App Store prices for in-app purchases in many countries in Europe and Asia to adjust for exchange rate compensation. Last month, a report by analytics firm Apptopia stated that developers are increasing app prices by 40 percent year over year.
According to analysts’ estimates, Apple generated $19.71 billion in services revenue in the quarter that ended in September. Although this figure indicates an annual growth of 7.9 percent, it fell short of Wall Street’s expectation of $ 20.25 billion.
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