Lesson 3

Mobile Apps Across Industries

This is only the dawn of a mobile-centric economy, but a majority of industries have already found ways to adapt their business to the app marketplace. Around the world right now, gaming and messaging apps attract the most users and generate impressive revenue numbers. Other industries are increasingly realizing that they need to be in the app universe and are quickly becoming powerful forces.

We’ll look at mobile gaming first, since that was the industry to first truly capitalize on the move to mobile. We’ll also look at retail, banking and video streaming apps. These four sectors illustrate different tactics industries can leverage with mobile apps. Each of these industries has found ways to create business opportunities and reach high-value new users, all by using the unique benefits of apps, but they’re by no means the only industries developing app strategies. From B2B businesses to travel, construction to food service and far beyond, apps are becoming a part of every industry.

Gaming: Players Want Surprising New Features

Gaming has been a long-established leader in the app economy. The amount of active subcategories alone proves how big this industry is: There are strategy, casino, adventure, puzzle and role-playing games (RPGs) — the list goes on. If you’re reading this and you’ve never played a mobile game, you’re in the minority.

Right now, the gaming space still represents a huge opportunity for gaming-focused publishers and is breaking new ground for publishers in any industry. In fact, in many ways gaming as an industry has set the stage for the current proliferation of apps and new technologies.

The groundbreaking success of Pokémon GO impressed players, publishers and the rest of the world when it entered the mobile gaming marketplace in 2016. Millions became avid Pokémon trainers, playing with the app’s augmented reality (AR) features in such record numbers that the game’s consumer spending topped $1 billion by early 2017, a mere six months after its extended launch. Pokemon GO’s success now has publishers from all industries exploring the use of AR in their own apps.

ARPU: The Gaming Metric That Matters

The defining metric for games is average revenue per user (ARPU). This measurement has increased significantly in some of the world’s biggest markets. In our recent study, Japan was the standout of all countries analyzed, with the top 30 games monetizing over twice as effectively as the top 30 in the US. Roughly two-thirds of Japan's top 30 games almost exclusively belong to the subcategory of RPGs. China is also emerging as a huge player in the gaming space as ARPU in the top 30 games has increased more than 10x in the past two years.

These more mature gaming markets prove that increases in usage can lead to dramatic revenue increases — even after downloads have peaked.

Gaming is a huge and varied category, and the original driver of the overall app economy. This means there are many measurable differences across countries, subcategories and demographics.

Shopping & Retail: Apps Drive Spending and Foot Traffic

Snap a photo of an outfit to get directions to the clothes on the rack. Hunt for clues and prizes using in-store QR codes. Find every sale item with one click, and use a smartphone to complete the purchase.

These are all examples of how retail apps are working to attract new shoppers and keep existing ones spending money in their stores.

Let's begin by looking at bricks-and-clicks apps, which are from retailers with an extensive physical presence. These retailers use their apps for a combination of online and offline strategies to gain loyal customers and their apps include Walgreens (a US-based pharmacy company), Target, and department store Kohl’s.

Some of these stores use their apps to drive traffic into physical stores. Walgreens, for example, has dramatically reduced the hassle of renewing prescriptions with its app. Convenience is, as always, key, but only one factor among many.

Department store Kohl’s rolled out a sophisticated and highly-rated user rewards program to encourage more users to download and use the app. And it worked. With the Kohl’s Pay feature, a QR code is scanned at the register to automatically apply discounts. Users can also organize multiple wishlists, earn rewards points, and track returns and exchanges.

In addition, online-first retailers often host a huge marketplace that can deliver great prices and fast shipping. Amazon is a world leader in this space — though it is now moving into the physical retail space. Other examples are shopping discount app Wish and craft marketplace Etsy.

Time spent in shopping apps in the US grew to new heights in Q1 2017, experiencing 20% year-over-year growth on Android phones. Meanwhile, worldwide mobile retail sales reached $220 billion in 2016, a 53% increase over 2015. Together these statistics show that customers are becoming increasingly comfortable both browsing and making purchases from within apps.

In other words, if you’re a retailer, you have a lot of eager customers in waiting, provided you have the right app strategy to reach and retain them.

Retail Banking: Your Bank in Your Pocket

App users understandably have a lot of demands when choosing a retail banking app. Quickly find the nearest locations and ATMs? Check. Receive quick updates and alerts on account balances? Of course. Offer app payment services and a seamless, inviting user interface? Yes, that too.

As banking apps continue to evolve to meet consumer demand, they’re also experiencing record levels of engagement. This is likely why downloads of and use of retail banking apps has soared in the past two years or so, to the point where it is transforming how consumers choose and interact with banks.

In November 2016, for example, combining iPhone and Android phone, the top 10 retail banking apps in the US collectively garnered the highest average MAU (monthly active users) they have ever seen.

Put more simply, there are more people using retail banking apps than ever before and so apps are influencing the way customers interact with and choose banking services.

Wells Fargo now allows users to withdraw money from an ATM using a one-time password generated on their mobile app. It foreshadows a movement away from physical debit cards, as a user’s smartphone becomes a primary source of payment. Wells Fargo Mobile is one of the first apps from a major financial institution to enable cardless “tap and pay” ATM access.

However, in order to keep existing users and attract new ones, there is still room for improvement. As we identified in our retail banking report, the customer experience delivered by retail banks is becoming increasingly defined by their mobile apps. Some customers select or leave particular banks based on the quality of the mobile banking experience.

For many users, the app is the sole touchpoint for a bank. The emergence of mobile-only banks is an indication that new companies are taking advantage of that impulse. Retail banks need to carefully evaluate their mobile features — or face being outpaced by fintech competitors.

App Video Streaming: Screens Stay in Our Palms

Users no longer need to be in front of the TV to be viewers. With a mobile device, content is available anywhere. Video streaming delivered strong growth in revenue in 2016 as premium content — including sports and live streaming apps — grew both in terms of users and engagement.

In fact, in the United States, United Kingdom and China, the top three streaming apps on the iOS App Store experienced massive revenue gains in 2016. In the US, iOS App Store revenue more than doubled, from $85 million in 2015 to $210 million in that same year.

This rise in video streaming app revenue shows consumers’ willingness to use in-app purchases to pay for subscription services. Even when presented with the choice of paying for a service outside of the app stores (e.g., with a credit card on a streaming service’s website), many users prefer in-app purchases given the convenience.

Netflix, Hulu, the BBC and iQIYI are leaders in the category, with their huge amount of original and high-quality content. Mobile video streaming is a trend around the world, especially in places with more mature app markets.

While it’s clear that content will remain king, a key lesson for media companies is that mobile has tilted the balance of power firmly in favor of users. With so many options to choose from, users not only expect high-quality storytelling, but also a flawless streaming experience and the ability to watch anywhere and at any time.

Facebook has doubled its average daily video views from four billion to eight billion in just over six months. Mark Zuckerberg has repeatedly emphasized that video is a top priority for the company, showing how much it recognizes the importance of this type of content when it comes to retaining and engaging users.

Video content is also a great way to pull in advertising revenue, which we’ll cover in more detail in Monetize.

More consumers are turning to mobile for their entertainment needs, so it makes sense that companies — and their ad dollars — will follow. Even longtime cable-first providers that have truly embraced mobile, like HBO, are seeing their efforts yield strong results.

Live-Streaming Sports and Entertainment

The idea of “appointment TV” is driving the use of live streaming apps and services, as users want to catch the action as it’s happening in real time. As viewers are increasingly accustomed to consuming mobile video, live streaming via apps is an area poised for significant growth.

Sports events (especially during playoff season) and live entertainment events bring huge opportunities and challenges for app developers. For the 2017 Academy Awards, for example, several new apps extended the live television experience by adding more photos and live commentary. Both the iOS App Store and Google Play ran features promoting the (many) award season apps.

Similarly, top sports apps such as MLB.com At Bat and NFL Mobile offer live video and commentary during an event. Sports fans demand in-the-moment content, and apps offering live-streamed video are especially popular.

Everyone’s in the App Business

Apps are working their way deep into every industry as the world becomes more reliant on apps. Games, retail, banking and video are only four categories experiencing exceptional growth.

Hungry patrons now turn to apps to decide which restaurants to go to or to order delivery from straight from their phones. Savvy consumers book tickets for a dream vacation while riding in the back seat of a car they booked via a favorite ride sharing app. Consumers’ daily lives are increasingly characterized by layers of simultaneous app engagement. If a job needs to be done, chances are that an app can help ensure that it’s done faster, better, and easier than ever before.

Of course, the popularity of apps is only important to the extent that you can develop an app that’s the right fit for your business. In Strategize, we’ll help you analyze how app development can align with your business goals.

Keep Learning

In the next topic, we'll move on to Strategize and shift away from the larger app economy towards building a successful app strategy for your business.

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