We are increasingly hearing the claim that the era of mobile apps has come to an end.

Intense competition, substantial app store commissions, steadily rising user acquisition costs, and plateauing smartphone adoption rates support this view.

Yet, mobile apps remain a massive market with over $100 billion in annual revenue and plenty of success stories. Some apps still achieve remarkable results, reaching tens or even hundreds of millions of dollars in revenue within just a few months.

So which of these perspectives is closer to the truth?

To answer this question, we conducted a study and used data to answer the question:

đź’ˇ Is it really much harder to achieve success in the current market than it was, say, five years ago?

Table of contents

To see the study results, jump to the Key findings section. However, we recommend reviewing the methodology to better understand how to apply this data.

Methodology

How we evaluated the state of the mobile app market using data

To measure a new product’s likelihood of success in the mobile app market, we used data from AppMagic:

  • We looked at all apps launched in the App Store from 2016 to 2023.
  • For each app, we gathered revenue and download data from AppMagic.
  • We calculated the percentage of apps launched each month that exceeded a cumulative revenue threshold of $100,000 from in-app purchases within the first year post-launch (reasons for this specific criterion are detailed below).
  • We analyzed how this metric has changed over time, what factors influenced it, and in what ways.

AppMagic is an analytics platform used for market analysis and designing competitive strategies. It provides data on mobile app and game downloads, revenues, and popularity.

In AppMagic, revenue values are listed after deducting the App Store commission but before accounting for taxes.

Success criterion for apps: $100K cumulative in-app revenue in the first 12 months post-launch

We defined a mobile app’s “success” by the following criterion: cumulative in-app revenue exceeding $100,000 in the first 12 months after launch.

Why $100K revenue?

  • It’s a significant and challenging target. Of all the apps published in the App Store since 2016, only 0.95% have earned more than $100K (regardless of the time taken to reach this milestone).
  • In the gaming segment, the share of “successful” apps is higher (2.78%). In the non-gaming segment, the share of “successful” apps is lower (0.57%).

Why the 12-month window?

  • We assess the likelihood of success for new apps (market conditions) at different periods.
  • The 12-month benchmark allows us to compare apps from 2016 with those from the first half of 2023.
  • For both groups, we use revenue data from the first 12 months post-launch to assess the difficulty of achieving target metrics.

How well does the criterion of achieving $100K cumulative revenue within 12 months reflect the probability of success for new apps and the state of the market?

  • The $100K in 12 months metric strongly correlates with long-term app success. Apps that reach this target are highly likely to be “successful”, while those that miss it will likely fail.
  • More broadly, the proportion of new apps that achieve this metric reflects the likelihood of success for a team launching a mobile app.

Methodology specifics

Before presenting our findings, we must acknowledge several methodological considerations that influence how this data should be interpreted.

The study relies on revenue and download estimates

AppMagic doesn’t possess actual download or revenue data for apps but estimates them based on app rankings in the in-store top charts.

According to AppMagic, estimates for most apps are within 10% of real values. 

But it’s essential to keep in mind that these are still estimates and not official data.

It’s also important to note that AppMagic revenue data reflects earnings after App Store commissions but does not account for country-specific taxes.

The success criterion for apps is based on revenue, not profit

To evaluate the state of the market, we analyzed the “share of new apps that earned over $100K in revenue from in-app purchases in the first year after launch.”

It is worth noting that the revenue criterion is less reflective of market conditions than profit-based criteria.

The profitability rate of mobile apps has significantly declined over the years due to factors such as increased competition, rising user acquisition costs, growing team expenses, additional regulations, and more.

Inflation is not accounted for

Between 2016 and 2023, the U.S. dollar depreciated by about 30%.

For simplicity, we have excluded this variable from the study.

However, it’s worth noting that $100K in 2016 is equivalent to $130K in 2023.

Only App Store revenue is included

Mobile apps can generate income in various ways:

  • Through in-app purchases or subscriptions
  • Via advertising
  • By selling physical goods
  • Through payments on the web version of the product
  • Other monetization methods

This study focuses on revenue data from in-app purchases and subscriptions processed through the App Store.

In this context, our definition of “successful” apps probably understates the true number of successful apps. Some apps generate revenue through advertising, commissions from product sales, and other avenues that we have not considered in this study.

We assume that the distribution of app revenue across different monetization methods remained relatively stable for most of the study period. Consequently, this aspect of the methodology should not significantly impact the core findings.

No data from Google Play in the study

It is impossible to obtain a similar dataset for analysis on Google Play due to insufficient data availability.

Growing popularity of web funnels and app monetization through web versions

In 2021–22, a widespread trend emerged where mobile app developers advertise the web version of their products.

In this model, users go through onboarding on the web version and subscribe to the premium version of the product before downloading the mobile app.

This approach helps developers address traffic attribution issues that arose after the changes in IDFA usage in iOS 14.5, as well as avoid App Store commissions. As a result, a substantial portion of revenue from such apps bypasses the store and is not visible in our study.

Web funnels are especially popular in Health & Fitness, Education, and several other categories. For a detailed analysis of web funnels, see our dedicated article here.

Key findings of the study

For clarity, we will refer to a “successful” app as one that achieved $100K in cumulative in-app revenue within the first 12 months after launch.

We intentionally put “successful” in quotes since this definition doesn’t cover all truly successful apps. As mentioned earlier, mobile products can generate income from advertising, commissions on physical goods sales, or achieve results over a period longer than 12 months.