Downloads may be dipping, but that doesn't mean the app business is dying

No, the app business isn't dying.

Newly published research suggests that app downloads are dramatically slowing both in the United States and abroad, causing some to suggest the App Store gold rush may finally be ending. But while there are certainly problems with the current App Store ecosystem and user behavior is shifting, the state of the App Store isn't nearly as bleak as it seems.

"With few exceptions, slowing app download growth is a reality in the US," declared a new report from Nomura, which used data from app analytics company Sensor Tower. That finding was accompanied by this scary-sounding stat: App downloads have declined more than 20 percent in 2016, compared with 2015.

That's a lot! Certainly enough to give you pause if you're an app developer, and that's only for 15 of the largest and most successful apps. If Facebook can't keep its download numbers up then what hope is there for any other app maker, right? Well, not quite. 

About those numbers
First off, Nomura's research was based on just 15 of the most popular apps, including Facebook, Snapchat and YouTube — hardly the most representative group if you're trying to get a broader sense of what's going on in the App Store, which is home to well over a million apps.

Furthermore, the fact that these are the most popular apps inherently means that the number of downloads will begin to decrease as they reach a saturation point. In fact, trying to use these apps' download numbers as a barometer for the rest of the App Store doesn't make a whole lot of sense.

"The softer or sometimes negative growth in downloads is coming mostly from one key factor, which is on iOS, a lot of the leading apps that were covered [in the research], shipped in 2010, 2011 and early 2012," explains Fabien Pierre-Nicolas, VP of marketing at app analytics firm App Annie. "On the iPhone, apps have been on those devices for a few years and people have been buying the iPhone for a few years. Those apps are not counted any more as new downloads and because of that the downloads might decrease but that doesn’t mean the number of people using those apps is decreasing."

So, no, slowing downloads does not, on its own, mean the end of time is near for  developers. In fact, by other metrics, the App Store is still incredibly successful. 

"The first thing people forget right now is the app economy is the fastest growing economy in the world," Pierre-Nicolas tells Mashable, noting that App Annie forecasts the revenue generated from in-app purchases will surpass $100 billion by 2020. 

Downloads aren't everything (really)
When Recode first published Nomura's research, it was accompanied by another staggering stat: the vast majority of smartphone users download zero new apps a month. That number, which comes from a (two-year-old) comScore report is certainly a sobering one and one that should absolutely concern developers. But, once again, by only looking at download numbers, onlookers are missing other important factors.

Yes, App Store dynamics are undoubtedly changing. Users have been downloading fewer apps for some time (and that is likely one of the driving forces behind Apple's imminent App Store changes.) But this may be more indicative of the App Store maturing, rather than cooling off. 

Consider this: The amount of time people are spending in apps grew more than 63% between 2014 and 2015, according to App Annie. By all accounts, app engagement is higher than ever. And it's engagement — not downloads — that really drives revenue, according to Pierre-Nicolas.

"The total number of people using your apps and the time they are spending on average, those two combined is how you should measure the potential of an app to generate a lot of revenue down the line,"  Get more info...

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