Despite the fact that it’s nearly impossible to go a day without seeing an Apple product, many people tend to forget just how big the company is. Annual financial numbers never fail to put things in perspective. According to data from CNBC, Apple’s App Store brought in $64 billion in 2020.
That’s a mind-boggling number. It also represents a 28 percent increase from the App Store’s 2019 revenue. Although Apple hasn’t commented on the factors behind the jump, it is almost certainly related to the COVID-19 pandemic.
Apple has a running tally of money that it has paid to app developers since 2008. Each year, it announces the new total. So far, it has paid out more than $200 billion. Using that data, CNBC is able to calculate how much revenue the digital marketplace brought in throughout the course of the previous year.
Since the Big Tech giant doesn’t self-report its App Store financial numbers, this is arguably the best way to estimate the marketplace’s revenue. It’s worth noting that the $64 billion figure may be on the low end.
Data analytics firm Sensor Tower reports that the App Store actually brought in $72.3 billion during 2020. It’s impossible to tell which number is closer to reality without hard data from the company. However, in either case, the figures are impressive.
Given Apple’s recent pivot away from hardware to focus its efforts on the digital services sector, the growth trend shouldn’t be surprising. Even without the pandemic, the App Store was on a positive trajectory. Since COVID-19 has forced more people to work and play digitally, that growth was simply amplified.
The company has been working hard to bring new users to its platform and get iOS device owners more engaged with the App Store. Of course, Apple has also had to defend its digital marketplace in order to stay on top.
With Apple’s unofficial App Store revenues now revealed, some of its practices are even harder to swallow. For instance, many have complained (and even filed lawsuits) about the fact that Apple takes a 30 percent cut of all revenue that flows through the App Store.
It’s worth noting that the company did recently loosen its grip on smaller developers. Apple now takes a 15 percent cut rather than 30 percent for developers that have revenues of less than $1 million per year.
Many have been quick to note that the move won’t disrupt Apple’s overall App Store profits by much. That’s because 95 percent of the App Store’s revenue comes from the top two percent of apps. For small developers, however, the change is a big one. The ability to retain more profits is very important for developers whose apps aren’t staples within the iOS ecosystem.
It will be interesting to see how the App Store’s growth continues to develop in the coming years. Apple’s Services division is by-far its fastest-growing segment. However, that doesn’t mean the App Store will stay on a positive track indefinitely.
As the pandemic subsides, people will be less reliant on the apps they adopted during 2020. Ultimately, with less subscription revenue and fewer people downloading new content, the App Store could come crashing back to reality in 2021 and beyond. Reality, of course, being relative since it is still likely to make upwards of $60 billion.