The mobile revenue is set to grow a staggering amount over the next few years due to several drivers, the biggest one being m-commerce.
Mobile revenue will hit $700 billion by 2017, a growth rate of over 300 percent, according to a subscription-report from research firm Digi-Capital. Asia is set to take the lead role in driving revenue forward. Most of the projected growth will be focused in the region, with a forecasted mobile return of $230 billion by 2017.
E-commerce in North America will be a distant second among the growth leaders at $144 billion, the report found. Europe follows with $113 billion, while the Middle East, Latin America and Africa lag behind. Though the low revenue figures in these areas are relative, since some countries such as Kenya have proven themselves m-commerce leaders within their regions.
In the United States, mobile commerce is growing very quickly. In recent years there have been year-over-year gains within the 20s for several quarters in a row. Now in the second quarter of 2014 growth hit 47 percent, comScore found in a recent report. The second quarter growth rate outpaced both desktop-based e-commerce and total discretionary retail by 10 percent and 3 percent, respectively.
While smart phones have historically counted for the majority of mobile commerce sales, tablet transactions are increasing at a brisk pace, the comScore report found. Historically, smart phones have accounted for around 60 percent of mobile spending. This has changed recently, though. After growth of 75 percent year-over-year, tablets accounted for 46 percent of mobile spending in the 2014’s second quarter. The smart phone category experienced spending growth of 29 percent.
In the past m-commerce has endured a number of soft quarters, comScore explained in the report. The excellent second quarter results this year could mean that the base of mobile consumers is finally solidifying. This will provide a base from which further growth could launch. Tablets should help in making mobile shopping more comfortable for shoppers.
Numbers won’t hit 40 for the third and fourth quarters, comScore explained. However the stellar stretch of growth could be a sign that 30 percent quarters will become the new norm. That will put mobile spending in 2014 at somewhere around $35 billion.
What is fueling the increases in mobile revenue?
There are five key drivers behind the massive projected growth of mobile revenue in the coming years. The most important one is mobile commerce.
“M-commerce will be the dominant business model, with $516 billion in sales driving more than 70 percent of all mobile internet revenue by 2017,” Tim Merel, of Digi-Capital, told VentureBeat.
There has been a shift toward the digital realm for shoppers, and with that m-commerce is expanding rapidly.
Another factor pushing the growth of mobile retail is advertising on the devices. Mobile advertising hit $7.1 billion last year, and is expected to reach $52 billion by 2017, Merel explained to VentureBeat. He stated that $42 billion will go to mobile web advertising, while the other $10 billion will be dedicated to advertisements in apps.
The next driver behind increasing mobile revenue is in-app purchases. Last year these transactions took in 90 percent of consumer app revenue. These transactions will generate more than $74 billion, Merel told the publication. Digi-Capital found that in-app purchases monetize four times more effectively when the consumer is playing a mobile game – versus other app types.
The fourth driver will be the app shifting from standalone entities to a service for consumers.
“New app as a service models are using the cloud to move beyond standalone device based apps, with free thin client apps such as Dropbox mixing data and media in cloud and on device,” Merel told VentureBeat. “Real-time cloud-based content updates are keeping users engaged, with strong ‘live ops’ teams supporting them.”
The final factor is that the best apps are getting better fast. The top 1 percent of apps significantly outperform others, and are constantly being enhanced.Back To Blog