Mobile phones have essentially become the swiss army knives for the information age. We can hardly imagine living without them – we use the phone to order our food, hail a ride home, edit photos or view the newest episode of a favourite show… Of course, if there is an app for it. And usually, there is.

There is a lot of money in apps. Global mobile app revenue is expected to reach $188.9 in 2020, which is an over 200% increase over the 2016 figures. Predictions are wild, and there are no signs of stopping.

worldwide mobile app revenues

Source

What app categories make the most money?

If you’re planning to launch an app, these numbers are very optimistic. But not every app category is equally profitable. To help you in your conquest of the app world, we’ve done a little research.

most popular apple app store categories

Source: Statista 2018

Here are the most profitable types of apps.

Mobile games

You may be thinking XBOX and Playstation are the only viable gaming platforms on the market, but here’s the kicker: mobile phones are not only more popular (everyone owns one), but also make up for the impressive 42% of the $110b global gaming industry. This is more than PC and console revenue combined.

As far as mobile apps go, games are also leading the pack in terms of popularity and revenue. Consumer spending on games is also higher than in any other non-gaming ap category. This is hardly surprising. Smartphones have become incredibly powerful over the past couple of years. Mobile games are more polished and visually beautiful. It is estimated that every fourth application in the App Store and in Google Play Store is a game. The mobile gaming industry has attracted over 2.8 billion users around the world, and this number keeps growing!

A single look at the statistics leaves no doubt: mobile games are doing extremely well.

leading android apps

Source

Most mobile games are usually free to play, but publishers use various monetization strategies to cash in. When it comes to monetisation, “free-to-play” is the commonly expected norm in mobile games, but by no means does it guarantee success.

There is no cutting corners when it comes to developing mobile games. To become a hit, the game needs to be exceptionally engaging.

Music and video streaming apps

In the non-gaming sector, streaming apps are the most profitable. According to a 2019 SensorTower report, mobile users spent $1.27 billion in subscriptions across the leading streaming apps in the US. Globally, we’re looking at $2.2b spend.

Clearly, the subscription revolution is a gold rush for developers. Coming up with a service which users are ready to pay for regularly is a rare and difficult skill. The income per user may not be the biggest, but a consistent revenue stream and the effect of the scale do the trick. Recurring payments are favored over unpredictable, one-off purchases, especially in app categories that offer content streaming.

Educational apps

In Q1 2018, education apps were the most popular category, accounting for 8.29% of all apps on the Google play store. Education apps guarantee a solid retention rate, probably amplified by the pangs of conscience that stop weak-willed people from uninstalling the app. These apps add unique value and thus have a user returning to them time and again.

While the free version must be a valuable resource to the user. This category of apps can be built to feature “additional” premium content. The users need not be forced to upgrade, instead, he needs to be shown the full value that a paid subscription can bring in.

Self help, health and fitness apps

Along with meditation apps like Calm, fitness apps are expected to gain in popularity as people are becoming more aware of the importance of physical health and want to track their progress. Health and fitness apps include:

  • Self-help apps, e.g. mobile fitness coaches and videos 
  • Calorie and diet trackers
  • Meditation coaches and audio guides
  • Running workouts plans and trackers

Additionally, fitness and health apps can serve as social networks for athletes where they compete against each other and complete various activity goals. The apps are compatible with various activity trackers and wearable devices that again increase the upsell and cross-sell opportunities.

Dating apps

Apart from games and all these incredibly successful streaming apps, dating apps are another insanely profitable app category. Tinder closely follows the world-leader Netflix in terms of revenues.

Tinder is a free-to-use app with in-app purchases. Switching to a Plus subscription costs $9.99 a month, whereas Tinder Gold costs $14.99 a month. The Tinder Gold plan gives users more features: unlimited Swipe Right (likes), and the Rewind® feature to “undo” a wrong swipe. The Passport add-on enables matching with users in other locations, and Boost literally “promotes” the profile in the area. Also, Everyone else can buy Boosts at any time.

This monetization strategy works amazingly well. In Q1 of 2018, Match Group, the developer behind Tinder generated an eye-watering $407.4m in revenue.

Stats say that with the impressive $238 million user spending, Tinder beats Netflix in terms of consumer spends.

How do apps make money?

First things first, there are various monetization models most apps rely on. We’ve written about mobile app monetization methods in another post on our blog, but the basic options (apart from commercial, paid apps) are freemium and in-app ads.

Freemium

Also known as “in-app purchases”, freemium works like a limited version of the full program. It gives users an opportunity to try out and use your app completely for free before paying. This method is known to increase user loyalty and secures a steady revenue. Very few users buy apps before testing them.

Some of the world’s most profitable apps are offered in the freemium format with optional in-app subscriptions for users who need more functionalities.

In-App Ads

If you’d prefer not to charge users anything, you can opt for in-app ads, and let them use the app for free instead. Many mobile apps display ads, but it entails some issues:

  • Compromised user experience. There is no way to place an ad to a complete user’s satisfaction.
  • Irrelevant ads leave a bad impression. Most ads are generated programmatically, and there is no way to efficiently verify and control what your app is advertising. Big sponsors can usually be trusted, but there is no 100% guarantee.

Conclusion

The conclusion is simple: mobile games and streaming apps are by far the most lucrative app categories, but also take the most development time.

Games dominate the mobile app market across all categories, with consumer spending higher than on all non-gaming apps.

The most profitable non-game apps operate on a subscription basis.

Dating apps are a real goldmine, with Tinder coming right after the world-leader Netflix in terms of revenues.

Health and fitness apps (activity tracking, dieting, meditation and running apps) are another successful category and offer multiple in-app purchases – and thus monetization opportunities for the publisher.

If you’re looking to develop a mobile app, drop us a line and see what we can do together.