With a high number of app downloads and relatively low revenue, Russia is one of the best regions for app companies to invest in.
As of May 2015, the five top regions for app downloading were the US, China, Brazil, India and Russia. Each of these markets has various strengths. However, for app investors, Russia may be the key region to pay attention to.
Russia has a large population of app enthusiasts, and a gap between revenue and download rates suggests there is potential for monetization and growth in this market.
Russia the top region for app companies to invest in
The mobile app market in Russia has seen significant growth in recent months. For example, App Annie calculates that combined iOS App Store and Google Play downloads increased approximately 15 percent year-over-year in the three-month period ended May 31, 2015. Revenue also increased during this time; despite currency adjustments at the outset of the year, the country still saw a 20-percent rise in monthly average spending per day in the app market.
However, a disparity exists between Russia’s download rates and its revenue from mobile apps. Explaining that disparity, App Annie states that although Russia is the fifth-largest app market in terms of combined iOS App Store and Google Play downloads, it doesn’t even break into the 10 top countries in terms of revenue. As companies work to monetize the country’s high level of app downloads, investors may be able to cash in.
That’s because the Russian app market is expected to continue growing in the coming years. Indeed, eMarketer predicted last year that Russia would boast 58.2 million smartphone users in 2015, presenting an enormous market for mobile app companies to invest in. That figure is up from 35.8 million in 2013, and is anticipated to grow to 76.4 million by 2018.
That growth should bode well for investors who want to monetize the country’s rapidly growing user base. As it stands, Google Play provides around 3.8 times the amount of downloads as the iOS App Store, and yet the iOS App Store holds an approximate 50-percent lead in terms of revenue.
Mobile games dominate
Games dominate revenue in the app market — according to App Annie, in the three-month period between March and May 2015, games constituted 80 percent of worldwide app revenue. In Russia, the story is no different. During those three months, games accounted for 75 percent of combined iOS and Google Play revenue, and over 90 percent of Google Play revenue alone during the period mentioned above.
However, games only constitute about half of downloads in Russia, and 40 percent worldwide. This gap suggests that gaming apps are a particularly lucrative area for investors to consider. In particular, strategy and role-playing games are increasing their share of market revenue. Games like Game of War: Fire Age, developed by US company Machine Zone, and Clash of Kings, made by Chinese developer Elex, are the top-grossing iPhone games across Canada, Germany, New Zealand and Great Britain. Think Gaming said recently that Clash of Clans has generated $1.64 million in revenue with 78.009 new installs, while Game of War: Fire Age has brought in $1.14 million with 45,477 new installs.
These stats indicate that gaming apps may be one of the most promising areas of investment in Russia. Investors should take note and keep an eye out as Russia’s user base continues to expand and app companies operating in the region work towards monetization.
This is an updated version of an article published on App Investing News on July 21, 2015.
Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.