Apple’s App Store revenue exhibited a bit of acceleration in the third quarter, Bank of America Merrill Lynch (BofAML) said. The bank indicated that, according to third-party data, App Store revenue increased 18 percent in the third quarter compared to 17 percent growth in the second quarter, per SeekingAlpha.
However, BofAML indicated that Chinese App Store sales are still a concern with a “material deceleration” coming out of the quarter that is “a concerning trend given that Services is based on installed base usage.” The bank maintains a buy rating, and Nomura increases its target for Apple to $180 from $175 but keeps a neutral rating with a slow finish to the Xs cycle and steady growth in the App store.
While Apple’s App Store continues to outpace the Google Play Store in terms of consumer spending, total app revenue for both stores came to $39.7 billion globally per recent reports. That number represents the first half of the year, and it’s a rise of 15.4 percent from the $34.4 billion from the same time period in 2018.
Worldwide users spent approximately $25.5 billion in the App Store — a 13.2 percent year-over-year increase from 2018. That number is 80 percent higher than Google Play’s $14.2 billion in estimated revenue, which is almost 20 percent higher than it was a year prior. Total growth overall is down due to slower China iOS growth, however, analysts said they think China will get back to positive growth in the next year.
Another factor in the downturn could be the decision by Netflix to stop in-app subscriptions for both the Play Store as well as the App Store. The numbers will steadily decline, especially because Netflix was the second-biggest non-game app when it comes to earnings in the first half of 2019 at $339 million. That number is down from $459 million a year ago, at the time that it was the No. 1 non-game earner.