iPhone Users in U.S. Predicted to Increase App Store Spending to $88/Year by 2020

The average iPhone user's spending on paid iOS applications and in-app purchases in free-to-play apps will increase by nearly 40 percent over the next three years, according to a new forecast based on data gathered by Sensor Tower. By the year 2020, iPhone users based in the United States will spend more than an average of $88 per year on both paid "premium" apps and in-app purchases in free apps.

Sensor Tower used previous app-based spending reports to predict how much users will spend over the next three years. Most recently, in 2016 it was estimated that the average iPhone user in the U.S. spent about $47 on apps, while 2017 is on track to increase that number to about $63/year. Afterwards, in 2018 the average U.S.-based iPhone user is predicted to spend $77/year on apps, and in 2019 Sensor Tower thinks that number will finally reach $88/year. That represents a 40 percent increase from the average user spending estimated for 2017, and an 86 percent increase from 2016.

U.S. iPhone users will spend an average of $88 per year on premium apps and in-app purchases (IAPs) by 2020 according to a new forecast based on Sensor Tower Store Intelligence data. Our projections place calendar year 2019 per-device revenue at approximately 86 percent higher than 2016 and about 40 percent higher than our forecasted average user spend in 2017.

While gaming apps will still dominate the spending landscape in the iOS App Store -- accounting for "nearly 70 percent" of all per-device revenue -- some other categories are forecasted to increase in popularity as well. This includes Entertainment, which Sensor Tower expects to overtake Music as the second-largest category of per-device spending in 2017, because of subscriptions in apps like Netflix and HBO NOW.

Specifically, in 2019 the Entertainment category is projected to account for about $8 of that year's $88 average user app spending, increasing from $2.80 in 2016. That still won't be anywhere near Games, with Sensor Tower anticipating the popular category to account for as much as $60 of the $88 spent by the average iPhone user in 2019.

In a separate story posted by Bloomberg this week, some of the reasoning behind the steady increase in user spending on paid games and IAPs can be connected to emerging technology being tested by game developers. A company based in Tokyo, called Silicon Studio Corp., has created a piece of software that uses deep-learning algorithms to predict how long users will play a game, what levels they might beat, and how much money they might spend and on what -- all amassed into a "psychological profile of each player" that aims to "mold player behavior."

The ultimate goal of the software is said to help developers maintain a healthy ecosystem, encouraging those who already spend a lot of money to keep doing so, while keeping non-spenders happy with the game. Besides smartphone apps, even massive multiplayer online game developers have approached Silicon Studio Corp. with interest in the software, which has been named "Yokozuna Data" after the highest rank in sumo wrestling.

Even more important, the technology lets game creators mold player behavior to keep them hooked.

“Game data is perfect for studying human behavior,” said Africa Perianez, chief data scientist at Silicon Studio and a former nuclear physicist at the European nuclear research organization CERN. “It’s going to change the industry, change the direction of personalized games.”

Apple recently updated the App Store in iOS 11, changing the layout and user interface with new tabs and editorialized content that updates every day. For Apple, the iOS App Store and other services consistently provide the company with yearly profit gains; in 2017 the App Store set a new quarterly record in May, while services did the same in August. This past June, Apple said that developers have earned more than $70 billion since the App Store first launched in 2008.