‘Contract labour’ made up two-thirds of the €17.5bn earned by EU app developers in 2013, fuelling 1m jobs
News that Finnish company Supercell made $892m from its two mobile games in 2013 was a boost for the European apps industry, but the market is about more than consumer apps.
A report published by the European commission suggests that two-thirds of the revenues earned by European app developers in 2013 came from work-for-hire projects for clients in industries including retail, financial services and packaged goods.
The Sizing the EU App Economy report claims that of the €17.5bn (£14.4bn) earned by EU app developers last year, €6bn came from consumer apps – a mixture of sales, in-app purchases and advertising revenues – while €11.5bn came from “contract labour’ projects for other companies.
The report also claims that apps accounted for 1m jobs across the European Union in 2013, with additional support and marketing staff boosting that total to 1.8m. By 2018, it predicts these figures will rise to 2.8m and 4.8m respectively.
The EC vice president, Neelie Kroes, was keen to stress the positive aspects of the report. “In the face of increasing youth unemployment, these figures give me new hope,” she said. “My message to young Europeans is: go grab yourself one of these 3 million new jobs in the app economy. These are really exciting opportunities if you are ready for them.”
There are caveats on the consumer side of the apps industry, where a handful of companies – many of them games firms – are making huge money from their products, while a very long tail of developers scrabble for revenues on the app stores.
This year, research firm Gartner published a report claiming that through 2018, less than 0.01% of consumer mobile apps will be considered to be financial successes by their developers, noting that around 90% of paid apps are downloaded less than 500 times and make less than $1,250 a day.
The EC report doesn’t shirk these challenges, pointing out that the five most successful European app companies are firstly, all games firms and secondly, account for 49% of all the appearances of European firms in the top 50 grossing apps charts across the EU and US.
While the report’s prediction that the European apps market will be worth €63bn to developers annually by 2018 could be seen as fuelling the app-hype gold-rush, its claim that €46bn of that will come from contract labour rather than consumer apps reminds developers that a sustainable apps career or business doesn’t have to be about making the next Clash of Clans or Candy Crush Saga.
That’s emphasised by developer responses to a survey conducted for the report, which was compiled for the EC by GigaOm. When asked about the “most challenging bottlenecks” for their businesses, 40% of developers said low prices and free apps, while 30% cited high customer acquisition costs.
On a business level, a number of European developers also said they struggle to compete with the US on salaries for talented app developers, while also criticising the quality of education and training programmes for mobile development.