Bigger than Hollywood

Apple paid $10 billion to developers in calendar 2014. Additional statistics for the App store are:

• $500 million spent on iOS apps in first week of January 2015
• Billings for apps increased 50% in 2014
• Cumulative developer revenues were $25 billion (making 2014 revenues 40% of all app sales since store opened in 2008)
• 627,000 jobs created in the US
• 1.4 million iOS apps catalog is sold in 155 countries

Putting these data points together with others from previous releases results in a fairly clear picture of the iTunes/Software/Services1

The App ecosystem billings (what consumers actually pay) is shown in the red area above. 70% of those payments are transferred directly to developers and Apple reports the 30% remaining as part of its revenues. This view of the iTunes ecosystem shows the impact of Apps relative to the other media types. When we measure the payments to the content owners we can see that Apps also dominate: 

The red area above adds up to the approximately $25 billion total paid to developers. This view of the payments to ecosystem contributors shows how apps are now a bigger digital content business than music2 and TV programs and Movie rentals and purchases put together.

This is quite a story.

Put another way, in 2014 iOS app developers earned more than Hollywood did from box office in the US.

Although the totals for Domestic (US) Box Office are not the complete Hollywood revenues picture, Apple’s App Store billings is not the complete App revenue picture either. The Apps economy includes Android and ads and service businesses and custom development.  Including all revenues, apps are still likely to be bigger than Hollywood.

But there’s more to the story. It’s also likely that the App industry is healthier. On an individual level, some App developers earn more than Hollywood stars3 and I would guess that the median income of app developers is higher than the median income of actors.4 The app economy sustains more jobs (627,000 iOS jobs in the US vs. 374,000 in Hollywood) and is easier to enter and has wider reach. As the graph below shows It’s also growing far more rapidly.

The curious thing is that even though the medium of apps is swamping other forms of entertainment in all measurable ways, comprehension of the phenomenon is lagging.

Information asymmetry is a wonderful thing.

1. soon to be renamed Services and encompass everything under the heading of iTunes software and services today including content, apps, licensing and other services and beginning Q4 2014 it will also include Apple Pay. [↩]
2. Music payments due to iTunes Radio streams are not shown as part of Music cost of sales. Streaming revenues are included in the services/licensing income and payments come out that cost structure. [↩]
3. so do YouTube stars, but that’s another story. [↩]
4. A large majority of actors earn less than $1,000 a year from acting jobs [↩]