The App Economy in Europe

A review of the mobile app market and its contribution to the

European Economy

August 2022

The App Economy in Europe – A review of the mobile app market and its contribution to the European Economy

Disclaimer

This report (hereinafter "the Report") was prepared by Deloitte Finance, an entity of the Deloitte

network, at the request of ACT | The App Association (hereinafter "App Association") according to the

scope and limitations set out below.

The Report was prepared for the sole purpose of presenting an overview of mobile applications’

contribution to the European economy and estimating its economic weight, in terms of value creation

and jobs in 2021. It must not be used for any other purpose or in any other context. Deloitte Finance

accepts no liability in the event of improper use.

The Report is intended to be used exclusively by the App Association. No other party apart from the

App Association has the right to use the Report for any reason whatsoever, and Deloitte Finance

accepts no liability to any party other than the App Association with regard to the Report or its

contents.

The information contained in the Report was provided by the App Association or retrieved from other

sources clearly referenced in the relevant sections of the Report. Although this Report has been

prepared in good faith and with the greatest care, Deloitte Finance does not guarantee, expressly or

implicitly, that the information it contains is accurate or complete. In addition, the findings in the

Report are based on the information available during the writing of the Report (March 2022). The

examples featured in the report are for illustrative purposes only and do not in any way constitute a

recommendation or an endorsement by Deloitte Finance to invest in one of the markets cited or one

of the companies mentioned. Deloitte Finance accepts no liability as a result of the Report and its

contents being used, including any action or decision taken as a result of such use.

Table of

Executive Summary

1. The introduction of smartphones has reshaped the way Europeans interact in almost all areas

of personal and professional life. Apps

have become an essential part of the way phones, but

also connected televisions, game consoles, virtual reality headsets, or PCs, provide digital

services. Moreover, apps play a central role in the growing Internet of Things (IoT), connecting

users to devices. Focusing on the mobile channel, this report analyzes the benefits of mobile

apps, and quantifies the contribution of the mobile app sector to the European economy

. Also

the impact of the Covid-19 crisis on the app economy is studied. The health crisis notably raised

awareness of how mobile apps have become an essential part of life. The report furthermore

discusses the active European landscape of small and medium-sized enterprises (SMEs) in the app

development sector.

2. Our research demonstrates that app stores have a positive impact on the mobile app ecosystem

- App stores enable disintermediation between buyers and developers which is one way

through which app stores reduce transaction costs for app developers and their users.

- App stores reduce entry barriers for developers and therefore increase the level of

competition.

- App stores increase consumer trust and security by creating a trustworthy platform for users

and developers.

3. The direct revenues of the app economy in the European Union

amounted to €95.7 billion in

2021 – these are revenues for mobile app developers. In comparison, box office revenues in the

EU and the UK stood at €3 billion in the same year

, and revenues for the provision of sporting

and recreation services were estimated at €168 billion in 2019

4. Including direct and indirect contributions, the app economy generated €210 billion in revenue

throughout all sectors of the EU’s economy. The breakdown of this sum is as follows:

• Direct contributions are estimated at €95.7 billion with the following categories:

i. Advertising revenue: €19.2 billion

ii. Paid downloads, subscriptions, and in-app purchases: €6.5 billion. Mobile games

represented 63% of this revenue.

iii. Contract work: €66.4 billion

iv. Mobile commerce: €3.6 billion is attributable to the app sector

• Indirect contributions: €114 billion in indirect contributions due to additional business and

household consumption triggered by app development.

Apps refer to the software applications that run on smartphones.

The contribution of the mobile app sector is quantified for the European Union and the UK separately.

App stores refer to all app platforms including Google Play store, Apple App Store, Amazon app store, etc.

Throughout this document, figures are cited for EU27.

International Union of Cinemas, Cinema-Going in Europe in 2021 - Recovering European Cinemas see 42 percent Box Office Growth in

2021, February 2022.

Source: Eurostat, National accounts aggregates by industry (up to NACE A*64). € 168 billion in EU27 and the UK included.

The app economy represented 0.7% of the European Union’s GDP in 2021.

5. In the United Kingdom, the direct revenues of the app economy in 2021 amounted to

€38.4 billion.

6. Including direct and indirect contributions, the app economy generated €86.5 billion in revenue

throughout all sectors of the UK’s economy:

• Direct contributions are estimated at €38.4 billion with the following categories:

i. Advertising revenue: €13.8 billion

ii. Paid downloads, subscriptions, and in-app purchases: €2.1 billion. Mobile games

represented 55% of this revenue.

iii. Contract work: €21.3 billion

iv. Mobile commerce: €1.2 billion is attributable to the app sector

v. Indirect contributions: €48 billion in indirect contributions due to additional business

and household consumption triggered by app development.

In terms of value-added, the app economy represented 1.5% of the UK’s GDP in 2021.

7. The total number of jobs generated throughout all sectors of the EU’s economy by the app sector

in 2021 is estimated at 1.4 million, and 400 000 in the UK. Jobs are calculated using our “Input-

Output” framework (total revenue for the sector combined with national accounts data). These

figures include direct jobs (software developers, mobile app specialists), indirect jobs (suppliers

to the app developers), and induced jobs (jobs created by the spending of the directly and

indirectly employed workers).

8. Europe is generally considered to benefit from highly skilled app developers and is home to a

rich ecosystem of SMEs in the app development sector. These include pure players and agencies

that work for the outsourcing market. The UK has the most app development firms in absolute

terms, but smaller countries such as Bulgaria, Poland, Romania, Estonia, Lithuania, and Croatia

show a relative specialization in app development with two to five times more SMEs in the sector

per unit GDP than the UK.

9. Nearshoring contributes to the success of app development SMEs in Europe. Notably, app

development firms in above-mentioned relatively specialized countries often work for clients in

for example Northern and Western Europe, leveraging their high-skilled, cost-competitive

developers. Cost difference between these countries and developers in Northern or Western

Europe can reach a factor of two to three. In addition, nearshoring benefits from low risk due to

proximity (language, culture, time-zone). Indeed, the remote delivery model works very well in

the app development sector, resulting in intra-European trade, benefits for both clients and

developer firms, and more opportunities for SMEs and startups throughout Europe.

10. Apps have permeated business models in several ways. Many firms integrated apps into the

way they provide services to their clients. For example, European airline and railways companies

facilitate the booking and travel process with mobile apps. Moreover, specific features of mobile

phones (geo-localization, accelerometer, camera, touch screen) have enabled the development

of new services.

11. Furthermore, pure players, companies that have built their activities only on apps, have

confirmed their importance in the ecosystem. Well-known examples are ride-hailing apps, which

use geo-localization, and mobile games. Europe counts innovative mobile game developers and

specialized firms such as Citymapper or Greenly, which are transforming consumer behavior.

12. Citymapper calculates, in real-time, the routes of urban transport for users, by combining several

modes of transport, suggesting alternative transport means to users

. Greenly is another app that

changes user behavior. The app informs users on the greenhouse gas emissions generated by

their mode of consumption, obtained through their banking transactions.

13. In interviews conducted for this study, several app developers stated that future innovation in

apps will not come from hardware developments but from the software side.

14. The mobile app sector has been resilient during the Covid-19 pandemic. Growth of the app

sector decoupled from the evolution of GDP in the EU and the UK. While real GDP in the EU

decreased in 2020 by 7.8%, and by 11.5% in the UK, the mobile app sector has seen an

acceleration in its growth trajectory in 2020: In the EU, real growth of consumer spending on apps

was 30% in 2020, and in Great Britain 29%. Comparison of pre-Covid-19 market estimates and

2021 growth of app store revenue suggests that the long-term growth trajectory is unaffected.

15. This resilience is related to the fact that the use of apps such as mobile games was not impaired

by physical distancing requirements. Furthermore, mobile apps have provided innovative

solutions to deal with the crisis. They contributed to the continuity of public services, social and

business activities during lockdown periods. Teleworking apps allowed desk-type jobs in mainly

the service sector mainly to pursue activities. In the health sector, Covid-19 tracking-, vaccination-

and testing-apps became the most downloaded medical apps in Europe in 2021. Apps for

teleconsultation facilitated the provision of health services. Finally, the use of food delivery apps,

such as Uber Eats or Deliveroo, increased dramatically during periods with strong physical

distancing requirements, allowing restaurants to continue to operate.

16. The pandemic has accelerated the digital transition in many sectors. Trends initiated during the

Covid-19 pandemic are set to become permanent, as the crisis has shaped new ways of life. For

example, the increased use of telemedicine changed the publics’ view on this practice: for

example, in France between 2019 and 2020, the proportion of patients that had a positive opinion

on telemedicine grew from 60% to 73%, and that of health professionals from 70% to 84%

. Along

the same lines, teleworking was first used to adapt to the crisis, but its massive adoption during

lockdowns has changed Europeans’ perception on work and workplace organization.

17. App developers shared how they think their solutions will continue to permeate more areas of

our lives. Areas where the use of mobile apps will further increase in Europe are hybrid events,

education, and healthcare (online health records, connected medical devices, etc.). In addition,

5G networks now enable higher connection density which allows the use of many connected

These include public transport networks, taxi and self-service rental networks (scooters and bikes).

Odoxa pour l’Agence du Numérique en Santé, Baromètre Vague 1 et 3

devices in the Internet of Things (IoT). The higher speed and lower latency of 5G will allow

developers to create richer user experiences, further increasing apps usage. The value created

by mobile apps in the European economy is expected to grow significantly in the years to come.

Accelerated by the Covid-19 crisis, the digital way and the use of mobile apps have become

more and more widespread. Apps will continue to introduce major innovations that will shape

the future of European consumers and firms.

 
© 2022 Deloitte Finance  7 / 85 
 
Table of Contents 
The App Economy in Europe .................................................................................. 1 
Executive Summary ................................................................................................. 3 
Mobile app platforms and the “economy of platforms” ............................. 8 
1  Mobile app markets are typified by a specific market structure ............................ 8 
2  The positive effects of app stores ......................................................................... 13 
3  App stores have an impact beyond the platforms' direct users ........................... 19 
The economic weight of the mobile app market in the EU and in the UK  22 
1  Presentation of the mobile app market in the European Union and the UK ........ 22 
2  The app-ecosystem stimulates growth and increases consumer well-being ....... 25 
3  The value created by the app economy in Europe ................................................ 30 
4  The app economy and job creation in Europe ...................................................... 37 
5  SMEs in the app economy ..................................................................................... 40 
6  Impact of the Covid-19 pandemic on the app economy ....................................... 46 
Mobile apps will shape the economy of tomorrow ................................... 48 
1  Success stories of firms that integrated apps into their business model ............. 48 
2  Pure Players ........................................................................................................... 54 
3  Seizing mobile apps’ potential: technologies and companies of tomorrow ......... 60 
4  What the Covid-19 crisis reveals about the mobile app sector ............................ 65 
Conclusion ............................................................................................................. 76 
Appendices ................................................................................................. 79 
1  Methodology to determine the size of the smartphone-only population ............ 79 
2  M-commerce revenue ........................................................................................... 80 
3  The Covid-19 Stringency Index .............................................................................. 81 
Bibliography................................................................................................ 82 
 

The App Economy in Europe – A review of the mobile app market and its contribution to the European Economy

1 Mobile app platforms and the “economy of

platforms”

1.1 Mobile app markets are typified by a specific market structure

1.1.1 A presentation of app platforms

18. Mobile apps and app stores were originally introduced by Apple with the launch of the first iPhone

in 2007. Since then, the phenomenal growth observed in this market has been fueled by the entry

of several innovative competitors in mobile devices and app store markets. Competitors in the

mobile device market include HTC, Huawei, LG and Samsung. The main competitor of Apple’s app

store is Google Play

19. Moreover, the range of app platform actors is wider than Apple Store and Google Play.

Different types of platforms co-exist. Native app stores belong to the major mobile OS

developers, most notably iOS, Android and Windows. Third-party app stores involve

manufacturer-specific app stores, including Samsung, LG, Motorola and Lenovo, but also carrier-

specific app stores, such as Vodafone, T-mobile and TIM store.

20. Depending on the service provided by the app, apps not only run on smartphones, but may also

run on other types of devices, such as connected televisions, game consoles, virtual reality

headsets, or PCs. This report focuses on the mobile channel.

21. Developments in mobile devices and app store markets significantly increase the capabilities of

mobile devices and the utility they provide to users.

“From a battle of devices to a war of ecosystems”

S. Elop, former Executive Vice President of Microsoft’s Devices and Services

22. Hence, in the mobile communication industry, the role of apps and app platforms is key.

According to the former CEO of Nokia, this market is turning from “a battle of devices to a war of

ecosystems”. Indeed, based on the theory of network externalities

, the development of app

ecosystems and apps has been crucial to the business strategy of leading mobile operating system

providers. Network externalities imply that attracting developers in an app ecosystem will lead

to a large number of available apps, which will attract a large number of users and underpin

device sales

Néstor Duch-Brown (2017).

Stephen Elop, former Executive Vice President of Microsoft’s Devices and Services and former CEO of Nokia Corporation, speech at D9,

June 1, 2011.

Hyrynsalmi, Suominen and Mäntymäki (2016), Katz, Shapiro (1985).

Holzer, Ondrus (2011).

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23. As of Q1 2021, about 3 482 452 apps were available on Google Play, and 2 226 823 on the Apple

App Store (Figure 1). App stores host a large number of apps, and the number of apps

downloaded from app stores is increasing significantly (Figure 2).

Figure 1. Number of apps available in leading app stores as of 1

quarter 2021, worldwide

Source: Statista, Number of apps available in leading app stores as of 1st quarter 2021. Windows Store figure is for March 2016, which is the latest

available figure

Figure 2. Number of mobile app downloads worldwide from 2016 to 2021 (billions)

App Annie Intelligence (January 2022). Note: iOS App Store, Google Play and third-party Android stores combined. Downloads are first time

downloads only

24. The use of smartphones is also linked to the interest of consumers in apps and the utility they

derive from this market. The number of smartphone users worldwide has increased from 2.5 to

3.6 billion between 2016-2020 and is expected to reach 4.6 billion in 2024 (Figure 3). This

represents a Compound Annual Growth Rate (CAGR) of 6.1 % over the period 2019-2024

Global Mobile Market Report (Free version, 2021), Newzoo.

3 482 452

2 226 823

669 000

460 619

Windows Store*Google Play Amazon AppstoreApple App Store

141

192

204

218

230

20212016 2018 2019 2020

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Figure 3. Number of smartphone users worldwide from 2016 to 2024 (billions)

Global Mobile Market Report (Free version, 2021), Newzoo . * are forecasts

25. This increase in smartphone usage has been accompanied by an increase in consumer spending

on mobile apps from USD 57.7 billion in 2016 to USD 170 billion in 2021 (Figure 4). This represents

a CAGR of 24.1%. Moreover, worldwide mobile app consumer spending is expected to grow on

Apple App Store (from USD 72 billion in 2020 to USD 185 billion in 2025) and on Google Play Store

(from USD 39 billion to USD 85 billion) (Figure 5).

Figure 4. Worldwide consumer expenditure on mobile apps from 2016 to 2021 (billion U.S.

dollars)

App Annie Intelligence (January 2022)

2018 2023*2016 2022*2017 2019 2020 2021* 2024*

2.5

2.7

2.9

3.4

3.6

3.8

4.1

4.3

4.6

6.1%

20202016

82.1

143.0

2017 20192018 2021

57.7

101.0

120.0

170.0

24.1%

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Figure 5. Mobile app consumer spending worldwide from 2020 to 2025, by store (billion U.S.

dollars)

Sensor Tower (February 2021)* are forecasts

1.1.2 App stores are “multi-sided markets”

26. In the information and communication technology (ICT) sector, app stores have a central position

in the provision of digital services by connecting app buyers and sellers. Economic literature uses

the concept of "multi-sided market" to define this type of market. Two-sided markets are

characterized by the presence of (cross-side) network effects: the utility which users on one side

of the market derive from their participation in the platform depends on the number of

participants on the other side of the market.

27. The mobile app market is a “multi-sided market”, bringing together app developers on one side

of the market and mobile phone (smartphone) users on the other side

. This specific market

structure benefits both users and developers:

• For mobile app developers: app stores represent an efficient distribution channel. More

generally speaking, the rise of the internet has reduced distribution costs and has made it

easier to serve niche markets, also coined as reaching the “long tail” of the market. App stores

further reduce these costs by making it easier for developers to access a wide potential market

with limited marketing and advertising expenditure.

• For mobile app users: thanks to platforms, end users have a one-stop-shop with access to a

host of apps. A multitude of websites would make searching and choosing apps more time-

consuming for users. The cost-reduction in reaching end-users yields greater competition and

reduced prices.

Hyrynsalmi, Suominen & Mäntymäki (2016), Rochet, Tirole (2003), Armstrong (2006).

112

134

159

185

2024*2020 2023*2021* 2022* 2025*

App Store

Google Play

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Figure 6. Illustration of the mobile app market

Deloitte Economic Advisory

Smartphone manufacturers

(innovation and sales)

Mobile app

developers

Consumers

App Stores

Demand of mobile applications

Supply of mobile applications

New distribution channel

Access to mobile applications

Access to market

Indirect

network

effects

Indirect

network

effects

Cross-side

network effects

Provision of mobile applications

Recommendations and payments

Important brands

(notoriety)

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1.2 The positive effects of app stores

28. Economists studied specificities of the mobile app market

and analyzed benefits introduced

both on the supply side and the demand side. The positive effects of app stores for developers

and users are presented in the following sections.

1.2.1 App platforms generate benefits for app developers

App platforms benefit developers by being the main intermediary between apps and users

29. App platforms are accessible to all users. Users mainly install apps via an app platform. Even

though users have the possibility to download an app directly from the developers’ website or by

jailbreaking their phone, it requires technical knowledge and might be risky.

App stores create trust capital for developers

30. App stores create a relationship of trust between users and developers, stimulating the demand

for app development. Indeed, the success of developers depends on creating and maintaining

trust of users, and app stores are a cornerstone in establishing trust between users and

developers. App stores draw up contracts with each developer and verify all new app updates

before they are released. This is beneficial to users due to the approval process behind the

submission of each app. Consumer recognition for Apple or Google reflects the trust they place

in their respective app stores

App stores reduce transaction costs for developers

31. The economic literature suggests that app stores reduce transaction costs

for developers. App

stores provide a variety of ready-to-use services for developers such as:

▪ ubiquity in user interface/user experience features,

▪ a secure platform to promote their products,

▪ storage systems for hosting apps and managing downloads,

▪ a billing service,

▪ a payment management system (micropayments) which makes it easy for

mobile app developers to recover sales revenue.

32. Each developer avoids having to create and manage these services when using a centralized

platform. Marketing and operational costs are therefore lower.

33. App stores provide their services to app developers through a standardized contract. The

harmonized legal framework effectively reduces information asymmetry between the different

developers. This has the effect of reducing transaction costs by reducing negotiation costs (i.e.,

Heitkoetter et al. (2012), Holzer et al. (2011), Parker and Van Alsyne (2000), Rochet and Tirole (2006).

Kramer, J and Zierke, O (2019).

Cuadrado et al. (2012), Hyrynsalmi et al. (2014), Yun et al. (2017), Lee et al. (2014), Roma et al. (2012).

Transaction costs were defined by the economist Ronald Coase "When one wants to carry out a market transaction, it is necessary to

discover who it is that one wishes to deal with, to give them certain necessary information and set the conditions of the contract, to conduct

negotiations that result in a bargain, to draw up the contract, to put in place control structures to make sure that the terms of the contract

are being observed by both parties, etc.".

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this framework prevents a proliferation of contracts)

. In addition, standardized contracts also

assure that larger developers do not negotiate better terms than smaller developers.

34. App stores provide ready to use interfaces for integrating advertisements into apps, thereby

reducing research and transaction costs for developers

. Advertising departments of app stores

are used by developers who wish to display advertisements on their app. This service combines

several tasks – such as technology management and payments – together into one interface,

reduces marketing effort and transaction costs for app developers. Without this service,

developers would be forced to find an agency themselves, contract with them and manage

payments.

35. A whole range of tasks required to market a mobile app is thus managed by app stores. All these

services contribute to reducing time to market for developers

App stores facilitate entrance to markets

36. App stores facilitate developers’ – and especially small business developers’ – entrance into

markets

. The platforms effectively enable fast and inexpensive access to smartphone users

around the world. Low barriers to entry mean that even the smallest businesses have access to

3.5 billion smartphone users globally

. Facilitating market entrance of small innovative

companies increases the sustainability of this dynamic ecosystem.

App stores reduce apps’ production costs

37. Mobile platforms benefit from economies of scale and efficiency gains. App stores can spread

costs across a large customer base, thereby lowering costs for all listed developers

38. Moreover, app platform’s developer membership, in addition to giving developers the possibility

to distribute their apps worldwide, provides access to high-quality programming tools

such as

tools to realize in-app purchases and subscriptions and, in the case of Apple’s app store, ARKit

and Core ML which provide augmented reality and machine learning services. This reduces the

need for developers to invest in software programming tools and, therefore, brings down the

cost of developing mobile apps.

App stores enable developers to choose their payment modalities

39. App stores offer developers freedom in their business models. Developers are free to choose

how their apps are remunerated. Today there are seven leading business models: distribution

channel, paid download, in-app purchase, subscription, in-app advertising, freemium and

paidmium

. They are explained in Table 1

40. Apps do not necessarily have a single business model: they have the possibility to generate

revenues via several channels, offering options to the user. These business models are called

Amit and Zott (2001).

ITU (2016).

Cuadrado et al. (2012).

Roma et al. (2012), Pon (2015), OECD (2013), Ershov (2018).

https://www.statista.com/statistics/330695/number-of-smartphone-users-worldwide/

Rob Frieden (2017).

Cuadrado et al. (2012).

A Freeemium app is downloaded for free on app stores, but users do not have access to all the features: they are encouraged to pay or

subscribe for advanced features. Paidmium apps are apps for which users pay the downloads and can also make purchases in the app.

Tang (2016).

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hybrid monetization. The number of apps using hybrid monetization has increased by more than

50% between 2017 and 2018

41. The paidmium model is an example of a hybrid business model, in which users have access to

differentiated services depending on the app-features they choose. Users first pay to access

common features and are offered the possibility to pay for additional features.

42. Other forms of hybrid monetization exist beyond the paidmium model. A growing number of

developers

are finding that ads can co-exist with other sources of revenue, such as in-app

purchases or subscriptions. Some apps, for example, offer a free version on which they display

advertisements. The consumer can choose to pay for a free-of-ads premium version. The revenue

stream is determined by the user’s willingness to pay.

43. Hybrid monetization is frequent in mobile games. Most players are not willing to pay for games,

so advertising has become the most popular way of monetizing these apps. However, to capture

revenues from users that are willing to pay, many games also include in-app purchase items.

Another possibility for developers is to display in-app purchase announcements: this is a way to

convert some players into paying users

44. Reader-apps allow users to read various digital content within apps: videos, music, documents,

books, including digital content purchased outside the app. For instance, Youtube, Netflix, Spotify,

Kindle, and Audible are reader-apps. Reader-apps often use hybrid monetization: users have the

choice between a free version, with ads and/or limited features, and a paid version. For example,

Spotify is either free with ads after every 6 songs, or users can subscribe and pay for a premium

version without ads on which they also benefit from exclusive features

Multi-homing is an available option for all app developers

45. The presence of several coexisting app stores allows multi-homing for developers. When Multi-

homing a developer publishes its product on several platforms. Even though multi-homing is not

used by all developers, exclusive contracts between an app and an app store are very rare

Multi-homing is an option available to all developers and give them access to each user.

46. Multi-homing is very common for the most attractive apps

. The largest app developers and

companies – such as banks or airline companies – that wish to interact with their clients usually

contract with several app stores to publish their apps. Moreover, when an app initially published

on one app store meets great success, it is often developed for the other app stores

https://admob.google.com/home/resources/monetize-mobile-game-with-ads/

https://static.googleusercontent.com/media/www.google.com/en//admob/pdf/admob-mobirix.pdf

Including offline listening, higher quality audio streams, unlimited playlists

Sami Hyrynsalmi, Arho Suominen & Matti Mäntymäki (2016)

Bresnahan, Timothy F. et al. (2014)

Lévêque, François (2016)

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Table 1. Different business models available to mobile app developers

Business model

How it works

Examples of mobile apps

Single business models

Distribution channel

(Sale of goods and services)

Goods purchased in the mobile app are

sent directly to users. Apps make the

shopping experience frictionless and

enable provision of new services.

Amazon

eBay

Uber/Lyft

grubHub

Paid downloads

(Paid)

Payment is made at the moment the

app is downloaded (with access to all

the app features).

Grand Theft Auto – San Andreas

FaceTune

Terraria

In-app purchase

Apps are offered free of charge. Users

can pay for additional services or add-

ons in the app (this business model is

found mainly on gaming applications.)

CandyCrush

Clash of Clans

Brawl Stars

Subscription

The user must pay a monthly

subscription to be able to use the app.

Netflix

Coyotte

In-app Advertising

Installing and using the app is free. It

displays advertising banners or video

clips when it is used.

Rolly Vortex

Helix Jump

Waze

Freemium

(derivative of in-app purchase)

The app is downloaded for free on app

stores, but users do not have access to

all the features. They are encouraged

to pay or subscribe for advanced

features.

Monster Strike

TomTom

Shazam

Hybrid business models

Paidmium

(derivative of in-app purchase)

Users must pay to download the app.

They can also make purchases in the

app (add-ons, etc.).

Minecraft - Pocket Edition

Minecraft - Story Mode

Ghost Blows Out the Light 3D

Other hybrid business models

Revenues are generated via a mix of

business models, depending on the

users’ choice. Reader apps and games

often use hybrid business models.

Spotify and Youtube: combination of

in-app advertising and subscription

Duolinguo: combination of in-app

advertising, in-app purchase and

subscriptions

Candy Crush: combination of in-app

advertising and in-app purchase

Deloitte analysis

Users either have access to a free version with ads or they can subscribe for an ad-free version with more features

Users have access to a free version with ads, on which they can buy additional services. Users can also subscribe to an ad-free version

with unlimited services.

Users can play for free, with ads being displayed. Players can also make some in-app purchase.

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1.2.2 Economic theory highlights various benefits introduced by app platforms for consumers

App stores reduce transaction and research costs

47. Platforms reduce the cost and time spent by users to search for an application

. The possibility

for users to quickly discover new services and apps is a significant advantage offered by platforms.

Using an app store is straightforward as users do not need any technical knowledge to install and

use available apps.

48. App stores offer users a single platform where they can download any app compatible with

their smartphone’s operating system. This phenomenon of "one-stop shopping" reduces

research and transaction costs. App stores offer users a single and secure interface for all their

purchases on the platform.

49. To facilitate the discovery of new apps, app platforms offer an editor-curated section to

promote new high-quality apps. The spotlight helps increase sales for the featured products. In

addition, these editor’s picks have spillover effects and stimulate sales of apps from the same

developer and of the same app on other platforms

. In addition, there is a weak spillover effect

for the same type of apps (similar functionality but different developer).

App stores promote a variety of innovative, high quality mobile apps

50. App stores produce strong network effects conducive to the development of a rich and dynamic

ecosystem of developers and apps

. The distinguishing feature of cross-side network effects

relies on the fact that the utility of an agent on one side of the market depends on the number of

participants on the other side of the market.

51. The large number of apps available on app stores pushes developers to constantly innovate to

attract new users

. As the pace of innovation and new developments is high, developers must

be able to offer apps that meet new user expectations

52. Platforms have made innovative services available to users. Without platforms, several services

would not exist. Uber, Tinder, TooGoodToGo and other apps that use geolocation would not exist

without the development of mobile app platforms. These services require a geolocation system

to operate and need to instantly reach a critical mass of users. App stores, with 3 billion users,

offer developers means to create these new services.

53. The fact that app stores enable app ratings has a positive impact on consumers. The economic

literature about the reputation effect demonstrates that there is a correlation between the

viability of apps and their scores on app stores

. This system has the advantage of rewarding

apps that better meet the expectations of end users and intensifies competition among

developers. An app rated as "excellent" by its users is more likely to survive on the market than

an app with a low rating.

Ershov (2018), Cachon et al. (2008).

Zhan et al. (2017).

Cuadrado et al. (2012).

McIlroy et al. (2016).

Lee et al. (2014).

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App stores also have a positive impact through the way apps are ranked

54. Promoting high-quality apps is in the interest of app stores. Major app stores include quality and

performance metrics in their ranking algorithm. Experience has shown that people use high-

quality apps more and uninstall them less

. Promoting apps based on their quality and value to

users is in the interest of app platforms. In fact, app stores are partially remunerated by sharing

the revenue generated by app developers through their platform.

55. Kramer and Zierke (2019) analyzed the impact of app stores’ ranking mechanism using a game-

theoretic model

. In their model, app stores can rank apps according to their quality (a quality-

based ranking) or according to their financial contribution (sponsored ranking). The study reveals

that quality-based ranking has a high impact on app quality and consumer surplus if app stores

accurately assess app quality

. Indeed, under a quality-based ranking, app developers will be

more likely to invest in app quality to appear higher in the search results. This result is conditioned

by the ability of app stores to accurately assess the quality of apps. The result underlines the

importance of the review process of apps, the search algorithm, and the editorial choice.

App stores benefit users in terms of security

56. The consistent approval process behind the submission of each app benefits users. The apps

downloaded by users thus present higher functionalities and present less risks to their device.

The brand recognition the public has for the Apple or Google app stores reflects the trust that

users place in their respective app stores

. For example, the Apple store’s review process

included since the early days a manual review of apps and put emphasis on protecting the total

user experience, such as making sure users do not accidently perform in-app purchases and are

informed about the use of data. The two major app platforms conduct today an approval process

that consists of an automatic, algorithmic part and possibly a manual part

. A manual review is

conducted for certain types of apps, such as in the case of apps for children

57. Moreover, app stores also moderate reviews and inappropriate content. This is an important

role as consumers are confident that negative reviews will not be deleted by the app developer,

while preventing inappropriate content from being published.

Ahn, A. (2017).

Kramer, J and Zierke, O (2019).

The conclusions are based on certain hypothesis on the behaviors of the consumer, developer and app platform: in the model, the app

store and the developer maximize profit and the consumer prefers to use high-quality apps.

Cuadrado et al. (2012), Hyrynsalmi et al. (2014), Yun et al. (2017), Lee et al. (2014), Roma et al. (2012).

Up till 2015, the Google Play review process of apps was entirely automatic.

https://www.cnbc.com/2019/06/21/how-apples-app-review-process-for-the-app-store-works.html

https://yalantis.com/blog/apple-app-store-and-google-play-store/ https://www.androidpolice.com/2020/03/16/google-play-store-app-

reviews-will-take-7-days-or-longer/.

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1.3 App stores have an impact beyond the platforms' direct users

1.3.1 App stores generate indirect network effects

58. App stores have a positive impact on smartphone manufacturers. By increasing the number and

the quality of apps available to users, the utility of the smartphone increases for users. This higher

utility, in turn, increases smartphone sales

59. Mobile app performance increases rapidly with the addition of new features

. Smartphone

manufacturers, therefore, follow this trend by investing in research and development to offer

their customers more efficient smartphones. Mobile apps thus encourage smartphone

manufacturers to innovate

60. Indeed, as highlighted in Figure 7, platform developers, content providers, third-party app

developers and software developers provide content and services directly linked to the mobile

devices market. Innovations of smartphone manufacturers − triggered by mobile app

performance − require electronic manufacturing services, original equipment manufacturers

and original design manufacturers, as well as suppliers of raw materials and components such

as metals, plastics and chips.

61. The strong relationship between the mobile industry, app stores and apps, has been a

cornerstone of the business strategy of leading mobile operating system providers when

developing their own ecosystems. This strategy is based on the theory of network externalities

The multitude of quality apps will attract users, which will drive device sales, and leads to a

virtuous circle

62. Although a significant percentage of mobile apps do not generate revenue directly, they provide

an additional distribution channel and can give existing services a broader customer base. For

example, when the mobile eBay app was launched in 2009, more than $600 million in sales were

made through the mobile application

. More recently, start-ups have created business models

based on consumer-to-consumer sales via mobile apps. OfferUp, which was founded in 2011, is

now the largest peer-to-peer commerce marketplace

. The mobile market has expanded to allow

new innovative business models that are mainly based on sales and activity via apps.

Holzer et al. (2011).

According to a study by SensorTower, the size of mobile apps has continued to increase in recent years. Over the period 2013-2017, the

size of the 10 most used applications on iPhones (Facebook, Uber, Gmail, Snapchat, Spotify, Messenger, Google Maps, YouTube, Instagram

and Netflix) increased by 1,000% https://sensortower.com/blog/ios-app-size-growth.

Cuadrado et al. (2012).

Sami Hyrynsalmi, Arho Suominen and Matti Mäntymäki (2016), Katz, M.L., Shapiro, C., (1985).

Holzer, A., Ondrus, J., (2011).

eBay Inc. Annual Report 2009. http://files.shareholder.com/downloads/ebay/923940436x0x361552/b45137ee-aa41-4c2c-94ca-

d72d5b0844be/eBay_77655_BANNERLESS.pdf.

Friedmann, Z., Meet Two Young Entrepreneurs Who Raised $221 Million To Disrupt Craigslist, Forbes, 2017.

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Figure 7. Main suppliers of mobile phone groups

Xerfi Global, 2019

1.3.2 The platforms have been proactive in addressing several challenges such as personal

information or payment

63. Mobile platforms manage users' and developers’ personal information. They also manage

financial transactions like payment for apps, in-app purchases, or payment of revenue to

developers. The fact that sensitive information is increasingly digitized and stored on the cloud

naturally raises concerns about inappropriate use or exposure to unauthorized entities. To

prevent this risk, app stores invest heavily in cyber security

64. Moreover, the centralization of personal data on online platforms could pose a problem for the

pricing of applications. Since platforms have access to the complete purchase history or users,

they could have a precise idea about users’ willingness to pay and therefore offer services at the

highest possible price. This fear is unfounded to the extent that app stores do not set the prices

of apps, this decision being the sole prerogative of developers

. Since developers do not have

access to other consumer app purchases, they cannot leverage that information for pricing

decisions.

“Cybersecurity has been a part of Apple’s DNA for a long time, and embedded into all of its products” Steve Morgan, Founder and Editor-

in-Chief of Cybersecurity Ventures (Cybersecurity Q1 2018: Trends and takeaways https://investingnews.com/daily/tech-

investing/cybersecurity-investing/cybersecurity-update-q1-2018-review/.

OECD (2013).

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Figure 8. Benefits generated by app stores

Source: Deloitte analysis

➢ New perspective

➢ New services

➢ Dynamic ecosystem

➢ Variety and innovation

➢ Create trust

➢ Reduce research costs and transaction costs

➢ Simplicity

➢ Compatibility

➢ Promote brand recognition

➢ New communication channel

➢ Gain customer loyalty

➢ Foster innovation among smartphone manufacturers

➢ Increase sales of smartphones

➢ Quality signaling

➢ Profit increase

➢ Encourage market entry

➢ Freedom in terms of business models

➢ Reduce costs of:

➢ transaction,

➢ marketing,

➢ development, research, and negotiation

➢ Create trust

Indirect

Beneficiaries

(e.g. smartphone

manufacturers,

etc.)

Developers

Users

App

stores

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2 The economic weight of the mobile app

market in the European Union and in the UK

65. This section quantifies the mobile app market in the EU and in the UK. We start with user statistics

that characterize the increasingly important role of the app-ecosystem in daily life (section 2.1).

Section 2.2 discusses how the app-ecosystem enhances consumer well-being and contributes to

growth. Figures on revenue and jobs generated by the app economy are presented in the

following two sections (2.3 and 2.4), and section 0 discusses the rich landscape of SMEs in the

sector throughout Europe. Finally, we discuss the impact of the Covid-19 crisis on the app sector

(0).

2.1 Presentation of the mobile app market in the European Union and the UK

2.1.1 Increasing adoption of the app-ecosystem the European Union and in the UK

66. In 2020, the European Union counted around 542 million mobile-cellular telephone

subscriptions

, corresponding to a mobile penetration rate of 121%

. The same year, the UK

counted 79 million mobile-cellular telephone subscriptions corresponding to a mobile

penetration rate of 118%

. In Europe, smartphone adoption increased by 2.6% in 2020, reaching

78% of mobile phone connections

. This figure is expected by the GSMA (GSM Association) to

reach 83% by 2025

67. With increasing smartphone adoption, a new category of internet users emerged across Europe:

the mobile-only population. This category is characterized by people having only a mobile

subscription and no fixed broadband subscription. Mobile-only users represent 21% of the EU’s

population and 14% of the UK’s population in 2020

68. On average in 2018, Europeans spent 185 minutes per day on their mobile phone, and 46% of

them spent more than 3 hours per day

. 88% of the time spent on a mobile is dedicated to the

use of mobile apps

International Telecommunication Union (ITU) Statistics (accessed:01/18/2022). Indicator definition from ICT: “Mobile-cellular telephone

subscriptions refers to the number of subscriptions to a public mobile-telephone service that provide access to the PSTN using cellular

technology. The indicator includes (and is split into) the number of postpaid subscriptions and the number of active prepaid accounts (i.e.

that have been used during the last three months). The indicator applies to all mobile-cellular subscriptions that offer voice

communications. It excludes subscriptions via data cards or USB modems, subscriptions to public mobile data services, private trunked

mobile radio, telepoint, radio paging and telemetry services.”

EU27 population was 447.8 million in 2020 (source: World Bank, accessed :01/18/2022).

UK population was 67.2 million in 2020 (source: World Bank, accessed :01/18/2022).

GSMA Intelligence (2021), The Mobile Economy 2021.

Ibid.

Estimate based on ITU data. Cf. Appendix 4.1.

Interactive Advertising Bureau, 2017.

Comscore, 2018.

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2.1.2 Business models of the app economy

69. App development takes place at a diverse selection of companies

. Some, such as mobile game

companies, develop and maintain their own apps and distribute them via the app platforms. Their

revenues are obtained directly from consumer payments for the app and/or sale of ad-space. A

closely related business model is used by mixed companies that propose services that run both

on desktop and on mobile (for example Deezer and Spotify).

70. Large companies that use mobile apps to support their business or which provide mobile services

to their customers, might have in-house developers. This is for example the case for Danske

Bank

. The more common arrangement however is to outsource app development and

maintenance. Many software companies in Europe thrive on this business model, developing

apps for enterprises. An important category are apps that serve as distribution channels for

consumer goods (M-commerce).

“(Our product studio) works with innovation and business teams that want to open new lines of mobile

products and digitalize their products to create an IoT layer.”

G. Dombri, CEO of mobile product studio Tapptitude

71. Six different sources of revenue are generated via apps. The analysis of the app economy’s weight

in the European economy quantifies each of them:

a. Developers can generate revenue by charging for the download of their app.

b. Developers can opt for in-app purchases. In this case, developers provide their app for free to

increase the user base.

c. Developers can also be compensated by offering a subscription for the use of their application.

This is the case with several newspaper or periodical apps, such as the Economist (UK), Gazeta

Wyborcza in Poland, and Sme.sk in Slovenia, for which consumers pay a subscription fee to

access articles.

d. Developers can be paid by displaying advertisements in their app. This payment method is

possible for both free and paid apps.

e. Developers can be paid as subcontractors for the development of apps that support the clients’

business. Examples are apps that provide mobile banking services and apps that are a

distribution channel for consumer goods (M-commerce).

f. Many retailers use a mobile app to open a new distribution channel for consumer goods. For

example, the Amazon app allows orders to be placed directly without using a PC. To access a

large clientele, retailers provide their app for free in app stores. Revenues generated through

this channel are grouped under the name of mobile commerce or M-commerce.

Thelle M.H. et al (2017).

Keenan C., “No gimmicks for Danske Bank’s agile app team. Danske Bank’s journey to becoming a truly digital business now includes its

own in-house app development team.”, Sync NI, 2018.

Interview with Deloitte, February 2022.

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Table 2. Revenue sources via apps

Revenue for developers

Revenue for

retailers

Revenue generated on app stores

Sale of ad-space

Contract work

Online sales

platforms

Paid

download

In-app purchases

Subscriptions

Mobile ads

App development

for clients

Distribution

channel

Revenue

generated by the

sale of apps on

app stores

In-app purchases

(including

Freemium and

Paidmium)

Revenue

generated by

subscriptions

Revenue

generated by

mobile advertising

Revenue

generated through

contract work

Mobile

commerce

Deloitte analysis

72. The revenue generated through sources a-to-e, − i.e., on app stores, through the sale of in-app

ad-space and through subcontracting − is revenue for developers. M-commerce revenue is

different in nature. Indeed, developers are remunerated for the development of the app;

however, the sales-revenue accrues to retailers. M-commerce apps facilitate the sale of goods

and services that are generally also available via alternative distribution channels.

73. The first four revenue sources (a-d) can also be combined (hybrid monetization). For example,

games can be monetized through a combination of in-app ads and in-app purchases. In the EU,

63% of the App market revenue was generated on the “Games” segment in 2021

. In the UK,

this ratio was a little smaller (55%)

. In 2021, three European mobile game companies generated

more than €1 billion in revenues, app store revenues and advertising combined (Table 3).

Table 3. Top European mobile game developers

Company

Number of games available

on app platforms

Total downloads

(million)

Revenue in 2021

(million Euros)

King

2 800

2275

Supercell

1 800

1 890

Playrix

995

1 730

Statista, Venture Beat, 2021

Mobile-commerce includes all commercial transactions carried out on mobile devices, both via web apps and via native apps. The

transactions are possibly carried out on the move, but also at home.

SensorTower Enterprise, accessed: 01/25/2022).

King annual revenue 2021 | Statista.

Supercell makes $852M on $2.24 billion in 2021 revenue | VentureBeat.

Playrix annual IAP revenue 2021, Statista.

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2.2 The app-ecosystem stimulates growth and increases consumer well-

being

74. The new products and services offered by apps increase consumer choice and consequently, their

well-being. Indeed, the rapid adoption of smartphones and apps demonstrates the preference of

many consumers for apps over alternative channels. In addition, growth is stimulated by the

creation of new products which offer new ways to generate revenue. Finally, growth is stimulated

by the increase in efficiency due to the use of mobile apps. Each of these aspects is detailed below.

2.2.1 The app-ecosystem increases efficiency in firms

75. Apps provide a fluid device-user interaction and offer personalized services. These characteristics

offered by the app ecosystem have the potential to improve efficiency of many types of

professional tasks like e-mails, expense reports, conference calls, etc. The economic role and

impact of mobile internet use and apps can be regarded as distinct from fixed internet

connection

. The influence on firms of mobile and apps has been little studied. However, a few

studies indicate a positive relationship between the smart mobile office and firm productivity.

76. Mobile devices and applications coupled with workplace flexibility have been shown to enhance

labor productivity. The use of mobile communication technologies in firms is associated with a

significant increase in labor productivity with an increasing penetration rate of mobile devices

amongst employees

. Moreover, a causal relationship is revealed, meaning the data studied

support the idea that mobile use causes the increase in labor productivity

. Also, increased

productivity due to the use of mobile devices would be higher when employees are granted

autonomy in the context of trust-based workplace arrangements

2.2.2 The app-ecosystem has a positive impact on consumer well-being

Consumer preference for apps

77. Smartphone- and app-use displayed impressive growth in recent years. In the EU, consumers

spent 21% more on apps in 2021 than in 2020, and in the UK 23% more. Growth of app-spending

thus decelerated compared to 2020 (33% increase in both the EU and the UK), but was in line

with average pre-Covid-19 growth rates over the period 2017-2019 (26% in the EU and 24% in

the UK)

78. The total number of downloads of apps decreased in 2021 by 6% in the EU, and by 8% in the UK

(Figure 9). This can be interpreted as a normalization of the particularly high consumption of apps

in 2020. Indeed, in 2020, app downloads increased by 17% in the EU and by 16% in the UK,

compared to 5% average growth over the period 2017-2019 in the EU and 7% in the UK

Draca et al (2018).

Viete S. and Erdsiek D. (2020), Bertschek, I. and Niebel, T. (2016).

Bertschek, I. and Niebel, T. (2016).

Viete S. and Erdsiek D. (2020).

SensorTower. Average growth rates are compound average growth rates (CAGR).

SensorTower.

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79. In 2019, European smartphone owners downloaded on average 31 new apps

. 76% of people

spend more than an hour per day on their mobile phone and 88% of time spent on a phone is

spent in apps

Figure 9. Number of apps downloaded in the EU and in the UK, 2017-2021 (billions)

Source: SensorTower

Mobile-only population

80. Another development showing an increase of consumer well-being due to the app-ecosystem is

linked to the growth of the “mobile-only” population. This choice has become attractive thanks

to the generalization of high-speed and very high-speed mobile data networks and affordability

of smartphones. Access to information and services via mobile sites and apps are important for

this category of population.

81. Based on ITU databases, 21% of the EU population is mobile-only, representing a total of about

78.4 million people (cf. appendix 4.1 for the methodology). In the UK, the mobile-only population

represents 14% or 7.6 million people).

82. Choosing to only access the internet via a mobile device is possible because of the high-quality

user experience offered by mobile websites and apps. The growth in size of the mobile only

population shows that when having the possibility, many users opt for mobile-only. This choice

allows them to save costs on a fixed internet subscription, optimize their budget and increase

consumer welfare.

2.2.3 The app ecosystem creates new services

83. A mobile device has many functionalities which make interaction intuitive and fast: geo-

localization, a camera, a microphone, a tactile screen, and movement detection. In addition, a

smartphone is a device that can be taken anywhere: 91% of smartphone owners report they

never leave home without their phone

. With mobile devices, new user experiences have

emerged: augmented reality used in games or services, games based on the movement of the

smartphone itself, ride-hailing services, dating apps that use geo-localization, online

marketplaces for used items, health apps, etc.

These are unique installations. Source: GSMA.

Comscore, 2018.

Ward, A., (2016).

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84. In the future, apps are likely to offer more and more new types of services as they will adopt

technologies such as virtual reality (VR), connection of smart objects (internet of things IoT), and

the analysis by artificial intelligence algorithms of user data collected through apps combined

with other data sources. Below, we discuss several categories of apps that use the specific

features of mobile devices.

Games

85. Many games, such as casual and hyper-casual games

, only exist on smartphones. In 2021, it was

estimated that there were 100.8 million game app users in the EU

(23% of the population), and

25.8 million in the UK (38% of the population)

. Games account for 10% of user time spent in

apps

86. Mobile games offer new experiences to users. The players’ experience is often built around the

tactile screen. For instance, the Swedish game Candy Crush Saga is based on tactile screen

specificity: the game is played by swiping candies in any direction.

87. Innovation is also important for app games. A more recent development in the game industry is

the introduction of augmented reality (AR) technology. Apps using AR create an interactive user

experience, overlaying digital objects with the real-world environment, thus creating composite

views that augment the real world. The most common use of AR is a digital image being viewed

through the smartphone’s camera. Artificial environments are created, and users can interact

with them by moving the phone, swiping, and clicking. AR apps do this by accessing the

smartphone’s camera, motion sensor and geo-localization.

88. For example, the ARrrrgh app, developed by Warping Media AB (Sweden), uses the tactile screen,

geo-tracking system, and camera to offer players an AR experience in a classic hide and seek game

that transforms players into modern-day pirates. Players look for digital-generated treasures

hidden in the real world through their phone’s camera.

Ride-haling services

89. Ride-Hailing applications offer a new type of service thanks to the geo-location of the user. Ride-

hailing apps connect clients and drivers through an app, and the geo-tracking system finds a car

close to the client. Both the client’s waiting time and the distance the driver must drive to pick up

clients are reduced, increasing efficiency for both passengers and drivers.

90. Ride-Hailing apps have been present in the EU for about 10 years, with the introduction of Uber

in Paris in 2011. Uber remains the most used app in the EU, but many similar companies were

successfully created all around Europe, offering ride-hailing services to millions of users.

Casual games are games targeted at a wide audience. Hyper-casual games are very easy-to-learn games that usually monetize with in-

app ads.

Estimates from Statista, Digital Market Outlook, Mobile Games, EU-27 (most recent update: Nov 2021).

Estimates from Statista, Digital Market Outlook, Mobile Games, UK (most recent update: Nov 2021).

AppAnnie, Worldwide Data, 2019.

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Dating apps

91. Dating apps offer customers new types of dating services. For dating applications, geolocation is

a crucial feature as the app matches users geographically close to each other. Happn relies on this

feature: the app allows users to see all other users they cross paths with while on the move.

Whenever registered users walk by each other, the app shows them their respective profiles and

a map of where they crossed.

92. Tinder is another example of new experience introduced by apps. It relies on the tactile screen:

users slide other user’s picture to the right or left on the screen if they like or dislike the profile.

Other types of apps that offer new services

93. Apple’s ARKit and Google’s ARCore developer tool were released in 2016, allowing AR experiences

to be included in more apps and allowing AR to go beyond game apps. AR features are now

implemented in many app categories: lifestyle, shopping, learning, culture. This new technology

is widely adopted by European developers (cf. Figure 10).

94. Health apps also offer a new type of service and are widely adopted. Health information, such as

duration of sleep or total number of steps can be recorded using motion and location sensors,

sometimes in conjunction with a connected device. The possibility to connect smartphones with

other (medical) devices allows the phone to record extensive data on users’ health.

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Figure 10. Presentation of 4 European non-gaming apps using AR

AR apps transform shopping experience

Amikasa

Amikasa 3D Room Designer allows users to build,

restyle, and redesign their rooms with furniture

from several brands, flooring and wall colors.

Users can choose their room shape and

dimensions, then decorate and furnish with

different color and shape combinations.

Education is a great use for augmented reality

BBC Civilizations AR

The BBC developed the Civilizations AR app

(2018), giving users the ability to admire diverse

historical artifacts. Users can visualize ancient

treasures in lifelike 3D, see inside it with an X-

Ray function, and hear about its history at the

same time.

Blippar

Using the camera from the smartphone or

tablet, the Blippar app recognizes any object,

from famous faces, flowers, cars, landmarks,

product packaging and more, and displays

information about scanned objects. It can also

place relevant AR content in front of users.

GeoGebra

GeoGebra is an education app allowing users to

place math figures on any surface, walk around

them and photograph them from different

angles. The app helps students develop their

skills in geometry and mathematics via 2D and

3D modeling or function transformations in 3D.

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2.3 The value created by the app economy in Europe

2.3.1 The app economy creates value in Europe via several channels

95. The study of the economic value of the app economy in the European Union is divided into three

parts:

- Direct economic impact: this includes the total direct revenue earned by companies in the

sector. This direct impact is calculated by evaluating the revenues generated through

downloads, in-app purchases, subscriptions, in-app advertisement, and contract work. Most

of these revenues are generated via the app platforms.

- Impact due to spillover effects: an important spillover effect of the app ecosystem is the rise

of M-commerce. The revenues generated by sales through mobile sites go to retailers,

wholesalers, and producers

. In addition to the choice of consumers to purchase standard

products like clothing and even tickets via mobile apps, M-commerce also brought new types

of services. The revenues associated with the new types of services are considered as

economic activity created by the app-sector.

- Indirect impact: because the different sectors of the economy are interdependent, the app

economy generates wealth beyond the companies in the app industry. These indirect impacts

include both impacts on other productive sectors and impacts on households. These indirect

impacts are quantified according to the methodology presented in section 2.3.4.

2.3.2 Direct economic impact of the mobile app market in Europe

Revenue generated directly on app platforms

96. In 2021, app platforms generated a total revenue of €6.5 billion in the European Union, of which

63% stems from mobile games

.The same year, app platforms generated a total revenue of

around €2.1 billion in Great Britain, of which 55% came from mobile games

. These revenues are

generated by paid downloads, in-app purchases, and subscriptions. In 2021, the EU accounted for

8.4% of global app platform revenue, while Great Britain accounted for 2.7%

. App platform

revenues from EU users increased by 17% and from Great Britain users by 19% in 2021

. If growth

continues at the same rate in 2022, revenue generated via app stores could reach €10.1 billion in

the EU and Great Britain in 2022.

The developers are remunerated for the development and maintenance of the app.

Source: SensorTower,accessed January2021. EU Appstore revenue is $ 7729 billion. Average 2021 exchange rate: € 0.8458 = 1 $,

https://www.exchangerates.org.uk/USD-EUR-spot-exchange-rates-history-2021.html.

SensorTower, accessed January 2021.

SensorTower, accessed January 2021. In 2021, global app platform revenue was USD 92 billion (EUR 78 billion).

The growth rate is calculated in euros. Average 2020 exchange rate: 1$ = 0,8755 $, World Bank, LCU per US$, period average.

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Revenue generated by in-app advertising

97. Many apps are free to download and use. In this case, developers generally gain revenues from

selling in-app ad-space. In 2021, mobile ad revenues represented roughly €19.2 billion

in the

EU, and 13.8 billion in the UK

Revenue generated through contract work

98. Many apps are developed by software companies for third party clients to meet specific needs.

These can be B2B or B2C apps

. B2C apps provide value for the client by delivering mobile

services to the final consumers, thereby for example increasing their competitiveness. Common

examples are banks that provide apps for mobile banking or retail apps. B2B apps, by enabling

mobility, can stimulate productivity, enhance well-being at the workplace and increase efficiency

in B2B relations and transactions. Apps are used for business tasks such as e-mail, online

collaboration, inventory management, automation of the purchase process and many more.

These practices are already widely adopted: in 2019, the share of revenue from web sales in the

EU was mainly realized via enterprises' own websites or apps

99. Companies are increasingly interested in having their custom apps: the share of developers’

revenue coming from the development of custom apps for businesses increased from 23% in 2014

to 32% in 2016

. We can expect an increase in the demand for mobile apps, since young business

owners are the ones developing most mobile apps: 55% of small business owned by millennials

have a mobile app, while only 13% of small business owned by baby-boomers have one.

100. The development of these apps is sometimes done in-house in the case of large firms but is

generally subcontracted to specialized app-development firms.

101. These apps do not generate revenue via the app store. Developers are directly remunerated for

the development of the app by their client. The value for the client is in the services these custom

apps provide, either for internal processes or for its clients (businesses or final consumers).

102. We estimate the revenue generated in 2021 through contract work at €66.4 billion for the EU and

€21.3 billion for the UK

. This estimate is based on data obtained by Gigaom in 2013,

extrapolated to today, assuming equal growth rates of contract work as of app platform

revenue

The direct revenue generated by the app economy via app platforms, in-app ads, and contract work,

represented for the EU in 2021 €92.1 billion, and for the UK 37.2 billion.

In 2021, digital advertising revenue in EU member countries (excl. Croatia, Cyprus Lithuania, and Malta) was USD 49.6 bn (source Statista

Digital Market Outlook, October 2021). The share of mobile in digital advertising spending in Europe was 46% (source: Statista, oct. 2021).

The estimate in euros was obtained as follow: 46% x 49.5* 0.8458.

In 2021, digital advertising revenue in the UK was USD 27.2 bn (source Statista, oct. 2021). The share of mobile in digital advertising

spending in the UK was 60% in 2020 (source: Statista – PwC; IAB UK). The estimate in euros was obtained as follows: 60% x (27.2*0.8458).

B2B stands for business to business, B2C for business to consumers.

https://ec.europa.eu/eurostat/statistics-explained/index.php?title=E-commerce_statistics.

ContractIQ, 2017.

€94 billion for the EU and the UK combined. We considered that 76% of this revenue is generated in the EU and that 24% is generated in

the UK (corresponding to the share in the revenue generated on app stores in 2021).

Gigaom Research, 2014. More recent estimates of this share of the market were not available at this date.

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2.3.3 Revenue due to the spillover effect on the retail sector: M-commerce

103. The app-ecosystem also has a spillover effect on commerce and retail. Mobile apps open a new

channel for generating revenues for retailers: M-commerce. The use of mobile apps for

commerce is becoming more and more common: in 2020, 47% of the major webshops in the EU

have a mobile app

100

Revenue generated by M-commerce

104. M-commerce denotes the realization of commercial transactions by way of mobile phones. These

transactions are conducted via native apps

101

or mobile web apps.

105. Unlike games or running apps, the user does not directly pay for the app, or for the services

provided by the app. The consumer uses the app to purchase goods or services sold by third

parties. The use of these apps does not directly generate revenue for their developers but opens

new distribution channels for retailers.

106. The goods and services purchased via mobile apps encompass many types of final consumer

products: air and train-travel tickets, clothes, furniture, health and beauty products, tickets for

events, electronic equipment, etc.

102

The value of M-commerce in EU27 is estimated at

€ 499 billion in 2021 and at € 84 billion in the UK

103

107. Moreover, reader-apps

104

generate mobile-commerce revenue, as the app allows consumption

of external digital content (for example books or music) in the app. Subscriptions or purchases

can pass outside of the app platform. For instance, people buying digital or audio books can read

them respectively on the Kindle and Audible mobile apps.

108. Mobile apps enable their users to change their consumption habits. Purchases formerly made via

traditional distribution channels (shops, hypermarkets, commercial websites etc.) can be easily

made on a digital device. However, because many (if not most) of the expenses made by

consumers through mobile apps would have happened through another distribution channel, we

do not attribute all the M-commerce revenues to the app sector.

Methodology to estimate the contribution of M-commerce to the European economy

109. M-commerce can have a positive effect on the growth of the European economy via two

channels:

- An overall positive effect on the retailing business is due to M-commerce’s characteristic of

ubiquitous access, creating an important advantage of shopping via mobile apps over desktop

e-commerce

105

. In addition, M-commerce presents other specificities such as the ability to

personalize services by using geo-localization. However, while the overall effect of e-

100

2021 European e-commerce report, Ecommerce Europe, Centre for Market Insights, Amsterdam University of Applied Sciences, 2021.

101

Native apps are apps that are developed for a specific platform or device. Because of this, the app can use hardware and software

specific to the device.

102

Eurostat publishes extensive data on e-commerce in the Europe. We hypothesize that the list of consumer products acquired via mobile

phone is similar to the range of products acquired via any internet site. https://ec.europa.eu/eurostat/statistics-explained/index.php/E-

commerce_statistics_for_individuals.

103

This estimate is based on Eurostat data and data by Criteo. Details can be found in appendix 4.2.

104

Defined in paragraph 28.

105

Rajan Y. et al (2016).

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commerce on the EU economy has been estimated, there is, to date, no study on the effect of

M-commerce on economic growth. This possible effect is not considered in this study.

- Apps and the app-ecosystem gave birth to new types of products such as ride-hailing apps that

use geo-localization. We consider only the revenues of these new types of products as

specifically generated by the app-sector.

Contribution via mobile sales of new types of products

110. To estimate the contribution of M-commerce to the growth of GDP, the sales of new types of

products via mobile channels are quantified.

111. The app-ecosystem gave rise to new types of services (cf. section 2.2.3) such as ride-hailing apps,

dating platforms, gaming apps and several other apps that use the functionalities of mobile

devices but do not generate much revenue (yet). In this category, we consider only ride-hailing

app revenues

106

. Table 4 presents the results of this approach.

112. Europeans widely adopted ride-hailing services: the 6 main applications cumulated almost

117 million users in 2021

107

. Over the same period, ride-hailing apps generated a revenue of

about €4.8 billion in Europe

108

Table 4. Revenues of main ride-hailing apps in Europe (2021)

App

Location

Users (M)

Revenues (M€)

Uber

75,8

3100

Gett

Israel

3,51

143

Bolt

Estonia

11,7

478

Cabify

Spain

2,34

Free Now

23,4

957

Ola

India

0,2

TOTAL

117

4784

Source: Uber, Business of Apps

In 2021, sales via mobile apps (M-commerce) in the European Union represented € 499 billion in direct

revenues for retailers and producers and € 84 billion in the UK. We consider that the revenue generated

by new types of products is attributable to the app-ecosystem. This represents 0.8% of M-commerce

revenues or €4.8 billion in the EU and in the UK combined.

106

Dating apps and mobile games revenues are app store revenues (subscriptions, in-app payments, paid apps).

107

Number of users were calculated based on the total users in Europe according to Statista

(https://www.statista.com/forecasts/891452/number-of-users-in-the-online-ride-hailing-market-in-europe), assuming that the number of

users for each app were proportional to their market share in Europe. The source of market shares: Business of Apps.

(https://www.businessofapps.com/data/taxi-app-market/). However, as opposed to Business of Apps, we assumed that the 6 main apps

occupied 100% of the market, i.e., that Uber has 64.8% rather than 60% of the market.

108

Total revenue of mobile apps was obtained based on market shares and on Uber’s annual revenue in 2021 for Mobility Services in the

EMEA region (Quarterly revenue multiplied by 4 in Uber Technologies, Inc. - Uber Announces Results for Third Quarter 2021). The source of

market shares: Business of Apps.

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2.3.4 Indirect economic impact of the mobile app market in Europe

113. In 2021, the total indirect contribution of the mobile app economy in the European Union

represents € 111.5 bn (Table 5). This includes revenue generated through supplier relationships

(€ 67.2 bn) and revenue resulting from the spending by people employed in core app economy

jobs and its suppliers (€ 44.3 bn).

114. In the UK, the total indirect contribution of the mobile app economy in 2021 represents €47.2 bn

(Table 5). Revenue generated through supplier relationships reached € 19.6 bn, and revenue

resulting from the spending by people employed in core app economy jobs and its suppliers

represented € 27.6 bn.

Table 5. Breakdown of the impact of the mobile apps beyond app developers

Impact

Revenue generated

in the EU economy

Revenue generated

in the UK economy

Impact on the productive sectors,

generated by intermediate consumption

by app developers (indirect impact)

€67.2bn

€19.6 bn

Impact of households,

resulting from consumer spending by people

employed in mobile app development

companies and their suppliers (induced impact)

€44.3 bn

€27.6 bn

Total indirect contribution

€ 111.5 bn

€47.2 bn

Deloitte analysis

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Methodology

115. Indirect impacts are estimated using an Input-Output model. The model enables us to assess the

additional value introduced by the app economy in the other sectors of the EU and the UK

economy (beyond the sector where the direct revenue is generated). We consider the total value

(in terms of revenue) of the app economy and estimate the spillovers on the rest of the economy.

Figure 11. Direct and indirect economic impact of the app-ecosystem

Deloitte

116. The Input-Output model is a powerful tool to assess the impact of an industry or an investment

project on other sectors of the economy. The general idea is to measure how a sector is integrated

into the economy and how the companies in that sector interact within the supply chain. Our

model is based on the most recent (2017) Eurostat input-output tables for EU28 and the 2018

OECD input-output table for the UK.

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2.3.5 Total economic impact of the mobile app market in the Europe

117. The total impact of the app economy in the European Union is estimated at €210 billion in 2021.

Table 6 summarizes the economic impact of the mobile app market in the EU.

Table 6. Impact of the app economy in the EU (2021)

Details

Revenue

Direct contribution

• €6.5 bn in revenue generated on app stores

• €19.2 bn from in-app advertising

• €66.4 bn from contract work

• €3.6 bn net contribution from sales made on mobile

apps

109

€95.7 bn

Indirect impact

• € 68.9 bn from impacts on the productive sector

• € 45.4 bn from impact on households

€114.4 bn

Total economic impact

€210.1 bn

Deloitte analysis

118. The total impact of the app economy in the UK is estimated at €87 billion in 2021. Table 7

summarizes the economic impact of the mobile app market in the EU.

Table 7. Impact of the app economy in the UK (2021)

Details

Revenue

Direct contribution

• €2.1 bn in revenue generated on app stores

• €13.8 bn from in-app advertising

• €21.3 bn from contract work

• €1.2 bn net contribution from sales made on mobile

apps

110

€38.4 bn

Indirect impact

• € 20.0 bn from impacts on the productive sector

• € 28.2 bn from impact on households

€48.2 bn

Total economic impact

€86.5 bn

Deloitte analysis

The total economic impact of the mobile app market in 2021, including in-app ads and the net

contribution of online sales generated on mobile apps, represents € 210 billion in revenue, throughout

all sectors of the EU economy and € 86.5 billion in the UK economy.

This is equivalent to 0.7 % of the EU gross domestic product in 2021, and to 1.5 % of the UK GDP.

109

The total revenue from mobile app sales for the EU and the UK equal to 4.8 billion was distributed between the UK and the EU by

assuming both regions’ shares are equal to their shares of revenue generated on app stores: €6.5 bn/ (€6.5 bn +€2.2 bn) = 76%.

110

The total revenue from mobile app sales for the EU and the UK equal to 4.8 billion was distributed between the UK and the EU by

assuming both regions’ shares are equal to their shares of revenue generated on app stores: €2.2 bn/ (€6.5 bn +€2.2 bn) = 24%.

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2.4 The app economy and job creation in Europe

2.4.1 The diversity of jobs created by the app economy

119. App development companies range in size, from entrepreneurs working from home in teams of

a few people, to large software and media companies, marketing groups, etc.

120. The types of jobs generated by the app economy are similarly diverse. Core app economy jobs

include technical jobs: programmers whose work requires knowledge of mobile applications,

security engineers keeping mobile apps safe from being hacked, and help-desk staff who support

the use of mobile apps. In addition, employment is created as support to core app economy jobs:

marketing, sales, human resources, etc.

2.4.2 Total number of jobs generated

121. We estimate the total number of jobs generated throughout all sectors of the economy in 2021

at 1.36 million in the EU, and 396 thousand in the UK. These estimates are based on the total

revenue for the app sector determined previously, combined with national accounts data

111

These figures include direct jobs (software developers, mobile app specialists), indirect jobs

(suppliers to the app developers) and induced jobs (jobs created by the spending of the direct

and indirect jobs).

- Direct jobs:

• Mobile app specialists: these are IT-positions occupied by qualified employees, including

mobile app development, maintenance, and support.

• Support roles within companies employing mobile app developers: jobs consisting of

management teams, human resources, marketing, sales, etc.

- Indirect jobs: jobs created by the procurement relationships of app development firms,

including positions in security, catering and cleaning services, and office utility supply.

- Induced jobs: jobs supported by the spending of wages from direct and indirect jobs. People

directly or indirectly employed by the app sector gain wages which are spent on taxes, savings

and consumption. Based on an estimate of the share of wages consumed, the number of

induced jobs is deduced.

122. The number of direct jobs in the EU is based on Eurostat data on sectoral output and employment,

from which we deduce that 5.8 people are employed for every € 1 million output in the

Programming and Software sector in 2021

112

. From the estimated € 95.7 billion direct revenues

for the app sector, follows that app development supports around 560 000 direct app economy

jobs. Furthermore, supplier relationships and consumption induced by the wages of direct and

indirect jobs support an additional 836 000 jobs, resulting in a total of 1.40 million jobs supported

by demand for app development (cf. Table 8)

113

111

Eurostat data for the EU, OECD data for the UK.

112

NACE sector J62-63, “Computer programming, consultancy, and information service activities”. For the year 2017, 6.2 people are

employed for every € 1 million output. This number was corrected for cumulated inflation between 2017 and 2021, equal to 5.96% (source

World Bank, FP.CPI.TOTL.ZG).

113

The number of indirect and induced jobs supported by the app-economy has been estimated using the input-output model presented in

2.3.4.

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123. In the UK, app development supports around 222 000 direct app economy jobs, and an additional

182 000 indirect jobs, resulting in a total of around 404 000 jobs

114

Table 8. Jobs generated by the app economy in Europe (2019)

Details

Thousands of people

employed in the EU

Thousands of people

employed in the UK

Direct jobs

IT positions and support roles within app-

development companies.

560

222

Indirect jobs

Jobs at the companies supplying app companies

485

131

Induced jobs

Jobs supported by the spending of those directly

and indirectly employed by the app economy.

351

Total number of

supported jobs

1 397

404

Deloitte analysis

124. To put our estimate of employment in the app sector into perspective, a study by the Progressive

Policy Institute (PPI) provides a similar estimate. In 2019, they obtain − via an altogether different

methodology that consists of counting job ads with relevant keywords – an estimate of the

number of direct jobs in the EU’s and in the UK’s app economy of 672 000

115

. This figure is 28%

higher than our own figure for 2019 (524 000), and 14% lower than our figure for 2021 (782 000,

EU+UK). Table 9 summarizes PPI’s results for 2016 up till 2019.

Table 9. Estimates of the number of jobs created by the app economy in the EU and in the

UK, 2016-2021, PPI

January

2016

January

2017

April

2018

July

2019

Direct jobs (thousands)

520

600

650

672

YoY growth

15.4%

8.3%

3.4%

The Apps Economy in Europe: leading Countries and Cities, PPI, 2017 and update 2019

125. Considering that the two methodologies are very different and independent, the results give

credibility to the range defined by the estimates. The reason for our more conservative estimate

of the number of direct jobs in 2019 might be found in the prudent methodology used to identify

all revenue sources.

114

The estimate of direct jobs in the UK is based on sectoral and employment data for the year 2020 from the OECD: For every €1 million

output in the “IT and other information services”, 6.04 people are employed in 2018. This number was corrected for cumulated inflation

between 2018 and 2021, equal to 5.21% (source World Bank, FP.CPI.TOTL.ZG). The number of indirect and induced jobs is based on the

2018 UK input-output table, OECD.

115

The Progressive Policy Institute estimates that the European App Economy totals 2.1 million jobs in July 2019, encompassing direct,

indirect and induced jobs, for 30 countries, including Norway and Switzerland. These results are based on the identification of online job

postings which contain “iOS” or “Android” or “Blackberry” or “Windows Phone” or “Windows Mobile” or “app”. The number obtained is

calibrated against national accounts data. Based on the employment multipliers specified in their paper, and by only retaining EU28

countries as geographical scope, we obtain the figure of 672 000 direct jobs.

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126. The app intensity − defined as app economy jobs as a percentage of all jobs – in the EU is 0.7%

116

In the UK, the app intensity is 1.5%

117

. In 2019, according to the PPI, four European countries

presented an app intensity of 1.5% or higher: Denmark, Finland, The Netherlands, and Sweden.

The number of jobs supported in 2021 by the EU app economy is 1.4 million, and in the UK close to

400 000, direct, indirect and induced jobs combined.

116

Sources: Eurostat (total employment, LFSI_EMP_A, last update: 02/02/2022), and own analysis (app economy jobs): 1 360 000 /

191 442 000 = 0.7%, where 191 442 000 is the estimate of total employment in 2021 in the EU, based on total employment in 2020

(186 972 000), corrected with the Share of employed people 20-64 in the total population of 2020 (71.1%), and of Q2 2021 (72.8%).

https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Employment_-_quarterly_statistics

117

Sources: OECD, Labour input by activity (total employment in 2020 = 32 523 252): 396000/32 523 252=1.2%.

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2.5 SMEs in the app economy

127. Many small and medium-sized enterprises (SMEs) work in the app development sector in

Europe

118

. These include pure players, and agencies that work for the outsourcing market. Mobile

app development outsourcing is a significant market in the EU and the UK, accounting for two

thirds of total mobile app revenue according to our estimates. Nearshoring, the practice of

outsourcing app development to nearby countries, contributes to the development of SMEs in

the region

119

. SMEs’ activity in the mobile app sector is expected to increase in the future, in line

with the expected strong growth of the software sector, of 57% between 2021 and 2026,

compared to 24% between 2016 and 2021

120

Europe is a strong player in mobile app development

128. App development SMEs in Europe are part of a dynamic ecosystem, built on strong universities

and highly skilled developers.

129. The EU member countries and the UK combined represent 37% of the top 50 of countries with

the best developers (online coding challenges hosted by HackerRank, Figure 12)

121

. Moreover, 4

of the top 10 best ranked universities in Computer Science & Information Systems are in the EU

and the UK

122

130. Europe is indeed generally considered to benefit from highly qualified developers. High skills are

essential for mobile app development, encompassing both technical and soft skills. On this

matter, F. Ronchi, president and CEO of Synesthesia, stated about the European educational

environment: “More people get trained in software development in Europe and the quality of

education is increasing”

123

. Along the same lines, when asked why European games are successful,

Kristian Nordahl, Senior Vice President of Operations at Kiloo, answered: “Education in the arts

and in software development are critical”

124

118

The definition of SMEs varies from country to country. In this report, we adopt the OECD definition: “SMEs employ fewer than 250

people. SMEs are further subdivided into micro enterprises (fewer than 10 employees), small enterprises (10 to 49 employees), medium-

sized enterprises (50 to 249 employees). Large enterprises employ 250 or more people.”

119

Nearshoring is. the practice of outsourcing app development to countries within the region.

120

https://www.statista.com/forecasts/963584/software-revenue-in-europe; https://www.statista.com/outlook/tmo/software/europe.

121

Trikha Ritika, Which Country Would Win in the Programming Olympics?, HackerRank Blog, 2016. https://blog.hackerrank.com/which-

country-would-win-in-the-programming-olympics/ consulted February 2022. The classification is based on online coding challenges posted

by HackerRank.

122

QS Top Universities, 2021 Ranking https://www.topuniversities.com/university-rankings/university-subject-rankings/2021/computer-

science-information-systems.

123

Interview with Deloitte, April 2020.

124

Interview with Deloitte, April 2020.

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Figure 12. Top 50 of countries with the best developers, based on online coding challenges,

2016

Source: HackerRank, 2016

131. Also, G. Dombri, CEO of the Romanian mobile product studio Tapptitude, remarks that “a lot of

women are entering this market”

125

“Europe has a vibrant app economy. We have some of the best universities here with strong academic

foundations in engineering and computer science. When it comes to software engineering and design in

particular, the talent in Europe is outstanding, and the ability to source and attract such talent from all

around the continent is truly unique”

126

K. Morsy, CEO of Algoriddim, maker of the music app “djay”

132. Excellence in soft and hard skills sparks innovation in the app development sector in Europe,

which in turn stimulates the emergence of startups and the development of SMEs in the app

development sector.

125

Interview with Deloitte, February 2022.

126

Interview with Deloitte, February 2022.

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The EU and UK are home to a rich ecosystem of SMEs in the mobile development sector

133. SMEs are very active in the mobile app development sector in Europe. The platform Clutch lists

4224 mobile app development firms in the EU and the UK (2022)

127

. Most of these companies are

SMEs: 34% are micro firms with 2 to 9 employees, 46% are small firms with 10 to 49 employees,

15% are medium-sized firms with 50 to 249 employees, and 9% are large firms of more than 250

employees (Figure 13)

128

Figure 13. Number of firms in mobile app development by size in the EU and in the UK, by

region, 2022.

Clutch.co, Deloitte analysis

134. The country with the most app development firms in Europe is the UK (1121 firms or 27% of

European firms), followed by Poland (644 firms or 14% of European firms)

129

. Eastern Europe has

a strong position with 1209 firms (29% of European firms). In Western Europe, 754 firms were

identified which represent 18% of European firms. Southern and Northern Europe represent

respectively 17% and 9%.

135. Countries with a smaller share of GDP in the EU and the UK, such as Bulgaria, Poland, Romania,

Estonia, Lithuania, and Croatia, have two to five times more app development firms per unit GDP

than the UK, demonstrating a relative specialization (Figure 14)

130

127

Clutch is a rating and review platform that provides information on the top companies ranked and referenced by their market presence,

reviews on previous work experience, and proven ability to deliver. Being ranked by Clutch is a testament of the company’s quality of

service. Worldwide, more than 150 000 agencies are listed on Clutch.co. We only included firms with 2 employees or more, excluding

individual consultants.

128

Clutch also lists 1-person companies (freelancers). We did not include these in the reported data, because only 61 freelancers are listed

in the mobile app development category, in the EU and UK combined. We conclude that most freelancers are not listed on Clutch.

129

Clutch.co

130

Number of firms was related to GDP in each country to show the specialization of each country/region in app development.

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Figure 14. Number of mobile app development firms relative to GDP in the EU & UK, per

trillion euros

Clutch, IMF - World Economic Outlook, October 2020

Intraregional trade in app development services

136. SMEs throughout Europe have achieved significant success by creating a nearshoring market,

taking advantage of highly qualified local talent, and, for some countries, a cheaper workforce.

Compared to offshoring to countries far from the head office (ex. South East Asia), nearshoring

combines cost competitiveness, and is low risk because of proximity (language, culture, time-

zone, physical distance)

131

. According to Swiss firms that use nearshoring, this model has the

advantage of providing high-quality products and being cost-efficient. Interaction with

developers is also considered to be easier

132

. For developers, nearshoring gives access to a large

market.

137. An analysis of a sample of the top-13 medium-sized (50-249 employees) firms in the app-sector

in the EU and in the UK revealed that all these firms export their services

133

. Table 10 gives a

description of the firm sample. An analysis of their clients allows us to make the following

observations:

- The UK firms in the sample usually export outside of Europe, mainly to the US.

- Most of the firms selling to other EU member countries (nearshoring) are based in Poland.

- Polish, Romanian, and Croatian companies have many clients in the UK. Cost comparative

advantage and proximity explains this situation.

131

Knaflewski J., “What’s the best country to outsource app development, and 5 reasons why it’s Poland?”, IT Generator, Poland.

https://www.itgenerator.com/nearshore-software-development/.

132

Nearshoring-info, “Nearshore App Development and Reasons Why People Use It”, 2019.

133

These conclusions are based on public data: firms’ websites and reviews on Clutch.

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Table 10. Characteristics of the sample of top 13 mobile app development firms in Europe

The top 13 medium-sized (50-249 employees) firms that dedicate 60-70% of their activities to mobile

development in the European Union and in the UK, based on the ranking of firms on the Clutch platform, are

located in the UK (6) and in Poland (5) (see table below)

134

. Smaller countries such as Romania and Croatia

are also present in this list (with 1 firm).

The clientele of Polish firms in this list is mainly composed of MidCap companies (USD 10 million-

USD 1 billion), while the app development firms in the UK have more LargeCap clients (> USD 1 billion). UK

developers charge their services twice as much as those in Poland, Romania, and Croatia. The sectors with

the highest demand for mobile app developers in the sample are the financial service sector (10 firms work

for this sector) and the healthcare sector (9 firms).

Source: Clutch, Deloitte Analysis and firms’ websites

138. G. Dombri, CEO of mobile product studio Tapptitude describes, from the developers’ point of

view, how the remote delivery model appeared in Europe over time in the app sector: “Initially

development firms worked locally. Then foreign development teams were integrated into the

delivery model, and since this worked very well, the next step was to also pursue clients abroad.”

139. Tapptitude is a product studio with headquarters in Transylvania, Romania, focused on products

for “people who do not sit at a desk”, and for connected devices. The studio is a good example of

the nearshoring business model. Most of Tapptitude’s revenue comes from the US, the UK, and

from other European countries. They have very little revenue from local clients. Remote delivery

is their core model. They also have experienced product stragegy teams in New York, London and

Amsterdam, which allows them to work closely with clients on product strategy and delivery.

“This is a sector where the remote delivery model works very well. It is easy [in the mobile app sector] to

deliver high-value services all over the world”

135

G. Dombri, CEO of mobile product studio Tapptitude

134

Clutch.co provides a worldwide list of the top mobile application development firms. The firms located in the EU and in the UK were

selected in this list, which resulted in a sample of 13 firms.

135

Interview with Deloitte, February 2022.

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140. Countries such as Poland, Romania and Bulgaria are cost competitive. SMEs in these countries

employ local highly skilled developers to provide high-quality services at lower rates: the hourly

rate for developing an IOS or Android app is on average € 30, about half the average rate in

Western Europe (€ 64)

136

. According to G. Dombri, the cost difference between Romania and

Scandinavian countries, for the same level of quality, can be a factor two to three.

141. This nearshoring trend has a positive impact on the development of the mobile app economy.

Clients benefit from strong expertise and cost effectiveness when outsourcing their mobile app

development projects. For app development SMEs, nearshoring provides access to a larger

market, which means more opportunities for growth.

136

ContractIQ – mobile app development report 2017.

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2.6 Impact of the Covid-19 pandemic on the app economy

142. The EU and the UK experienced a period of economic recession in 2020 due to the global Covid-

19 pandemic. In the EU, real GDP decreased in 2020 by 7.8%, and in the UK by 11.5% (Figure 15,

Figure 16). In contrast, the mobile app sector has seen an acceleration of its growth trajectory.

Figure 15. GDP and App Store revenue in the EU, 2015-2021, constant 2010 billion euros

World Bank (GDP), SensorTower (App Store Revenue), OECD (2021 GDP and inflation projections)

Figure 16. GDP and App Store revenue in the UK, 2015-2021, constant 2010 billion euros

World Bank (GDP), SensorTower (App Store Revenue), OECD (2021 GDP and inflation projections)

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143. At the beginning of the pandemic, it was already expected that the crisis’ impact on the app

economy would be limited. At the end of March 2020, Codin’Game conducted a worldwide survey

of 2700 developers on the impact of the Covid-19 pandemic. At the time of the survey, 87% of

the respondents were still full-time employed. Temporary company closures impacted only 1.3%

of the developers in the survey

137

. In April 2020, SensorTower projected worldwide app platform

revenues to increase by 20%, taking into account the effects of the crisis

138

. This estimate was one

percentage point lower than their initial projection prior to the crisis.

144. Actual growth of app platform revenue even surpassed projections. Worldwide, app platform

revenue increased by 28% in real terms in 2020

139

. In the EU, real growth of app store revenue

was 30% in 2020, and in Great Britain 29%

140

145. This situation is explained by the fact that the use of many apps, such as games, is not impaired

by lockdown measures and physical distancing requirements. Moreover, apps provide innovative

solutions to respond to the crisis. In an interview in April 2020, the Italian app developer

Synesthesia noted that many actors in industries affected by the crisis turned to developers to

find solutions: “We saw a rise in the interest in mobile app development during the emergency”

141

146. Average growth over 2019-2021 was above 20% worldwide and for Europe, which is in line with

initial market projections. In conclusion we can consider that the development of the mobile app

economy was accelerated by the crisis, but that the long-term trend is not impacted.

137

Codin’Game (2020).

138

Nelson R., “5-Year Market Forecast: App Spending Will Double to $171 Billion by 2024 Despite COVID-19”, April 2020.

https://sensortower.com/blog/sensor-tower-app-market-forecast-2024. Projected growth is in nominal terms.

139

SensorTower for app platform revenue ; inflation figures from the World Bank. Nominal growth of app platform revenue was 30% in

2020.

140

SensorTower for app platform revenue. Inflation figures from the World Bank.

141

Interview with Deloitte, April 2020.

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3 Mobile apps will shape the economy of

tomorrow

147. Section 3 analyses innovative apps and the future of the European app economy. In the first two

sections, we describe how apps have permeated business models: many firms incorporate apps

into the way they used to provide services to their clients (3.1). In addition, pure players emerged,

which are firms that have built their activity on apps (3.2). In section 0 we look at the future of

the app economy, including an analysis of the future of the sector through the lens of developers,

and the impact the global Covid-19 pandemic had on the app sector (0).

3.1 Success stories of firms that integrated apps into their business model

148. As smartphone penetration increases, presence on mobile phones has become increasingly

important for many companies. Companies whose core-business is not related to the app-

economy are adapting to the digital mobile trend by introducing apps to propose their services

and goods to consumers. They also use mobile apps as internal business tools. This trend is

observed in all branches.

149. When companies launched an app, users’ adoption was often broad and quick. For example,

when the Lithuanian marketplace Vinted introduced its app in 2012, one day after the release,

30% of its traffic, which corresponds to the volume of visits, came from the app

142

. The DB

navigator app of the German railway company Deutsche Bahn, which allows to book contactless

tickets and receive information about travels, saw a 50% year-on-year increase in active users in

mid-2019, after implementing new features

143

3.1.1 Medical sector

150. The use of mobile devices by health care professionals (HCPs) has transformed many aspects of

clinical practice in Europe. Mobile devices have become commonplace in health care facilities,

leading to rapid growth in the development of medical apps. Numerous apps are now available

to assist HCPs with essential tasks, such as information and time management, electronic

prescribing, access to medical textbooks and drug reference guides, patient management and

monitoring, clinical decision-making, and medical education and training

144

VIDAL Mobile

151. Vidal was founded in France in 1911, and its first book, a dictionary of pharmaceutical specialty,

was published in 1914. For almost a century, the company’s revenues were generated by book

sales

145

. Vidal launched its mobile app “VIDAL Mobile” in 2010 (for iPhone) and in 2011 (for

Android, Blackberry)

146

142

Vinted offers a platform for CtC apparel sales. Source : http://lemonlabs.co/vinted/.

143

Deutsche Bahn, 2019 Interim Results Press Call.

144

Mobile Devices and Apps for Health Care Professionals: Uses and Benefits, C. Lee Ventola, 2014.

145

The firm also developed a CD-ROM in 1989 and websites in 1999.

146

http://www.vidalfrance.com/societe/histoire/.

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152. The app is restricted to healthcare professionals: they need to authenticate when they first use

the app. The app helps health professionals with the diagnoses of a disease based on symptoms

and gives them easy access to information on pharmaceutical drugs.

153. In 2019, the app was used by more than 100 000 health care professionals and hospitals across

Europe and generated a revenue of almost $300 000 through subscriptions.

Figure 17. VIDAL Mobile’s app interface

Source: Apple Store

154. Mobile phone characteristics

147

and app convenience explain why apps are adopted even in

traditional sectors such as medicine. Health practitioners can always have their phones at hand,

contrary to books. Also, searching for treatment and dosage is easier and quicker with an app.

The app contributes to improving patient care efficiency.

3.1.2 Airline and Railway companies

155. Most European railway companies were created in the first half of the 19

century. Transport is

the second item in European household expenditures

148

. In 2018, rail passenger transport in the

EU was estimated at 472 billion passenger-kilometers, a 10% growth from 2013. During the same

year, 1.1 billion Europeans traveled by air

149

156. In a world where mobility plays a crucial role in people’s lives, most railway and airline companies

respond to travelers’ needs by providing basic features in their mobile app. These apps make

the booking and travelling process easier: users can book flights and trains anywhere and at any

time. Apps also enable users to easily obtain up-to-date information on delays or gates, to

147

Small handheld device.

148

https://ec.europa.eu/eurostat/statistics-explained/index.php/Household_consumption_by_purpose#Evolution_of_shares_over_time.

149

https://ec.europa.eu/eurostat/statistics-explained/index.php/Air_transport_statistics.

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exchange or cancel tickets, etc. and thanks to mobile passes, travelers can have their boarding

pass at hand.

157. If most transport companies nowadays propose a mobile app, some apps, such as Lufthansa and

Oui.SNCF, stand out by adopting new technologies to offer new user experiences.

Lufthansa: integration of new technologies

158. Lufthansa (the German national airline company) launched its mobile app in 2012. In February

2020, it counted a total of 20 million downloads and 350 000 monthly active users. New features

are continuously added, with the goal of “Rethinking air travel”.

159. The Lufthansa app goes beyond traditional services offered by airline apps, such as booking

tickets, mobile boarding passes and instantaneous updates. The app’s success is explained by

technological innovations, offering travelers a differentiated and convenient experience.

160. Lufthansa was one of the first airline companies to propose a passport and credit card scan option

on its mobile app, in 2015. Customers booking flights on the Lufthansa app can scan their

payment cards and passport with their smartphone’s camera: the relevant information is

automatically extracted. Using the scan option reduces the average mobile check-in time from

about two minutes to twenty seconds

150

Figure 18. Lufthansa’s mobile app Apple Watch interface

Source: Patentlyapple

150

This figure is obtained from another app with similar functionalities. https://www.businesstraveller.com/news/2016/02/23/easyjet-app-

upgraded-for-credit-card-scanning/.

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161. Services permitted by the internet of things (IoT) were integrated early on. Since 2015, users

can synchronize the mobile app with their smartwatches. This option allows users to keep an eye

on all the important information about their Lufthansa flight at all times.

162. In 2019, the Lufthansa app has added a new option which allows to directly access flight

information by voice command, without opening the app. This function is based on the Siri

Shortcut technology launched by Apple in 2018, which allows to deliver information from apps to

Siri. Thanks to a short voice command, such as "Hey Siri, my flight", users get all the flight

information from the intelligent assistant: the time needed to get to the airport, the boarding

gate, etc.

Oui.sncf: simplifying the travel process

163. The app proposed by the French railway company SNCF is a great example of how to meet

consumers’ expectations with innovative options. SNCF launched its mobile app in 2009. The

Oui.sncf app has been downloaded more than 18 million times and has more than 1.5 million

monthly active users. It is frequently ranked as the number one travel app in France. In 2018, the

firm announced that more sales had been achieved through the app than through its website

Figure 19. Oui.sncf’s app interface

Source: Apple Store

164. The app makes the whole travel process simpler. When users perform a search, their recent trip

searches are shown, and thanks to Artificial Intelligence (AI) the app proposes trips that are more

likely to be booked. Also, the Low Price Alert

151

option has been very successful since its launch

in 2017. App users can enter the destination and the travel date of their interest, and they will

receive a notification on their mobile phone when the price is low. In 2018, this option has led to

151

Alerte Petits Prix. This option is also available via SNCF website: an e-mail will be sent when a given trip is available. However, when

using this option through the app, users can book their train as soon as it is available.

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more than 2.4 million notifications. The app thus proposes a new booking process: users can book

tickets everywhere, at any time, with an intelligent platform. In addition, the tickets are available

as QR code.

3.1.3 Shopping

165. With M-commerce revenues reaching an estimated €394 billion in Europe in 2019, mobile apps

became an integral part of retailers’ business model

152

. Traditional brands acknowledged that

apps are tools for increasing sales. While many retailers offer a basic app as an additional

distribution channel, other retailers offer users a renewed shopping experience.

Ikea Place: AR technology supporting shoppers’ purchasing decision

166. Ikea is a Swedish company founded in 1943 that designs and sells ready-to-assemble furniture,

kitchen appliances, and home accessories. Realizing that consumers were ditching showrooms

for online shopping, the company decided to develop three apps enhancing the shopping

experience: an in-store app that helps to collect barcodes, an Ikea catalog app, and an augmented

reality app to preview furniture in the customer’s room.

167. This last app, Ikea Place, was launched in 2017 and has been downloaded 3.7 million times since.

Ikea Place had more than 370,000 monthly active users worldwide on iPhones in February

2018

153

. This app demonstrates AR’s potential to create valuable user experiences by solving

practical problems.

Figure 20. Ikea Place’s interface

Apple Store

152

Cf. section 2.3.3.

153

According to App Annie.

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168. IKEA Place lets shoppers virtually place true-to-scale 3D models in their own home

154

Consumers can use the augmented-reality feature to visualize the furniture in their house before

buying. The last version of the app also features Visual Search, allowing users to take a photo of

any piece of furniture they fancy, then find similar or identical Ikea products through the app.

Asos: Visual Search technology to help shoppers choose

169. Asos was created in 2000 in the United Kingdom as an online clothing retailer. However, with the

increasing mobile-phone penetration rate and m-commerce spending, the firm soon understood

the importance of developing a mobile app. Today, 70% of Asos’ traffic and 58% of purchases

happen on mobile

155

170. The company developed its built in-house app, which was released in 2011 in the UK and in 2014

worldwide. The app has more than 50 million downloads in total and 5 million monthly active

users in 2019.

Figure 21. Asos’ Visual Search option

Businessinsider

171. The firm’s willingness is to “build experiences that capitalize on mobile”

156

. In line with that idea,

the app proposes, since 2017

157

, a Visual Search tool: the Style Match option. This option is

valuable for users since shoppers can take an in-app photo of a product they like, and, thanks to

both data learning and intelligent digital image processing technologies, the app pulls similar

items from a pool of 85,000 product images. This option responds to an issue that users are facing

when doing online shopping: they face a dense and hard-to-digest range of products. This tool

will help narrowing down the product range and getting customers straight to the products they

are looking for.

154

App description in Apple Store.

155

https://digiday.com/marketing/asos-gets-50-percent-customers-buy-mobile/.

156

Rich Jones, Asos’s head of product.

157

2017 for the UK and 2018 Worldwide.

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3.2 Pure Players

172. The novelty and the intrinsic features of the smartphone allow anyone with a good idea to

propose a unique service and experience by launching an app. When the App Store was created

in 2008, there were 5 000 apps launched the first year. Five years later, there were more than

730 000 apps available in both stores. In this section some examples of pure players are discussed

in popular categories: health and lifestyle, travel, and games.

3.2.1 Health and lifestyle

173. Health

158

and lifestyle

159

mobile apps aim to make their users’ lives easier. These categories of

apps are growing fast. Lifestyle apps have a penetration rate of 65%

160

among Android users, and

mobile health apps are expected to increase steadily with wearable device adoption. Smartphone

features facilitate the recording of health data. Moreover, the camera of mobile devices allows

for an interaction between app functionalities, the user, and its environment, which provides a

basis for innovative services.

Yuka

174. Yuka gives users the possibility to scan food and cosmetic products and analyzes their impact

on health. The French app was launched in January 2017, after Yuka’s developers won the 2016

Food Hackathon, a startup competition, allowing them to benefit from a year of support in their

development.

Figure 22. Yuka’s interface

Yuka, 2020

175. In November 2020, Yuka counted 20 million users

161

. In total, five million products are scanned

every day, which means that on average, 55 products are scanned per second.

158

Health apps are only for users, while m-health solutions improve the collaboration between patients and healthcare professionals.

159

Some of the lifestyle apps include: Fitness apps, Food & Drink apps, Dating apps, Music apps, Fashions apps, news, etc.

160

https://www.statista.com/statistics/200855/favourite-smartphone-app-categories-by-share-of-smartphone-users/

161

Yuka’s 2020 Press Kit, 13/11/2020, https://yuka.io/wp-content/uploads/presskit/Yuka-dossier-de-presse.pdf

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176. The app has 3 main features:

• It evaluates the quality of food according to nutritional quality and the presence of food

additives.

• Since June 2018, Yuka also checks the quality of cosmetics according to the presence of

allergens, carcinogenic compounds, endocrine disruptors or irritant products.

• For mediocre or bad products that a user has scanned, Yuka independently recommends more

healthy alternatives.

Figure 23. Yuka’s recommendations of alternative products

Yuka, 2020

177. Yuka’s success is dependent on the product database. Currently, it contains 1.5 million food and

cosmetic references. About 2 000 new products are added to the database daily

162

178. Yuka has an impact on consumer behaviors and on companies:

- 92% of users do not buy the scanned products when it is rated red on the app

163

;

- 21 food and cosmetic companies said that Yuka has impacted the composition of their own

products

164

Too Good To Go

179. Too Good to Go was created to enable everyone to fight against food waste at their own level.

Food sellers can offer unsold items that would otherwise be wasted. Consumers can obtain food

at a reduced price. The app was launched in 2016 in France and is now available in 11 European

countries. In 2021, it had 31 million users and allowed to “save” 60 million meals worldwide.

162

Yuka’s 2020 Press Kit, 13/11/2020, https://yuka.io/wp-content/uploads/presskit/Yuka-dossier-de-presse.pdf

163

Op cit.

164

These companies include Nestlé France, Monoprix, Garancia, Unilever, Caudalie, Leclerc, Fleury Michon and Intermarché.

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180. More than 60 000 food businesses are registered on the app, such as bakeries, supermarkets,

restaurants, and hotels

165

. Many food leaders joined the platform to propose their unsold

items

166

Figure 24. Too Good To Go’s interface

Apple Store

181. The strategy of the app can be qualified as a Win-Win-Win

167

strategy. Too Good To Go’s success

is based on matching the needs of consumers, producers and the planet. Both producers and

consumers take part in an environmental effort by using the app. The app’s success is linked to

its environmental commitment, aligned with current mindset change. When developing Too

Good To Go, Lucie Basch, the Too Good To Go founder, understood that apps can be activists.

Figure 25. Too Good To Go’s environmental commitment

Source: Too Good To Go, 2020

165

Ibid.

166

Examples include Casino (FR), Carrefour (FR), Auchan (FR), Edeka (GR), Spar (NZ) and Starbucks (US).

167

Business, consumers and planet benefit reducing food waste

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3.2.2 Travel

Citymapper

182. Citymapper is an example of the innovative solutions in the field of travel and route calculations

that are enabled by the geo-localization feature of mobile devices.

Figure 26. Services offered by Citymapper

Citymapper

183. Citymapper is a mobile app for urban route calculations. The start-up was created in London in

2011. The app calculates, in real time, the routes of urban transport users, by combining several

modes of transport. It considers both public transport networks, taxi, and private hire, such as

self-service rental networks, from scooters to bicycles

168

184. As of 2021, Citymapper was active in more than 80 cities worldwide including Amsterdam,

Berlin, London, Madrid, and New York, Paris, Rome, Tokyo and Vienna, and headquarters are

based in London

169

185. The app offers many innovative features. Citymapper indicates to the user where to board the

train i to be close to the exit when leaving the train and suggests the best entrance to get quickly

to the platform. Citymapper also has a live service alert concerning disruptions and offers

alternative routes taking them into account. It also indicates availability of bikes and docks at

nearby locations.

186. Its success led the app to innovate beyond the app ecosystem. Citymapper has created a

“Citymapper Pass”, a subscription to all transport modes available in London. This new pass

integrates ticketing and payment and allows the user to avoid queues. Citymapper aims to extend

this pass to other cities. Hence, with a single subscription, users are able to travel easily

everywhere.

168

In London, Citymapper includes Bus, Santander, beryl, JUMP, Mobike, Tube, Train, Turo, Zipcar Flex, Virtuo, Getaround, Ola, Kapten,

Uber, Black Cab, FREE NOW, Ferry, Tram and on foot.

169

Citymapper’s official website.

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3.2.3 Games

187. Of all the mobile apps available on the app platforms, the most popular category is gaming. Nearly

25% of all mobile apps fall into this category

170

188. Mobile has helped broaden the age range of gamers: most time spent in mobile games is by

people over 25, who do not identify themselves as gamers

171

. Europe groups many successful

mobile game developer companies.

Supercell: Clash of Clans

189. Supercell is a Finish mobile game development company founded in 2010. The company has

released five mobile games which are freemium fast-paced games

172

. Supercell’s games have

been downloaded 1.8 billion times and in 2019, the company’s revenues topped €1.4 billion

173

190. The firm’s strategy relies on developing long-lasting games. More than 8 years after it was

launched, Clash of Clans still has 36 million monthly active users in 2020. The firm managed to

keep players using their app: the app never had less than 19 million monthly active users. This

success is explained by app store and smartphone specificities:

• Games are community-based: players join teams and fight against other teams. The app

platforms offer visibility to the game and allow players to battle against million players

worldwide.

• Adaption to user behavior: most smartphone apps are opened for less than 3 minutes.

Clash of Clans and Clash Royal apps are adapted to this behavior. To upgrade levels,

players must play several times during the day, for small intervals.

Playgendary and Voodoo

191. Even though mobile games are very popular, app usage analysis reveals that users often

download an app and use it for a very short period of time: the user retention rate of mobile

applications worldwide was 32%

174

in 2019.

192. With this in mind, some game developers choose a strategy to keep users playing their games:

develop multiple small games. Once players are bored with one game, they can download

another game of the company.

170

Statista, Most popular Apple App Store categories by share of available apps, 2019

171

App Annie, State of Mobile: 2019 and beyond, 2019

172

Hay Day, Clash of Clans, Boom Beach, Clash Royale, and Brawl Stars

173

Statista, 2020

174

Percentage of users that returned to an application 11 times and more.

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Figure 27. Voodoo’s and Playgendary’s top Games by number of downloads

Voodoo’s Top Games

Helix Jump 550M

downloads

Crowd City 190M

downloads

Color Road 103M

downloads

Paper.io 253M

downloads

Hole.io 184M

downloads

Rolly Vortex 61M

downloads

Balls VS blocks 170M

downloads

Fire Balls 3D 89M

downloads

Playgendary’s Top Games

Kick the Buddy 51M

downloads

Polysphere 53M

downloads

Tank stars 31M

downloads

Partymasters 16M

downloads

SensorTower

193. Playgendary, founded in Germany in 2016 and Voodoo, founded in France in 2013

175

, have both

based their strategy on developing multiple hyper-casual games

176

. Voodoo has more than 90

mobile games available on the major app platforms, of which 12 were released in the last three

months. Playgendary has a total of 69 apps available. The firms’ success relies on developing

games that attracts many users, even if is only for a short period of time. Both developers

constantly have games in the top 10 games.

175

In 2019, Playgendary had a total of 1.2 billion downloads, and $59 million revenues while Voodoo had 2.9 billion downloads and $7.5

million in revenue. Voodoo and Playgendary respectively have 1 billion and 500 million individual players worldwide.

176

Hyper-casual games are games that have simple tap-to-play mechanics and offer instant gameplay. They don’t take much of users’ time

and can be played while multitasking.

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3.3 Seizing mobile apps’ potential: technologies and companies of tomorrow

3.3.1 Apps of the future

IoT and connected devices

194. The internet of things

177

(IoT) refers to a vast network of connected devices that share and exploit

many different types of data. Mobile apps play a fundamental role in the IoT: they constitute

the interface enabling users to interact with physical connected devices. Gartner

178

predicts

that, globally, there will be more than 50 billion connected devices by 2030

179

(Figure 28).

Figure 28. Change in the number of connected devices globally in millions (estimates)

Statista

195. More and more homes will be connected throughout Europe: in 2019, there were 20 million

smart homes. This number is expected to exceed 80 million by 2023

180

, or 23% of European

households. Hence, smart homes will be a strong driver of the future development of connected

devices.

196. A connected home has a network that interconnects multiple devices and sensors. Services range

from communications and entertainment to healthcare, security, and home automation. Users

are connected in real-time with their home, and mobile apps enable them to control and monitor

their homes.

197. Connected devices inside smart homes can be regrouped into 5 categories: control and

connectivity, smart appliances, security, media and entertainment, comfort and lightning and

energy management. Table 11 describes the different categories and evaluates their growth in

2023 in terms of number of households equipped with the different connected devices.

177

63. This term includes a wide range of devices connected via mobile apps ranging from household appliances, to cars, and even

buildings forming a concept widely referred to as smart cities.

178

Gartner is the world's leading IT research and consultancy firm. Gartner regularly publishes sector analysis of the IT market. Gartner

advises more than 12,000 companies all over the world. The company employs more than 8,000 people in 85 countries and in 2016

Gartner generated $2.4 billion in revenue.

179

https://www.statista.com/statistics/802690/worldwide-connected-devices-by-access-technology/

180

Berg Insight (2019)

2018 2025 2030

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Table 11. European households (in million) equipped with connected devices, by categories

of connected devices

Category

Description

2018

2023

Control and Connectivity

The segment includes smart speakers, central control

and communication units, programmable control buttons, and

smart plugs for the control of non-smart devices.

Growth: 173%

smart appliances

This includes connected versions of all kinds of

household appliances, provided they are connected to the internet.

Growth: 198%

Security

The Security segment includes surveillance products as well as

equipment for risk monitoring

Growth: 185%

Home entertainment

The Home Entertainment segment comprises the sale of products

and services for multi-room entertainment as well as connected

remote controls and streaming devices.

Growth: 157%

Comfort and Lighting

The Smart Home segment Comfort and Lighting

includes devices for the improvement of the living

atmosphere.

Growth: 185%

Energy management

181

The Energy Management segment covers the sale of products and

services for the control and reduction of energy consumption.

Growth: 237%

Smart Home Report (2019), Statista

Enterprise mobile applications and Enterprise mobility management

198. Enterprise mobility management (EMM) apps enable ubiquitous access to tools and processes for

workers. The rise of EMM goes hand in hand with the allover rise of the use of smartphones. The

modern workforce becomes more and more mobile, and firms thus increasingly use mobile

devices: 60% of employees use apps for work-related activities

182

199. Moreover, enterprise mobile apps are designed to improve business and employee efficiency. For

example, mobile access to emails has been shown to increase labor productivity

183

. Employees

perform work-related tasks on mobile devices during transport time, which increases the total

time employees spend working

184

200. EMM is a growing industry. Many companies plan to adapt by offering new/additional mobile

apps: 87% of companies plan to expand their app portfolio

185

. Revenues are expected to grow

from $6.9 billion in 2017 to $16.3 billion in 2021

186

181

This category is still mainly linked with smart cities, but consumers are progressively proposed devices and apps allowing them to track,

control and monitor their gas/electricity consumption.

182

Digital Strategy consulting, (2014)

183

Bertschek, I. and Niebel, T. (2016)

184

iPass, 2011

185

Apprian (2016)

186

451 Research report, 2017

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3.3.2 Innovation and apps of the future

201. In April 2020, interviews with several app developers were conducted on their view on innovation

in the app sector. As sector specialists, they shed a light on why and how they innovate, and on

the types of innovations to be expected in the future.

Innovation in the app sector

“Innovation is something that should be valued, that we should embrace and appreciate in Europe.”

F. Ronchi, president and CEO of Synesthesia

187

202. Even though apps already are an “integral part of our life” (F. Ronchi), Stanislas Dewavrin, co-

founder and CEO of Oh BiBi, explains why many innovations are still to come: “Aspects of our lives

that have not been revolutionized yet are the next frontier, anything that has been done the same

way for a century is about to change. Consider the way you're exercising your democratic rights

for example: do you think the next generation will feel comfortable doing it this way? They're used

to a level of communication and interactivity with leaders that has yet to be invented”.

203. Over the past years, there have been many hardware innovations for smartphones. According to

S.Dewavrin: “Tech is already great. We have tons of bricks that allow us to create whatever we

want”. Future innovations will come from software combined with the use of big data.

“Innovation is progress, it's a perpetual race towards unlocking competitive advantage in the segment”.

Stanislas Dewavrin, CEO of Oh BiBi

188

204. For app developers, “Innovation is vital to remain competitive”, says F. Ronchi

189

. He adds that

innovation is important both for developing new solutions for their customers, as well as for

increasing the efficiency of the internal work process.

205. In the mobile game industry, innovation is strongly driven by user behavior. An important share

of games are hyper-casual games: “games that can get the attention from anyone out there and

which let users play for a short period of time” as Kristian Nordahl, Senior Vice President

Operations at Kiloo, puts it. These games are adapted to the way users interact with a

smartphone: the phone is used for short moments, up to 10 minutes, and users go back often to

their phone

190

. K. Nordahl gave an insight into hyper-casual games’ importance: “of the top 10

games today, give and take but we will see half of those being hyper-casual games”. Users play

these games for not more than a year and then pass on to other games. This dynamic drives

innovation, as S. Dewavrin says: “you can expect a lot of innovation [in mobile games] as the cycles

are shorter and pressure to understand people in multiple situations is pretty high”

191

187

Interview with Deloitte, April 2020.

188

Interview with Deloitte, April 2020.

189

Ibid.

190

Source: Statista

191

Ibid.

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The innovation process

206. App developers transform inventions, which are new technologies or processes, into innovations.

Innovation happens when an invention is implemented in marketable products and adopted by

consumers and enterprises. Inventions relevant for app developers are big data analysis

techniques such as artificial intelligence and virtual and augmented reality. Developers use these

inventions to propose innovative apps for consumers. A. Normand, founder of Greenly, illustrates

this transformation of invention to innovation. The app’s concept is to inform users on the

greenhouse gas emissions generated by their consumption pattern, obtained via their bank

transactions. For this, detailed databases on emissions for individual brands and products are

used. In addition, as he explains, the app “takes advantage of the consequences of the European

Directive DSP2 which obliges banks to make banking information available to third party

applications with the consent of users”.

207. Innovation in app development is a two-way process. On the one hand, new needs and

expectations emanate from users: enterprises and consumers. On the other hand, developers are

aware of inventions and societal evolutions of which non-specialist end-users might be less

aware. As Synesthesia’s developers state: “We have two ways to do research: bottom-up and top-

down”. Bottom-up research is more short-term and consists of “collecting customer needs and

then develop prototypes” that can be proposed to their clients. The driving idea is to “identify the

gaps in the current technology”.

208. The top-down process concerns longer-term development of new solutions. In collaboration with

startups and research groups at universities, technologies are selected “that will bring value for

example five 5 years from now”.

F. Ronchi gave an example of top-down innovation: “People in the future will want to know how Artificial

Intelligence decisions are made, and to be part of the process. In the future, the non-transparent nature

of AI technologies will be less acceptable for users. Developers need to be ready in time.”

192

209. Developers acknowledge the importance of professional networks for the innovation process. For

Synesthesia, this network is both academic and business oriented.

210. Developers agree on the importance of training and education for app development,

encompassing both hard and soft skills. Also, in development companies, a stimulating work

environment is an important factor for innovation. Freedom and intrinsic motivation are highly

valued: “what we have are highly-skilled, highly educated people who can think: they have the

liberty to think.”, says K. Nordahl. “My colleagues are passionate: they could be musicians or

soccer players. They love [their job], and that affects the creation of the games”.

192

Interview with Deloitte, April 2020.

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Future developments in apps

“Innovation will continue, there are fantastic things to do and many problems to solve.”

P. Abel, Escapadou

211. Interviewees agreed on the importance of connected devices for the mobile app sector. In

particular, app development for medical and health-related connected devices will further

develop. If connected devices, such as connected watches, are already largely adopted by

individuals, professional adoption in the health sector is less advanced. In Europe, “Doctors are

not equipped for remote monitoring with connected objects and applications” observes A.

Normand, who previously worked at Withings. In the future, mobile apps will be used to

“aggregate telemedicine data to identify at-risk patients in heart failure, diabetes, hypertension,

etc.”

212. F. Ronchi identifies digital identity as an area which will further develop. Many technologies are

included in this topic: “connection with public administrations, healthcare, digital payments, etc.”

213. If mobility and micro-mobility are already important in the mobile app economy, Synesthesia

developers predict that “Mobility is a sector that will continue to grow. We saw the explosion of

electric scooters in cities and of ridesharing. These services, that are enabled by smartphones and

apps, were quickly adopted by users. [….] This segment will continue its expansion.”

214. Finally, developers argue that app platforms have a role to play in development of the mobile app

sector. As P. Abel says, app platforms offer “great opportunities, a fantastic medium” that “give

people the opportunity to develop apps.” App platforms he says have the responsibility to help

users find the right apps: “For the last ten years, the question has been: how can the user find the

right apps? This is a problem that Apple and Google have to address”. Some app categories

struggle to be visible on app stores. A. Normand points out that “neither Apple nor Android have

an environment category on their platform.” He defends that “If a central topic of the next few

years is the environment, and mobile applications have a major role to play in this, then it is

important to have an environment category.”

“The platforms have enabled a lot of innovation.”

P. Abel, Escapadou

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3.4 What the Covid-19 crisis reveals about the mobile app sector

215. The health crisis has raised awareness of the importance of apps in everyday life. Apps are used

today both for market activities and public use (information and education for example). Apps

went from a nice-to-have product to a must-have product: “mobile apps are moving from

complementary components to essential components.” says F. Ronchi, CEO of Synesthesia

193

216. App downloads for services such as business apps, food & drink apps, medical, and health &

fitness apps, increased significantly in 2020. For example, business app downloads went from

186 million in 2019 to 476 million in 2020 (Figure 29). For these sectors, the use of apps has

enabled the continuity of social and market activities during periods of strong physical distancing

measures imposed by governments. Although it is too early to draw conclusions, some of these

evolutions may prove to be permanent changes.

Figure 29. Downloads in millions for apps in four categories in the EU (2017-2021)

Source: SensorTower

217. Since the beginning of the pandemic, many industries prepared for the possibility of a durable

change in markets and mindsets: “We have been contacted by many players among the most

affected industries like tourism, education, event organizers… All these players are very concerned

with how this crisis is going to change the market and mindset of people. Some of them think that

this is going to permanently change some industries”, reports F. Ronchi in April 2020

194

193

Deloitte Interview with F. Ronchi from Synesthesia, April 2020.

194

Interview with F.Ronchi, CIO at Synesthesia, April 2020.

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3.4.1 The app economy strengthens the resilience of existing sectors

218. During the Covid-19 crisis, mobile apps enabled business continuity for several sectors. Apps allow

efficient teleworking, especially in the service sector (office jobs) which accounts for more than

70% of GDP in the EU. For the restaurant sector, the Covid-19 pandemic significantly affected

consumers’ relationship with food and eating. Food delivery apps allowed many restaurants to

continue to operate and meet the new expectations form consumers.

Teleworking

219. Downloads of professional applications such as mail and teleconferencing apps increased by 94%

in the first quarter of 2020, and by 55% in the second quarter. Throughout 2020 and 2021, during

periods of strong distancing requirements in Europe, the use of professional applications has

increased to a level almost three times higher than in 2019 (Figure 30)

195

. Hours spent on apps in

the business category increased from 65 million in Q1 2019 to 137 million in Q4 2020 cumulatively

in the UK, France, and Germany

196

(Figure 31). This trend illustrates that apps have played a crucial

role in working and collaborating throughout the crisis.

220. Indeed, apps related to cloud technology, collaborative work, and scheduling tools have made

teleworking highly efficient. Features such as videoconferencing, content sharing and interactive

presentations have been developed to introduce more interactivity between workers.

Figure 30. Number of downloads of business apps per quarter in the EU and in the UK, Q1

2019 to Q4 2021 (in millions)

Source: SensorTower (downloads), Oxford Covid-19 Government Response Tracker (Covid-19 Stringency Index)

195

The “periods with strong distancing requirements” in Europe and in the UK were defined with the Covid-19 Stringency Index (Oxford

Coronavirus Government Response Tracker). “The nine metrics used to calculate the Stringency Index are: school closures; workplace

closures; cancellation of public events; restrictions on public gatherings; closures of public transport; stay-at-home requirements; public

information campaigns; restrictions on internal movements; and international travel controls.”

196

State of mobile 2021, App Annie

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Figure 31. Hours per capita spent in business apps, Q1 2019-Q4 2020, UK, France and

Germany (Android phones only)

App Annie, State of mobile 2021

Restaurant delivery through apps

221. Restaurant delivery services through apps provided a level of business continuity in the restaurant

industry during the lockdown periods

197

. The success of online restaurant delivery is reflected in

its use since the start of the Covid-19 pandemic. Consumer spending through restaurant delivery

apps increased by 46% in 2020 and by 26% in 2021 in the EU and the UK combined, compared to

average growth of 19.5% over 2017-2019 (CAGR) (Figure 32)

198

Figure 32. Annual online food delivery revenue and revenue change, in the EU and in the UK,

2017 to 2021

Statista data for Online Food Delivery extracted on the 02/11/2022

197

The restaurant delivery market encompasses the delivery of meals carried out by delivery service platforms or by restaurants

themselves.

198

Statista data for Online Food Delivery, extracted on the 02/11/2022. “Consumer spending” corresponds to the gross merchandise value,

which is defined as the total sales value for merchandise/food sold through the Online Food Delivery marketplace.

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222. Worldwide, the use of food delivery apps increased significantly: the number of connections to

food delivery apps doubled in 2020

199

. In France, the number of connections to food delivery apps

(ex. Uber Eats, Deliveroo, Phenix) went from 23 million per week in January 2020 to 45 million

per week in December

200

223. Specifically during the periods of the crisis with strong governmental physical distancing

measures, food delivery apps were even more used. For example, downloads of the Deliveroo

app peaked during those periods, increasing for instance by 47% in one quarter between Q3 and

Q4 2020 in the EU and UK (Figure 33).

Figure 33. Number of downloads of the Deliveroo app per quarter in the EU and in the UK, Q2

2019 – Q4 2021 (in millions)

Source: SensorTower (downloads), Oxford Covid-19 Government Response Tracker (Covid-19 Stringency Index)

3.4.2 The Covid-19 crisis has accelerated the digital transition

224. The crisis has been an accelerator of the digital transition. In Europe, all countries have witnessed

a surge in the use of apps, which allowed the continuity of public services, business, and social

activities during lockdown periods. This increase in app utilization is set to become a permanent

trend, as stated by F. Ronchi from Synesthesia:

225. “A lot of trends we are seeing during [the sanitary crisis] are going to set permanent changes on

how people work, study, teach, get distraction and entertain in the future. The digital way is going

to be more and more wide-spread and accepted.”

201

199

Bregeon B., “Les applications mobiles ne connaissent pas la crise”, 2021. https://www.digital-mobile-retail.com/category/apps/. The

number of connections is counted on Android apps.

200

Op. cit.

201

Interview conducted with Synesthesia in April 2020.

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226. The pandemic has disrupted activities in all sectors of the economy. Even traditional sectors such

as education or events had to adapt to lockdown constraints. Digital tools and mobile apps were

key in this adaptation, as shown in the following examples:

• Education: education was provided online or via digital tools in several countries during

the crisis. Ed-tech, or the use of technology in education, proved to be a consistent

alternative for children and youth to pursue their classes during lockdowns. The pandemic

has proven its benefits and its use might further expand in the future.

“Apps are not teachers but rather facilitators. Educational apps can guide children and provide them

autonomy in their learning process. For small children, using fingers on a tablet is a very intuitive way to

interact with a machine.”

P. Abel, Escapadou

202

• Online and hybrid events: conferences, theatre shows, and concerts were held online

during the crisis. Democratization of online events or hybrid events that mix physical and

digital experiences is likely to continue in a post-Covid-19 world. Mobile apps are likely to

play a crucial role in the hybridization of events. According to F. Ronchi “For these kinds of

events, we need software and mobile apps to let people interact just as if they were going

physically to the event”

203

• Micro retail and grocery delivery: shopping at micro-retailers that sell locally made

products, and ordering groceries on mobile apps, were two trends already seen before the

sanitary crisis, but which accelerated significantly during lockdowns. Examples of grocery

delivery apps include German Gorillas, created at the beginning of 2020 and French Cajoo.

These two trends are expected to become “a big deal in the future

204

.”

227. Teleworking and digital heath are two other major trends using digital apps and that are expected

to continue to increase after the pandemic. Both are discussed in more detail below.

Teleworking

228. Since the outbreak of the pandemic, an increasing number of companies allows their employees

to work from home. This has resulted in an acceleration of digital transformation in the business

sector, and in parallel the general adoption of business apps. What was considered as an

exception before the pandemic became the “new normal” for employees, especially in the

services sector.

202

Interview with Deloitte in April 2020.

203

Synesthesia, April 2020.

204

Ibid.

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Figure 34. Correlation between the number of downloads of business apps and the Covid-19

Stringency Index, the EU and UK, Q1 2019 – Q4 2021

Source: SensorTower (downloads), Oxford Covid-19 Government Response Tracker (Covid-19 Stringency Index)

229. Business app downloads increased significantly since the start of the pandemic (Figure 30).

Moreover, a strong correlation was observed between the stringency of governmental measures

and the volume of business apps downloaded (Figure 34). The use of business apps has been

crucial in the transition to teleworking during the crisis.

230. In 2019, the mail app Microsoft Outlook was the most downloaded app with 15 million downloads

in the EU and the UK combined. In 2020, the top 3 most downloaded apps were teleconferencing

apps, totaling nearly 130 million downloads

205

(Figure 35). The success of teleconferencing marks

a new stage in the digital transition of work, where apps allow to communicate and to partially

reproduce real working conditions.

Figure 35. Top 10 of the downloaded business apps in 2019, 2020 and 2021 in the EU

Data from SensorTower, analysis by Deloitte

205

Sensor Tower data, 2021.

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231. Teleworking was first used to adapt to the crisis, but its massive adoption during lockdowns might

have permanently changed Europeans’ perception on work and workplace organization.

Figure 36. Number of teleworking days in 5 European countries in 2021

IFOP and Fondation Jean Jaurès

232. A survey on teleworking in five European countries in 2021 revealed that the desired number of

teleworking days by employees is higher than the actual number of teleworked days, by on

average 1.5 days. Indeed, the desired number of teleworking days varies between 1.8 (France)

and 2.7 (Spain), while the average number of teleworked days varies between 0.4 and 1.3 (Figure

36).

233. The difference between desired and actual teleworking rates suggests that working conditions in

Europe are evolving towards more flexibility. The digitization of work is likely to increase workers’

welfare and also firm productivity in the future (cf. section 2.2.1).

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e-Health

234. The pandemic has accelerated the adoption and use of mobile apps in healthcare. The increase

in use was remarkable for medical apps and health and fitness apps.

• The use of medical apps surged in all European countries in 2020: in Great Britain

downloads more than tripled (226%) and in the EU downloads doubled (104%). (Figure

37). In comparison, the average annual growth rate of downloads over the period 2017-

2019 was 21% in the EU and in the UK combined

206

• Health & fitness apps were already widely used before the crisis, with a 51% average

growth rate of revenues in the EU and the UK over the period 2017-2019 (CAGR). Revenue

growth was even higher in 2020, with a 72% increase (Figure 38)

207

Figure 37. Downloads of Medical apps by Country, 2017-2021, in millions

Source: SensorTower

Figure 38. Revenue of Health & Fitness Apps by Country, 2017-2021, in million USD

Source: SensorTower

206

Sensor Tower data for the period 2017-2021 on medical apps.

207

Sensor Tower data for the period 2017-2021 for health & fitness apps.

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235. eHealth apps have played an important role during the crisis. Governments and private

organizations have created apps to fight the pandemic through contact tracing, symptom

monitoring and information provision. Apps used different data collection technologies such as

Bluetooth or GPS, to facilitate analysis of contacts and contaminations. Downloads of Covid-19

tracking apps, and vaccination and testing result apps, became the most downloaded medical

apps in Europe in 2021

208

(Figure 39).

Figure 39. Top 10 of the downloaded health apps in 2019, 2020 and 2021 in the EU & UK

Source: Sensor Tower

236. In order to adapt to physical distancing recommendations, telemedicine was also widely adopted

during the crisis (Figure 40). For example, downloads of the NHS App (used in the UK) almost

tripled in 2020 and more than quadrupled in 2021

209

(Figure 39). The NHS App allows users to

access health advice, use emergency services, register as organ donors, and choose whether the

NHS can use personal data for research and planning

210

. The number of teleconsultations on the

platform Doctolib in France multiplied by 100 in one month, to reach 100 000 per day at the end

of March 2020

211

. Similarly, the demand for teleconsultations doubled for Swedish digital health

provider KRY, and the demand for the Top Doctors platform increased 30 times in Italy, Spain,

and the UK

212

237. Downloads for other medical apps such as health monitoring and health reminder apps remained

stable before and during the crisis

213

(Figure 39).

208

Sensor Tower

209

Ibid.

210

NHS Digital, Introducing the NHS App, accessed February 2022. https://digital.nhs.uk/services/nhs-app#introducing-the-nhs-app

211

https://siecledigital.fr/2020/04/24/doctolib-les-chiffres-de-la-teleconsultation-sont-tombes/

212

The rise of digital health technologies during the pandemic (europa.eu), European Parliament

213

Ibid.

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Figure 40. Map of European Teleconsultation Platforms in 2020

Source: Source: HealthAdvances (2020), Deloitte 2022

238. As the crisis continued, the sector received more financing. In 2020, investment in Europe for

digital health increased by $ 750 million

214

. Venture capital and private equity have invested

massively in European health-techs, mainly in telemedicine, operations, software and

insurtechs

215

. Large funding rounds included $ 150 million for the Swedish teleconsultation

platform LIVI

216

and $ 30 million for the German dermatology platform Formel Skin. By 2021,

the combined value of European-based health-techs was estimated at $ 41 billion, reaching six

times its 2016 value

(Figure 41)

217

Figure 41. Combined value of European health tech companies ($B)

Source: Healttechs in 2021 in 6 charts, Sifted

214

https://www.digitalhealth.net/2020/01/livi-raises-118m-to-fund-ambitious-expansion-plans/

215

Insurtechs are firms that use technological innovations to expand and optimize the sector. Examples include Wefox in Germany and Alan

in France.

216

https://www.digitalhealth.net/2020/01/livi-raises-118m-to-fund-ambitious-expansion-plans/

https://www.eu-startups.com/2021/12/german-healthtech-startup-formel-skin-gets-e30-million-boost-to-make-dermatology-more-

accessible/

217

The healthtech trends of 2021, in six charts | Sifted

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239. The crisis has improved consumer perception of telemedicine which for many was a new way of

accessing health services. In France, only 7% of the population used teleconsultations before the

first lockdown, compared to 22% after

218

. Between 2019 and 2020, the proportion of French

patients with a positive opinion of telemedicine rose from 60% to 73%, and that of health

professionals from 70% to 84%

219

. In the United Kingdom, appointments through the National

Health Service (NHS) App increased by 111% in March 2020, with a rapid increase in adoption

rates on patient portals

220

240. The growing use of eHealth services during the crisis has contributed to the uniformization of

regulatory frameworks across Europe, allowing countries with lower institutional readiness to

catch up with more advanced countries

221

. The increased adoption of public reimbursement for

teleconsultations during the crisis is an example of this. Progress in regulation shows that

governments are eager to develop telemedicine and digital health at scale, setting the framework

for after the crisis.

“The pandemic has helped pushing doctors and hospitals into more digital environments. Doctors

started receiving their patients remotely, and when Ministries of Health started to reimburse remote

visits, suddenly, everything was moving in the right direction very fast. What the Covid-19 crisis has

done with telemedicine for doctors, it has also done with decentralized clinical trials for research

stakeholders. And Andaman7 is helping with these new opportunities.”

V. Keunen, CEO of digital health platform Andaman7

241. The rise in the number of mHealth research publications reveals a growing scientific interest in

the field, and a willingness to further develop the sector

222

. Apps allow to optimize health

procedures like monitoring of chronically ill patients or assisted cognitive rehabilitation.

Moreover, data collected through mobile apps support clinical diagnosis and medical analysis.

mHealth innovations will help shape the future of the health sector.

218

France Assos Santé, Les français et la e-santé, Juillet 2021

Diapositive 1 (france-assos-sante.org)

219

Odoxa pour l’Agence du Numérique en Santé, Rapport Baromètre Vague 1 et 3

220

Rachel Hutchings, The impact of Covid-19 on the use of digital technology in the NHS, August 2020.

https://www.nuffieldtrust.org.uk/files/2020-08/the-impact-of-covid-19-on-the-use-of-digital-technology-in-the-nhs-web-2.pdf

221

G. Chittim, A. Pappas, J. Bomba, “The Changing Fortunes of Telemedicine in Europe – Past, Present and Future beyond Covid-19”, Health

Advances Blog, May 2020

222

Cao J, Lim Y, Sengoku S, Guo X, Kodama K, Exploring the Shift in International Trends in Mobile Health Research From 2000 to 2020:

Bibliometric Analysis, JMIR Mhealth Uhealth 2021;9(9):e31097.

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Conclusion

242. Mobile apps have introduced significant changes in the life of Europeans across consumer and

enterprise frameworks. These were especially accelerated in the context of the crisis. This report

has quantified the app economy in the EU and UK and discussed the increase in the use of apps

in all aspects of daily life, a trend expected to further develop in the post-Covid-19 era. The

health crisis notably raised awareness of how mobile apps have become an essential part of life.

The report furthermore discusses the active European landscape of small and medium-sized

enterprises (SMEs) in the app development sector.

243. Our research demonstrates that app stores have a positive impact on the mobile app

ecosystem

223

- App stores enable disintermediation between buyers and developers which is one way

through which app stores reduce transaction costs for app developers and their users.

- App stores reduce entry barriers for developers and therefore increase the level of

competition.

- App stores increase consumer trust and security by creating a trustworthy platform for users

and developers.

244. The direct revenues of the app economy in the European Union amounted to €95.7 billion in

2021

224

– these are revenues for mobile app developers. In comparison, box office revenues in

the EU stood at €3 billion in the same year

225

, and revenues for the provision of sporting and

recreation services were estimated at €168 billion

226

245. Including direct and indirect contributions, the app economy generated €210 billion in revenue

throughout all sectors of the EU’s economy

227

. The breakdown of this sum is as follows:

• Direct contributions are estimated at € 95.7 billion with the following categories:

i. Advertising revenue: € 19.2 billion

ii. Paid downloads, subscriptions, and in-app purchases: € 6.5 billion. Mobile games

represented 63% of this revenue.

iii. Contract work: € 66.4 billion

iv. Mobile commerce: € 3.6 billion is attributable to the app sector (out of a total of

€ 499 billion total revenue)

• Indirect contributions: € 114 billion in indirect contributions due to additional business and

household consumption triggered by app development.

In terms of value-added, the app economy represented 0.7% of the European Union’s GDP in

2021.

223

App stores refer to all app platforms including Google Play store, Apple App Store, Amazon app store, etc.

224

See Appendix 4.2.

225

Eurostat, Symmetric input-output table at basic prices. NACE R93, Sporting services and amusement and recreation services.

226

Ibid.

227

See Appendice 4.2.

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246. In the United Kingdom, the direct revenues of the app economy in 2021 amounted to

€38.4 billion.

247. Including direct and indirect contributions, the app economy generated €86.5 billion in revenue

throughout all sectors of the UK’s economy:

- Direct contributions are estimated at €38.4 billion with the following categories:

i. Advertising revenue: €13.8 billion

ii. Paid downloads, subscriptions, and in-app purchases: €2.1 billion. Mobile games

represented 55% of this revenue.

iii. Contract work: €21.3 billion.

iv. Mobile commerce: €1.2 billion is attributable to the app sector.

v. Indirect contributions: €48 billion in indirect contributions due to additional business

and household consumption triggered by app development.

- In terms of value-added, the app economy represented 1.5% of the UK’s GDP in 2021.

248. The total number of jobs generated throughout all sectors of the EU’s economy by the app sector

in 2021 is estimated at 1.4 million, and 400 000 in the UK.

249. Europe is generally considered to benefit from highly skilled app developers and is home to a

rich ecosystem of SMEs in the app development sector. These include pure players and agencies

that work for the outsourcing market. The UK has the most app development firms in absolute

terms, but smaller countries such as Bulgaria, Poland, Romania, Estonia, Lithuania, and Croatia

show a relative specialization in app development with two to five times more SMEs in the sector

per unit GDP than the UK.

250. Nearshoring contributes to the success of app development SMEs in Europe. Notably, app

development firms in above-mentioned relatively specialized countries often work for clients in

for example Northern and Western Europe, leveraging their high-skilled, cost-competitive

developers. Cost difference between these countries and developers in Northern or Western

Europe can reach a factor of two to three. In addition, nearshoring benefits from low risk due to

proximity (language, culture, time-zone). Indeed, the remote delivery model works very well in

the app development sector, resulting in intra-European trade, benefits for both clients and

developer firms, and more opportunities for SMEs and startups throughout Europe.

251. Apps have permeated business models in several ways. Many firms integrated apps into the

way they provide services to their clients. For example, European airline and railways companies

facilitate the booking and travel process with mobile apps. Moreover, specific features of mobile

phones (geo-localization, accelerometer, camera, touch screen) have enabled the development

of new services.

252. Furthermore, pure players, companies that have built their activities only on apps, have

confirmed their importance in the ecosystem. Well-known examples are ride-hailing apps, which

use geo-localization, and mobile games. Europe counts innovative mobile game developers and

specialized firms such as Citymapper or Greenly, which are transforming consumer behavior.

253. In interviews conducted for this study, several app developers stated that future innovation in

apps will not come from hardware developments but from the software side.

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254. The mobile app sector has been resilient during the Covid-19 pandemic. Growth of the app

sector decoupled from the evolution of GDP in the EU and the UK. While real GDP in the EU

decreased in 2020 by 7.8%, and by 11.5% in the UK, the mobile app sector has seen an

acceleration in its growth trajectory in 2020: In the EU, real growth of consumer spending on apps

was 30% in 2020, and in Great Britain 29%. Comparison of pre-covid market estimates and 2021

growth of app store revenue suggests that the long-term growth trajectory is unaffected.

255. This resilience is related to the fact that the use of apps such as mobile games was not impaired

by physical distancing requirements. Furthermore, mobile apps have provided innovative

solutions to deal with the crisis. They contributed to the continuity of public services, social and

business activities during lockdown periods. Teleworking apps allowed desk-type jobs in mainly

the service sector mainly to pursue activities. In the health sector, covid-19 tracking-, vaccination-

and testing-apps became the most downloaded medical apps in Europe in 2021. Apps for

teleconsultation facilitated the provision of health services. Finally, the use of food delivery apps,

such as Uber Eats or Deliveroo, increased dramatically during periods with strong physical

distancing requirements, allowing restaurants to continue to operate.

256. The pandemic has accelerated the digital transition in many sectors. Trends initiated during the

Covid-19 pandemic are set to become permanent, as the crisis has shaped new ways of life. For

example, the increased use of telemedicine changed the publics’ view on this practice: for

example, in France between 2019 and 2020, the proportion of patients that had a positive opinion

on telemedicine grew from 60% to 73%, and that of health professionals from 70% to 84%

228

Along the same lines, teleworking was first used to adapt to the crisis, but its massive adoption

during lockdowns has changed Europeans’ perception on work and workplace organization.

257. App developers shared how they think their solutions will continue to permeate more areas of

our lives. Areas where the use of mobile apps will further increase in Europe are hybrid events,

education, and healthcare (online health records, connected medical devices, etc.). In addition,

5G networks now enable higher connection density which allows the use of many connected

devices in the Internet of Things (IoT). The value created by mobile apps in the European

economy is expected to grow significantly in the years to come, and apps will continue to

introduce innovations that will shape the future of European consumers and firms.

228

Odoxa pour l’Agence du Numérique en Santé, Baromètre Vague 1 et 3

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4 Appendices

4.1 Methodology to determine the size of the smartphone-only population

258. For each country in the European Union and for the UK, the size of the mobile-only population

was estimated by taking the difference between the number of people having access to the

internet via a mobile and via a fixed connection.

259. Data on the number of fixed broadband and mobile broadband subscriptions at the country level

are provided by the ITU. We assumed that a mobile subscription provides a personal access to

the internet (for one person) and a fixed subscription for the household. World Bank data on the

size of households per country were used to estimate the number of people per country that have

internet access via a fixed connection.

260. The penetration rate is calculated with respect to the population aged 10 to 80 years old, as we

consider that this is the population likely to have a mobile phone

229

261. Finally, we are interested at people who have only a mobile access to the internet and use a

smartphone. At the European level, 75%

230

of mobile subscriptions concern smartphones. This

final adjustment results in a smartphone-only population of 21% in the EU and 14% in the UK.

229

https://techcrunch.com/2016/05/19/the-average-age-for-a-child-getting-their-first-smartphone-is-now-10-3-years/

230

Eurostat data

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4.2 M-commerce revenue

262. Criteo reports that M-commerce represents 47% of e-commerce in the EMEA region in 2020

231

By hypothesis, we assumed this share the same for 2021.

263. E-commerce revenue from consumers was obtained from Eurostat data gathered through the

2021 survey on 'ICT usage and e-commerce in enterprises'

232

. The data provides the share of

turnover due to e-sales. Only 7% of total enterprise turnover in the EU stems from consumer e-

spending (2020)

233

. These figures were combined with Eurostat’s enterprise turnover data to

obtain the value of e-commerce due to consumers. Total turnover in EU27 was € 13 394 billion in

2020, and in the UK, € 2527 billion in 2019 (Table 12).

264. An estimate for 2021 was obtained by assuming that enterprise turnover increased with the same

growth rate as GDP. GDP projections for 2021 were used from the OECD (Table 12).

265. The value of total M-commerce revenue in 2021 was obtained by determining the consumer

share of e-commerce equal to 3.3% = 47%*7% (Table 12).

Table 12. Estimate of the value of M-commerce in the EU and in the UK in 2021

2019

2020

2021

Source

Total output EU27

(billion euro,

current)

13 394

15 154

Eurostat 2020 value

(NAMA_10_GDP)

Total output UK

(billion euro,

current)

2 527

2 302

2 542

Eurostat 2019 value

(NAMA_10_GDP)

Real growth EU27

5,2%

OECD

Real growth UK

-9,7%

6,9%

OECD

CPI EU27

1,05055

1,07583

OECD

CPI UK

1,00881

1,033041

OECD

Share E-commerce

websites

Eurostat, 2021 survey on

'ICT usage and e-commerce

in enterprises'.

Share M-commerce

47%

Criteo

Value M-commerce

(billion euro,

current)

441

499

Calculated

Value M-commerce

(billion euro,

current)

Calculated

Source: Eurostat, OECD, Criteo

231

Criteo, november 2020 (App Commerce Booming in APAC | Criteo)

232

https://ec.europa.eu/eurostat/statistics-explained/index.php?title=E-commerce_statistics

233

Note: The figure of 7% corresponds to the turnover from web sales. The turnover from EDI-type sales is not taken into account (source

E-commerce statistics - Statistics Explained (europa.eu) )

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4.3 The Covid-19 Stringency Index

266. The Covid-19 stringency index is a composite measure based on nine response indicators

including school closures, workplace closures, and travel bans, rescaled to a value from 0 to 100

(100 = strictest)

234

. If policies vary at the subnational level, the index shows the response level of

the strictest subregion.

267. From the daily Stringency Index data, quarterly averages are calculated for each country of the

area of interest (the EU + the UK). Then, these quarterly averages are weighted by the weight of

the country in the GDP of the area to obtain an aggregate index for the EU and the UK.

268. The results highlighted 2 periods of high stringency measures. The first one occurred during the

second quarter of 2020 and coincides with the outbreak of the virus in Europe. The second one

lasted during three quarters, from Q4-2020 to Q2-2021.

Figure 42. Quarterly average weighted Covid-19 stringency index by GDP EU+UK

Source: GDP data World Bank, Covid-19 stringency index https://ourworldindata.org/grapher/covid-stringency-index?tab=chart

234

Covid-19 Stringency Index (ourworldindata.org)

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