European Mobile Market Update: Revenue Will Continue to Rise to $20.8 Billion by 2022, But COVID-19 Pandemic Slows Growth

Europe’s mobile apps market is projected to grow to $20.8 billion by 2022, nearly $3 billion less than previously expected, according to a new forecast based on Sensor Tower Store Intelligence data. This revision to our original forecast represents the both the near- and long-term impact of the global COVID-19 pandemic on the European app economy.

Our new revenue projection through 2022 represents an increase in revenue of 85.5 percent from 2019 and a compound annual growth rate (CAGR) of 22.9 percent over the subsequent years. Previously, we had forecast a CAGR of 27.9 percent for the European mobile market.

App Store and Google Play Spending Continues to Rise

App Store user spending is set to rise to $11.5 billion over the next three years, up 91.4 percent from 2019’s $6 billion of revenue, at a CAGR of 24.2 percent. Google Play revenue, meanwhile, is expected to grow 78.8 percent from $5.2 billion in 2019 to $9.3 billion in 2022, at a CAGR of 21.4 percent.

The App Store had previously been forecast to grow at a CAGR of 27.8 percent to almost $12.6 billion in 2022, while Google Play was expected to increase at a CAGR of 27.9 percent to $10.9 billion. The change in forecast suggests that revenue on the Android marketplace will be hit harder by the pandemic than on Apple’s store.

The App Store’s share of user spending is predicted to increase from 53.7 percent to 55.3 percent in 2022. Prior to the global pandemic and regional lockdowns across Europe, the share of the two mobile stores was expected to remain static at 2019 levels.

When it comes to downloads, Europe is set to grow to approximately 30.4 billion in 2022, up 26.1 percent from 2019, at a CAGR of 8 percent. The largest year-over-year increase over the next several years will come in the near-term, with App Store installs set to grow 23.4 percent from 2019 to 2020 to 8 billion, while Google Play downloads will increase 18.2 percent to 20.8 billion in 2020. This is largely down to the COVID-19 pandemic and European citizens looking for entertainment, and ways to shop and work remotely.

Overall, App Store downloads are expected to grow at a CAGR of 9.4 percent to nearly 8.5 billion in 2022—above the previous forecast of 7.6 billion. Google Play, however, is expected to grow at a CAGR of 7.5 percent to 21.9 billion, slightly lower than our previous projection of 22 billion.

Great Britain, Germany, and France Lead User Spending

Great Britain is forecast to lead revenue growth for Europe, with user spending hitting $3.7 billion by 2022, up 73.8 percent from 2019. Germany, meanwhile, is set to rank No. 2 for user spending in the region, increasing 66 percent from 2019 to $3.4 billion. France will round out the top three, accumulating $2.4 billion in revenue, up 77.4 percent from 2019.

All three countries are expected to make less from user spending in 2022 than previously forecast, with anticipated revenue for Great Britain dropping by approximately $400 million, Germany by $300 million, and France by $400 million.

Russia is set to be the top country for downloads in the region, picking up 6.6 billion new installs in 2022, up 24.8 percent from 2019. Turkey is predicted to rank at No. 2 in 2022, with 4.2 billion downloads, up 38.9 percent from 2019, while Great Britain will rank at No. 3, accumulating close to 2.7 billion downloads in 2022, up 21.9 percent from 2019. These figures are higher than our previous forecasts suggested, adding an extra 700 million downloads between these three countries alone in 2022.

Entertainment Jumps to No. 2 Category for Revenue

Across the App Store and Google Play combined, Games is forecast to be the top category for user spending, growing 62.3 percent from $7.5 billion in 2019 to $12.1 billion in 2022. While a substantial increase from 2019, the change from our pre-COVID-19 lockdown forecast has shaved off approximately $800 million from our previous forecast.

Entertainment is now forecast to be the No. 2 revenue-generating category in 2022, instead of Social Networking, increasing by 126.9 percent from 2019 to close to $1.1 billion. Social Networking, meanwhile, will rank No. 3 for user spending, with revenue rising 116 percent from 2019 to almost $1.1 billion. Forecasts for these two categories have dropped by approximately $200 million and $300 million respectively.

Overall, the revenue share for the Games category is expected to fall to 58 percent in 2022 compared to non-gaming, dropping from 66 percent in 2019. Its share on the App Store will fall to 44 percent, from 54 percent in 2019. We had previously predicted this to fall to 39 percent. The Games category will still take the lion’s share of revenue on Google Play, dropping from 81 percent in 2019 to 75 percent in 2022. We had previously forecast this to drop to 73 percent.

Games will remain the single biggest driver of downloads across the stores, generating 13.7 billion installs across Europe in 2022, up 31 percent from 2019. This is up by approximately 1.3 billion from our previous forecast for the category.

The Utilities category is expected to rank No. 2 in 2022, hitting 2.2 billion downloads, up 11.9 percent from 2019. Photo & Video, meanwhile, will round out the top three, accumulating close to 1.6 billion installs, an increase of 15.1 percent from 2019. These figures are in line with our previous expectations.

Slowing Growth and an Uncertain Future

The COVID-19 pandemic that has gripped Europe and sparked lockdowns across the region is forecast to decrease user spending in 2022 by more than $1 billion on both the App Store and Google Play. Despite this, however, downloads are overall expected to increase, potentially leading to an increase in ad revenue opportunities.

It’s important to note that Europe is expected to continue to be a growing market, despite a slower than expected increase in consumer app spending. One key factor that countries around the world, not just in Europe, will be keeping a close eye on is how long the pandemic and lockdowns continue for, and the lasting effect this will have on the economy. The lockdown has forced people around the world to develop new habits, many using their phones and apps for both entertainment and necessities such as shopping and fitness. But how quickly economies across Europe and globally can rebound is an open question.

Note: The revenue estimates contained in this report are not inclusive of local taxes, in-app advertising, or in-app user spending on mobile commerce, e.g., purchases via the Amazon app, rides via the Uber app, or food deliveries via the GrubHub app. Refunds are also not reflected in the provided figures.