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Tech

What a US$166-billion mobile market will look like

App Annie predicts games, short-form content and AR/VR apps will define the mobile market this year—and the kids digital space is leading the charge.
January 30, 2017

While the kids app market continues to be in a state of flux, one thing is for certain: mobile’s momentum will not be stopped. A recent study from market researcher Childwise found mobile phones to be the default multimedia device among five- to 16-year-olds in the UK, and a whopping 65% of global digital media time was spent on mobile phones last year.

Providing perspective on where things are headed next, data provider App Annie has released its list of predictions for 2017, which, apparently, will be defined by more smartphone-driven AR growth, short-form content and a surge in gaming apps.

App Annie says gross mobile ad spend, including app store and advertising, will reach US$166 billionup significantly from last year’s US$129 billion. Gross in-app spending will reach US$65 billion, with most of the revenue coming from games. This bodes particularly well in the kids space, with Toca Boca constantly putting out new appsits latest being Toca Hair Salon 3and Turner releasing a new Ben 10 game. (Both of these apps currently rank at the top of the kids app chart in the US.)

App Annie also anticipates gross in-app spending to account for US$101 billion, with revenue share being split between social media, video platforms and games. It expects mobile video ad formats to experience the fastest revenue growth. Brand advertising will also be a strong contributor, generating 12.5% of mobile in-app ad spends. Mattel is already getting in on this action by doubling down on its influencer campaigns in 2017.

One of the predictions already affecting the kids space is the explosion of short-form video. App Annie estimates that Facebook and Snapchat are poised to be the major disruptors in this space. In fact, in October 2016 time spent by US Android users on YouTube grew by 45%.

Voice search is also going to rise, which is not surprising in light of Accenture’s recent study that showed younger people are more likely to use voice-enabled digital assistants in the future. The tech made significant strides at CES this year, which introduced Mattel’s Aristotle, for one.

Smartphone-based AR elements are also expected to greatly infiltrate the mobile space this year, especially following the popularity of Pokémon GO. The kids space is already seeing this, with Osmo receiving US$24 million in funding from Mattel, HMH, Collab+Sesame and Shea Ventures. MIT is also joining the fray, launching a startup accelerator to create AR and VR games. However, don’t expect to see Pokémon GO copycats, says App Annie.

Finally, VR is one to watch in the kids space. Companies like Google with the Daydream and Samsung’s Gear VR are emphasizing on-the-go VR rather than PC-based devices like the HTC Vive and the Oculus Rift, and App Annie expects mobile VR will outperform the latter. VR is already ushering in a new era of storytelling for kids, with many AR and VR apps launching last year to capitalize on the trend.

About The Author
Alexandra Whyte is Kidscreen's Online Writer. Contact her at awhyte@brunico.com

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