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Mobile Apps to Hit More Than Seventy Billion Dollars Revenue Driven by Explosion of Diversity: Digi-Capital Mobile Apps Investment Review

Digi-Capital, an investment bank for mobile apps and games, forecasts >$70B mobile apps revenue by 2017 in its Mobile Apps Investment Review Q1 2014. (please include link to Review in articles).

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Digi-Capital Managing Director Tim Merel said:

"Mobile apps are hot, and games have taken the lion’s share of revenue so far. We think the balance is going to change, with other app categories using new approaches to win. We’re already seeing SaaS-like App as a Service models emerging, and can’t wait to see what happens next.

Mobile apps could reach >$70B revenue globally, with non-games apps to double revenue share from 26% to 51% by 2017 (61.3% CAGR 13-17F).

Dramatic mobile app usage growth is disrupting incumbents, with mobile usage having grown 5x in 4 years to ~20% of media consumption last year (50% CAGR 09-13).

Mobile apps investment has doubled across categories since Q3 2013, with $10B invested in the last 12 months.

Mobile apps M&A hit a record >$35B in the last 12 months (>$16B excluding Facebook/WhatsApp). At over $7B (excluding Facebook/WhatsApp), Q1 2014 M&A was >2x Q1 2013 M&A. Including Facebook/WhatsApp, Q1 2014 M&A was >7x Q1 2013.

Mobile app public and private valuations have varied significantly across categories, with some app types valued much higher than others relative to their performance. For investors and acquirers, not all apps are created equal.

Free downloads and in-app purchases dominate revenue (>90%), but not for all app categories. In-app purchases have monetized most effectively for mobile games (40% downloads = 74% revenue share). In-app purchases for all other app categories have monetized 4x less effectively (60% downloads = 26% revenue share). We’re seeing the SaaS model being adapted to operate as App as a Service, which looks like one way that a range of app categories can lift their monetization.

The apps market is creating billion dollar companies at an accelerating pace globally, delivering outsize returns for entrepreneurs and investors in Asia and the West.

With massive value being built quickly, recent blockbuster deals have focused on strategic growth and defensive moves to ward off potential threats."

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