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Why can’t we make revenue generating apps? India contributes less than 1% of global in-app revenues | by Deepak Abbot | Growth Bug — Technology | Product | Growth


India is world’s no.1 in app downloads on Android with 23bn downloads in 2021, almost 2.5x of USA. This make Google Play Store one of the most powerful platforms in the country as they control almost 15bn downloads if we exclude side loads and alternate app stores. Last year Google announced, apps that are offering in-app purchases of digital goods, have to use Google Play’s billing system and pay 30% commission to Google. While this rule existed but Google never enforced this strictly. Currently, most apps offering digital music, IAP, OTT subscription are using external payment gateways paying anywhere between 0% to 2% MDR.

Apple also charges 30% commission from all digital goods purchase and they never relaxed that rule hence even today all apps (Indian and Global) pay upto 30% commission.

Google’s announcement last year irked Indian app developers, who saw this as a monopoly tax. As a result, one alliance of startup founders has filed a petition before the Competition Commission of India seeking interim relief from Google’s new Play Store policy. CCI is also probing Apple, based “on the complain filed by Together We Fight Society,”

In USA, Epic Games filed suit against Apple in which court ruled that app developers should be allowed to place links to direct its users to bypass apple payment gateway. Indian developers are fighting the same battle and I really hope they force Apple & Google to allow apps to use external payment gateways.

While this battle is important but we have a bigger issue at hand which in my opinion should be addressed too. Before going further on this thought, let’s see some numbers which may help me establish my point later:

  • India has over 29k developers who have published 150k App on Play Store. This accounts for less than 3% developers on App stores.
  • Of 15bn downloads in 2021, Indian Apps would have garnered over 4bn downloads.
  • Majority of 4bn Indian apps downloads came from popular apps like Meesho, PhonePe, Paytm, Sharechat, Flipkart, Amazon India, Jio, Hotstar followed by a long tail of smaller apps.
  • Most of the big apps mentioned above do not sell digital goods (in-app items) and are not directly impacted by this google ruling.
  • Globally in-app economy is driven by gaming, dating, entertainment, education & utility,
  • India roughly generated $600mn of in-app revenues in 2021 but Indian Apps accounted for just 10% of this number. Let me rephrase this — $60mn of in-app revenues came from Apps published by Indian developers.
  • Globally in-app revenues by Apple & Google were in the range of $85bn
  • India contributed 7% of this but Indian Apps contributed a paltry 0.7%.
  • Over 230 Apps & Games generated $100mn each. Except hotstar, none was even closer to $10mn

The fight put up by some of the founders is a fundamental one and I fully support them, but I want to highlight a much bigger issue here — why is our share of in-app revenue is meagre 0.7% while our download share globally is over 30%. Why are startups based in India worried about this number? Why are global gaming, dating, entertainment apps are taking away the money from Indians? Are we not building quality games & Apps to extract the money from Indians?

Solving for 30% commission is not going to solve the gap we have in in-app revenues. While some can argue that high commission dissuades many developer due to rising cost of producing quality apps but this stands true for global apps too. If Apple & Google were to remove this forced billing, we are not likely to see the boom in in-app revenues.

Some possible answers to Indians not generating IAP revenues:

  1. Local opportunities are far bigger around ecommerce, finance, health, agri, education leaving little talent to build global focused product around gaming, entertainment, utilities which drives in-app revenues
  2. Slightly controversial but may be we don’t know how to build quality games which can extract dollars from gamers pocket. Or may be all the good talent has been scooped up by card or cash gaming companies?
  3. Ease of payments? While google has introduced UPI as a payment mode but it is still not seamless 1 click payout most games expect.
  4. Indian developers making money through App store do not get counted in India due to their company’s domicile?
  5. Freemium apps pricing policy doesnt suit India as international developers do not have India specific pricing making it difficult for masses to experience it?

If you can think of some good reasons and suggestions on how can we increase the share of Indian developers in app store economy, do comment or mail me at dabbot@gmail.com



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