European App Economy Will Be Worth £52 Billion By 2018, Says EU

Research commissioned by the EU suggests that European mobile app developers will earn as much as €63 billion (£51.8bn) in revenue by 2018, when the sector will employ almost five million people. Currently, app developers in Europe generate €17.5 billion (£14.4bn) in combined revenue.

“Many of the current market dynamics have the air of a gold rush in the Wild West. A relatively small number of astute, opportunistic companies have quickly learned how to make the economics of the fledgling app economy work and dominate app store revenues,” wrote Mark Mulligan and David Card from GIGAOM, which carried out the study.

“But companies selling through consumer app stores are just one part of a much broader ecosystem that includes independent developers acting as contractor guns for hire, small and large agencies, and the developer workforce within enterprises. At the risk of exhausting the metaphor, the surest bet in a gold rush is selling shovels.”

Shovel time

Today, there are approximately one million application developers working across 28 countries of the European Union. According to the study, in five years, this number will swell to 2.8 million and the total number of people working in the sector, including support and marketing staff, could reach 4.8 million.

By this time, EU businesses are expected to spend €18.7 billion (£15.4bn) a year on mobile apps. Consumer spending combined with advertising and contract work could lead to €63 billion annual revenue for the app sector.

The app market is indeed growing at an incredible pace: for example in 2011 Grapple Mobile, a software development house from the UK, had just three employees. By the middle of 2013 it had 120 staff and in September it was acquired by banking technology firm Monetise, in a deal worth almost £40 million. Next year, Grapple Mobile expects to hire another 120 people.

The report states that three of the most successful app companies on the European and American markets today are Nordic games developers King.com, Supercell and Rovio. German, French, Spanish and UK app developers are also finding success outside their native markets.

Employment opportunities

About a third of developers participating in the survey said they were worried about the state of technical education in Europe, and complained about the lack of business expertise at start-ups.  The report also highlighted another worrying trend – only nine percent of European app developers are female.

Researchers suggested that in the future, there might be more work in offering “services for hire” than many people realise, but at the same time, being an independent developer can result in lower rates.

“In the face of increasing youth unemployment, these figures give me new hope,” commented European Commissioner for Digital Agenda Neelie Kroes. “My message to young Europeans is: go grab yourself one of these three million new jobs in the app economy. These are really exciting opportunities if you are ready for them. The app sector is one area of the digital economy where Europe can really lead.

“But we have to address concerns about connectivity and fragmentation – yet another reason to complete the telecom single market!”

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