App Economy Bigger Than Hollywood, Says Horace Dediu

Apple had a great year, and did (some) developers, who cashed in on app sales that totalled $10 billion paid to them in 2014 alone. When the App Store launched in 2008, no one thought it could surpass Hollywood’s box office revenues. Well, developers earn much more than actors, on average, and there is a reasonable explanation for that. Horace Dediu of Asymco has the arguments and the numbers.

In just six years, the app economy directly related to Apple has created 627,000 jobs in the US alone. Now, the App Store has more than 1.4 million apps available for download, and customers spent $500 million on apps in the first week of January 2015.

Since the launch of the App Store, Apple has paid $25 billion to developers. The chart inserted below shows that amount in relation to the iTunes group gross revenues, which includes licensing, OS X, book billings, app billings, video billings, and music billings.

Itunes group gross revenue

As you can see from the above image, the app business is now much bigger than music, TV programs, and movie rentals and purchases put together.

Although the totals for Domestic (US) Box Office are not the complete Hollywood revenues picture, Apple’s App Store billings is not the complete App revenue picture either. The Apps economy includes Android and ads and service businesses and custom development. Including all revenues, apps are still likely to be bigger than Hollywood.

But there’s more to the story. It’s also likely that the App industry is healthier. On an individual level, some App developers earn more than Hollywood stars and I would guess that the median income of app developers is higher than the median income of actors.[4] The app economy sustains more jobs (627,000 iOS jobs in the US vs. 374,000 in Hollywood) and is easier to enter and has wider reach. As the graph below shows It’s also growing far more rapidly.

App store billings

Dediu compares the app economy to Hollywood: 2014 yearly box office results show a total revenue of slightly above $10 billion. Apple paid more than $10 billion to developers last year. However, if we count the total amount paid to developers, the app economy becomes bigger than Hollywood, Dediu emphasises.

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