Ask around for the latest stats on mobile app markets and most professionals will point to research group App Annie as the top authority.
Do that for Saudi Arabia and you will end up with some very misleading results.
App Annie tracks app store revenues directly but its analytics tool only tracks country-specific stores. However, about 50-60 percent of Saudis use US app stores to buy from as well, meaning App Annie's data is less useful there as it doesn't track purchases made in foreign stores.
I realized this last month while developing a report on the mobile games market there for a client. This is what happened.
First, I collected and collated the scarce amount of secondary research available:
Global games research firm Newzoo reports their estimated current annual gross revenue of the total games market in Saudi Arabia in 2015 to be $203 million. Newzoo and SuperData - another firm I contacted for the report - are online game research firms that apply bottom-up methodologies to determine their best estimates on revenues, including point-of-sale research, and primary and secondary research:
If the average mobile share of games revenue globally is 30 to 35 percent, the estimated mobile share of Saudi Arabia’s games revenue will be around $70 million:
Mobile games represent about 90 percent of total app revenue in app stores in most markets around the world, so I projected that onto Saudi Arabia’s total app revenues. That estimate means the total app market in Saudi is just under $80 million:
But then my client, who has access to an enterprise account at App Annie, reported this: the top 100 apps revenue - games and others - for the Apple App Store and Google Play was $2.1 million in July.
If the revenue App Annie tracks is similiar month-to-month, it adds up to a total annual revenue of about $25 million.
Revenue from other app stores is so minimal as to not have an impact on these figures.
The gap between one side's gaming revenue and the other side's total
That means there's a gap in revenue tracking of Saudi Arabia's app market. Secondary market data of only gaming apps from Newzoo and SuperData comes to just over $70 million, yet App Annie's data indicates the full app market is worth $40-45 million less than that.
The client’s first thought, naturally, was that I was in the wrong.
I immediately sent emails over to Newzoo, SuperData, and App Annie. The first two responded promptly while I have yet to hear back from App Annie.
Both SuperData and Newzoo confirmed that the $70 million calculation for the gaming app market was more or less a reasonable estimate.
“If just 10 percent of the population played mobile games and spent just $1 per month, that would already surpass the [total] App Annie figure,” said Sam Barberie of SuperData.
Saudi preference for US app stores
Sander Bosman of Newzoo said that in any market on average “the top 100 apps roughly account for 60 percent of the total app store revenues”.
The fact that a large amount of revenue comes from apps not in the top 100 can be surprising, but it doesn’t explain what is happening in Saudi Arabia.
Then I checked in with one of my developer pals who currently has a top 20-ranked game on the Saudi iOS game charts. He said their Arabic-only title receives 60 percent of its revenue from the US app store even though they know that 90 percent of those buyers are still from Saudi, based on their IP/location.
So let’s summarize what we have so far:
I've estimated the mobile games market in Saudi Arabia at $70 million.
App Annie's top 100 app revenue data comes to only around $25 million.
Newzoo states that the top 100 only represent 60 percent of total revenues, and my friend says most of his revenue comes from Saudi buyers in the US app store.
If that's true, then based on the figure extrapolated from the $2.1 million number App Annie's total revenue for Saudi Arabian apps still only comes to about $40 million - much lower than the figure gleaned for the gaming ap market from Newzoo and SuperData.
The moral of the story is that App Annie falls very short in tracking emerging markets like Saudi Arabia.
But it also reveals a striking challenge that app stores face: the localized editorial teams at Apple and Google are engaging a segment of users that contribute only one-third of total Saudi revenues.