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The state of the European app economy through the lens of Finland, France, and Turkey

by Carl Livie on Nov 2, 2018

Recently, a study by The App Association showed that the American app economy was on track to hit $950 billion. It’s clear that the app economy in the US is healthy, but what about Europe?

On the whole, the European app economy is quite robust, accounting for a third of global revenues. Europe also has the second highest smartphone adoption rate in the world behind the US with 70% penetration, which is expected to jump to 81% by 2025.

According to a study by the Progressive Policy Institute, by the end of 2017, about 1.9 million people were employed within the European mobile app economy, which shows a growth of about 15% over the previous year. Think that’s small pickings? Guess again. The study reported that “28 countries of the European Union plus Switzerland and Norway have been able to create more app economy jobs than the United States since the App Store was introduced in 2008.”

The broader technical trends still apply in Europe. IoT, AR/VR, and AI now find their way into every meaningful conversation about where the European app economy is going (spoiler alert: it’s all good). However, there are challenges that European countries must overcome in order for the European app economy to keep growing. For example, limited availability of financing, a shortage of skilled digital workers, and the dominance of US platforms are all factors that impact revenue. Additionally, the need to constantly upgrade infrastructure and improve access to data are barriers to growth for many.

To capture the economic diversity of Europe, I’ve selected a country with different market characteristics from the north, the east, and the west of Europe. By probing the individual app economies of Finland, France, and Turkey, one can gain a sense of the rich diversity of the European app economy as a whole.

Finland: Great local talent, but foreign brands reign

At the end of 2017, there were some 54,000 app economy jobs in Finland. That equates about 2.2% of all jobs, which ties with the Netherlands for the #1 spot in Europe in terms of “app intensity”, the number of app economy jobs as a percentage of all jobs. Compare that to just 1.1% in the US, and an average about .84% throughout Europe.

viaplay-finland

Finland’s top-grossing apps on iOS, however, are largely the products of US and global brands, such as Tinder, Candy Crush, Spotify, and Netflix. Netflix’s market share is threatened In Finland, as it is elsewhere in Scandinavia, by Finland’s only home-grown product to crack the Top 10: Viaplay, a Nordic equivalent of Netflix that distributes both third-party and original programming.

These competing data points—a saturation of local jobs for developers, but a distinct user preference for foreign-created experiences—form a unique characteristic of Finland’s app market.

France: Western Europe’s most successful app exporter

With 260,000 total app economy jobs, France is Europe’s third largest app economy employer, settling in just behind Germany with 311,000 and the UK with 330,000. Checking in at 1% app intensity, meaning one in every 100 jobs is an app economy job, France sits just above Europe’s average rating in the category.

Top-Dating-Apps-by-Monthly-Active-Users-and-Revenue-Google-Play-France-Dec-2015

Source: App Annie

Top-grossing apps include both US stalwarts, such as Tinder and Candy Crush, and local entrants, such as dating app AdopteUnMec, which is free for women, but paid for men. That concept has been successful enough to make AdopteUnMec France’s top grossing non-gaming app in 2015. The model and brand have been successfully exported to Spain, Italy, Brazil, and Argentina.

This ability to successfully find users across borders and language barriers is a distinct hallmark of apps developed in France. As stated in the European Parliament’s May 2018 briefing note on the European app economy, analysis shows that “spatial proximity seems to support cross-border app trade, despite distinct languages; France is especially strong in exports.”

Turkey: Mobile economy’s inflection point is very near

About 1,800 miles to the south and east sits Istanbul. The city is the largest tech hub in Turkey, which has a thriving app economy with unique characteristics. Home to nearly 90 million, Turkey is one of the largest app markets in the world by downloads, checking in at #8 as of 2018, according to App Annie.

Turkey app economy 2017

Source: App Annie

As of this writing, Google Play owns more than 80% of all the downloads in Turkey, so we’ll take a look at the top-grossing app info on Android. Tinder and Clash of Clans are the big names that crack the Top 10, but the remaining titles are a blend of foreign games such as Zynga’s Texas Hold’em, and culture/language-specific apps such as video chat app Azar, the free-to-use and overall top-grossing app in Turkey.

While gaming and communications dominate Turkey’s downloads now, App Annie calls for quick near-term growth in the shopping (expected to rise 28%), entertainment (30%), and food & drink (56%) segments. These growth projections align well with some other key market data: Growth in number of downloads as a whole is slowing, but time spent in-app (a.k.a. app usage) continues to grow, signalling transition into a period of rapid growth and spending.

Looking ahead

As user demand for increasing intelligent experiences proliferates, and emerging techs like IoT and AI create more objects and processes, apps will become the European user’s “interface to their home, their travel, their entertainment, their car, their schools, their health providers, and their state and local governments,” according to the Progressive Policy Institute’s study. In other words, that inflection of data and connectivity is going to impact usage and dwell times, and marketers will have to determine if consumers are using different channels to do the same things and whether they can monetize across those experiences.

All in all, the European app economy is doing well. The European app economy is recognized as a competitive, fast-growing, and innovative sector, and app job intensity seems to be increasing in Europe, even as it declines in the US and elsewhere.

But, in order for the European app economy to continue growing, EU member states and candidates alike must strengthen research and innovation, create fair tax policies, and foster consumer protection and confidence. While these issues will ultimately be addressed by the European technical community as a whole, the local business and technical realities, as well as the key influencers for users ultimately craving more or less localized content and experiences, will continue to drive great variety in the app market, leading to an even more robust app economy.

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