Apple’s App Store revenue fell by 5% year-on-year in September, with games revenue down by 14%, according to Sensor Tower analytics.
Morgan Stanley, which carried out financial modeling based on the data, said that this was the biggest drop seen since it first started tracking, back in 2015. The fall is likely explained by two factors …
The App Store saw declines in markets including the U.S., Canada and Japan, Morgan Stanley analyst Erik Woodring wrote in a report Monday. His analysis was based on data from Sensor Tower, a firm that tracks app downloads and sales.
Morgan Stanley said the main culprit for the drop was gaming revenue, which was down 14% in September, according to the data.
During its last earnings call, Apple suggested that year-on-year comparisons are still impacted to some degree by the strong demand for at-home entertainment during the pandemic. While lockdowns were long over by this time last year, it took time for consumers to return to pre-COVID-19 behavior in terms of visiting restaurants, movie theaters, and so on.
Second, sanctions against Russia, and related disruptions to gas supplies, have seen energy prices rise steeply around the world. That is resulting in double-digit inflation in many countries, leaving people with less disposable income. Even many of those who haven’t yet been hit are being more cautious with their discretionary spending in anticipation of tougher times ahead.
App Store revenue could well fall even further this month, as price rises come into effect tomorrow, in Europe and other parts of the world. This increases the cost of both app sales and in-app purchases by a full 20% increase in prices, as Apple protects its revenues against the strong dollar.
Regions affected are Chile, Egypt, Japan, Malaysia, Pakistan, Poland, South Korea, Sweden, Vietnam, and every territory that uses the euro as its currency […]
For those in the eurozone, apps and in-app purchases priced at €0.99 will now cost €1.19. An item that costs €9.99 will have its price increased to €11.99. Apple reminds developers that the new App Store prices will take effect on October 5, 2022.
Additionally, the Cupertino company continues to face antitrust pressures, mostly surrounding its cut of App Store revenue. The latest development is a new investigation in South Korea into net charges exceeding 30%.
However, the bank says that overall Services revenue will continue to grow, though it predicts that the rate of growth is slowing.
Apple doesn’t report App Store sales but includes it as part of the services business, which also encompasses warranties and subscriptions such as Apple One. Morgan Stanley expects Apple’s total services revenue to show an 8% increase in the September quarter.
Apple has said only that it expects Services revenue growth in the quarter to be “less than 12%.” It can take comfort from the fact that Morgan Stanley estimates that Google Play Store revenue fell almost twice as much last month, at 9%.
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