A tech analyst at Morgan Stanley, Erick Woodring reports that Apple App Store net revenue fell by 5% in September mainly in the U.S., Canada, and Japan markets.
For Q1, 2022, Sensor Tower reported that the iOS App Store saw flat growth because of the normalization of the mobile market in the post-Covid-19 pandemic era. The firm’s recent report revealed that all mobile game genres saw a 9.6% decline in downloads and in-app purchases in the first half of 2022 due to macroeconomic conditions worldwide, along with the revival of social activities and privacy changes like App Tracking Transparency on iOS.
Basing his analysis on data from Sensor Tower, Woodring wrote that it was the “steepest drop” App Store revenue saw since 2015 because of a drop in gaming revenue.
App Store’s saving grace will be Apple Services
In his new note, Woodring wrote that App Store gaming revenue was down by 14% in September, because Apple customers may be prioritizing spending on essentials commodities in the wake of a looming recession and soaring inflation.
“We believe the recent App Store results make clear that the global consumer has somewhat de-emphasized App Store spending in the near-term as discretionary income is reallocated to areas of pent-up demand.”
Having said that, the analyst believes that the revenue of Apple Services will see an 8% increase in the September quarter to make up for the revenue lost on App Store. Apple Services include Arcade, Fitness+, TV+, Music, iCloud, Apple Pay, and others.
Apple’s services unit has been a focal point for investors, who want to see iPhone and Mac customers spend more after buying their devices. In the June quarter, Apple reported a 12% increase in services revenue to $19.6 billion.
Morgan Stanley analysts also predict a 9% drop in sales on Google Play, the primary Android app store.
Apple will announce its Q4, 2022 earnings on October 27 which will cover sales in the July – September period.