Apple’s senior vice president of Services, Eddy Cue recently shared achievements of the company’s services in 2022 in an open letter. Saying that 2022 was the “groundbreaking year for entertainment”, the letter stated that Apple services hit 900 million paid subscriptions and App Store paid $320 billion to developers offering digital services and goods since the platform launched in 2008.

by Liz Rustia

Its annual year-end report is published last month, sharing how much money developers have made from the App Store and listed other accomplishments around its Services business.   Developers have earned $320 billion from the App Store since its beginning, but an analyst believes revenue from the platform was down year-over-year in December.

App Store revenue

Tim Cook at WWDC21 on June 7th, 2021.
Source: Apple

Based on the stats provided by Apple, analyst David Vogt believes the report suggests that App Store revenue in December 2022 was likely down 7% to 8%, based on a flat take rate year-over-year. UBS also estimates Apple’s blended take rate in the App Store is between 22% and 24%.

While Apple doesn’t provide any granular context to this headline number, its development on a year-over-year basis can be used as a rough proxy to track overall App Store revenue:

  • Through year-end 2018: $120BN.
  • Through year-end 2019: $155BN (+$35BN from 2018);
  • Through year-end 2020: $200BN (+$45BN from 2019);
  • Through year-end 2021: $260BN (+$60BN from 2020);

With $320BN in cumulative App Store developer payouts through year-end 2022, developer payouts in 2022 are calculated to be $60BN — equivalent to the value of payouts in 2021 and representing a decline in relative year-over-year payout growth from 33% in 2021 to 0% in 2022. In other words: Apple paid developers the same amount of money in 2022 as it did in 2021. Per the chart below, 2022 was the first year since at least 2016 for which annual App Store developer payouts did not grow.

The composition of App Store revenue may change from year to year, which makes comparison difficult. It’s important to note that all of the changes that Apple has implemented to its platform fee — from reducing the fee from 30% to 15% for subscriptions after one year to introducing the App Store Small Business Program — would increase developer payouts as a percentage of total App Store revenue. The fact that developer payouts remained flat from 2021 to 2022 likely indicates that overall App Store revenue growth was weak in 2022 relative to prior years, if not flat or down.

The slowdown in App Store revenue growth can be attributed to the App Tracking Transparency Recession; the degradation of app advertising efficiency caused by Apple’s App Tracking Transparency (ATT) privacy policy has likely resulted in slowing platform revenue growth as app advertisers Apple’s new restrictions on targeted advertising. Last year, an iPhone software update required developers to obtain users’ consent for tracking — a policy known as App Tracking Transparency — and most people didn’t opt ​​in.

The change wiped out billions of dollars from advertising revenue on Facebook, Twitter, Snap and YouTube last year, and the games industry is still grappling with the fallout. Many developers who used to be able to target players most likely to spend big in their games based on their behavior were no longer able to do so.

While Apple expects Services to grow, UBS believes it will continue to be affected by foreign exchange rates, macroeconomic factors such as inflation, and softness in digital advertising and gaming.  But let’s not forget the effect of the pandemic. These figures are comparing Y to Y and in 2021, the World was still in the middle of the pandemic. So, comparing 2022 Apple App Store quarterly results to the same quarter in 2021 will always show a downturn as paid app downloads (specially entertainment apps) surged because of the pandemic lock down and many were stuck at home.  And as what Dmitry Buchman, co-founder of Playrix, creator of Gardenscapes and Homescape saidThe market, as you can see, is unpredictable, it is difficult to say what will happen next year exactly. We hope to grow.”

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