Russia’s mobile app economy

A huge market with huge potential
Russia already offers a huge opportunity for app publishers, and appears to hold the
potential for further growth in the future.
According to eMarketer, smartphone penetration in Russia is currently around 55%, and
set to grow to over 70% in the next three years, equivalent to almost 20 million additional
smartphone users.
In December 2013, a policy of technological neutrality was introduced in the Russian
telecommunications market to aid the development and expansion of 3G and 4G mobile
internet. Licenses renewed or granted after the introduction of this policy require
operators to provide mobile internet services to any urban areas with populations over
10,000 people. This is likely to lead to significant growth in mobile internet penetration.
After the economic crisis in late 2014 to early 2015, currency fluctuations have stabilized.
Following this, revenue in the Russian market grew considerably over a short period of
time. If the economic stability continues, it is likely that growth in the app market will
accelerate.
The current market conditions and potential for future development make Russia an
excellent opportunity for growth or international expansion.
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Leveraging opportunities in games and social
Games drive the majority of app store revenue in Russia, consistent with app markets
around the world. Strategy and Role Playing game subcategories are particularly strong
in the Russian market, while Casual and Puzzle see a smaller revenue share than they
do worldwide.
Games see a higher proportion of downloads in Russia than they do worldwide, yet direct
app store monetization is not as strong. Careful consideration of local preferences for
game genres and effective localization is therefore vital to success in the Russian market.
Apps within the wider social networking space are booming in Russia, led by Mail.Ru
Group’s VK and OK.RU. The social networks provide a mobile content distribution
network with extensive reach, just as Facebook has moved into news and video delivery.
With the declining share of revenue for the Entertainment category, growth in social
networks will be a key area of interest for content providers and competing platforms.
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PowerPoint PresentationInternational games and local content
The strong performance of international game publishers indicate Russia is a promising
market to target for international expansion. Publishers looking to monetize from the app
store directly need to consider local preference for strategy and role-playing games.
For publishers outside of games, local content is key, and for overseas publishers it may
be worth considering local partnerships. Of the top 10 companies by revenue outside of
games, only two were based outside Russia – Badoo was founded by a Russian-born
entrepreneur, and Rakuten’s Viber also has a Russian-born co-founder.
Publishers looking to advertise apps in the Russian market need to consider the social
network landscape, as Western social networks have a less extensive reach there. The
strong local players are starting to offer alternative options for app marketers, such as the
app install ads launched by VK in late 2014.
Source: https://www.appannie.com/indexes/all-stores/report/
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