The release of the Apple iPhone and the launch of Google’s Android have jump-started a practically inexistent industry of smartphone app developers. Over the next five years, however, developers will likely struggle to satisfy the digital consumer, according to a new study from IBISWorld.

“With an increasing number of mobile Internet connections and low barriers to entry, the number of developers has been growing rapidly, and the structure of the industry is not mature enough to accommodate them,” said Sarah Kahn, industry analyst. The industry quickly became oversaturated, with players competing to develop new apps and advertise them to an exigent mobile audience. Developers have also been struggling to make a profit, as an increasing number of apps are offered for free. Monetization has been migrating away from paid apps and advertisements to a “freemium” business model that offers a pricing strategy in which a mobile app is available for free, and advanced features and functionality are acquired as in-app purchases. This model is widely successful, and revenue is expected to grow 27.8% this year alone.

Over the next five years, developers will likely struggle to satisfy the digital consumer. Smartphone app developers are expected to increasingly rely on the development of web apps that are run by a browser, typically written in HTML5 and function across multiple platforms; consequently, they will rely less on the development of native apps that are integrated with the device’s respective operating system. Big data and predictive analytics are also expected to allow developers to create predictive apps.

“With the increase in private information stored on smartphones, developers will likely struggle with mobile app security,” said Kahn. As developers attempt to differentiate apps in the oversaturated industry, opportunities for mobile app marketing are also on the horizon. Due to the decreasing average app price, industry revenue is projected to climb at a slower annualized rate over the five years to 2019.

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