App Store Growth Slows for Apple in 2022: IDFA and ATT

Apple's App Store experienced a significant slowdown in growth during 2022, with developer earnings showing little change from 2021. Developers earned over $320 billion since 2008, an increase of $60 billion from the $260 billion reported in 2021. This suggests that the amount developers received in 2022 was comparable to 2021. The analysis estimates Apple's total revenue for both 2021 and 2022 to be approximately $82.68 billion, based on a 20/80 rule where 20% of revenue is subject to a 15% fee and 80% to a 30% fee, factoring in the "Small Business Program" introduced in December 2020.

In comparison, Google's Play Store revenue dipped in 2022, despite Google also lowering commissions to 15% for most developers starting July 2021. Data from Sensor Tower and Data.ai indicate this trend. The document questions whether Apple's IDFA (Identifier for Advertisers) and ATT (App Tracking Transparency) changes, introduced with iOS 14.5, are the primary cause of the mobile game industry slowdown. While often cited by industry leaders, the industry exhibited signs of a slowdown pre-pandemic, and other factors such as the economy and a return to pre-pandemic consumer behaviors likely play a significant role.

An examination of publicly traded mobile game companies with market caps over $100 million reveals that companies with a market cap under $250 million saw an improvement in their EBITDA margin compared to pre-pandemic levels. The analysis of aggregated Last Twelve Month (LTM) revenue, marketing spend, and EBITDA margin for various market capitalization sizes (over $1 billion, $250 million-$1 billion, and under $250 million) provides an overview of the mobile gaming industry's financial health over the past five years. The long-term outlook suggests these changes could be positive, fostering a shift away from arbitrage-based user acquisition and content cloning towards more selective investments in game design and user experience.