Apple vs. Google: Why Apple's App Store Revenue Leads Google Play In Q3

Over a decade after Apple (NASDAQ:AAPL) launched the App Store, the growth days still aren't over. Overall mobile consumer spending in the third quarter jumped 23% to hit $17.9 billion, according to new estimates released this week from mobile-analytics specialist Sensor Tower. That spending includes revenue from upfront purchases, in-app purchases, and subscriptions.

Expectedly, Apple again beat out Google Play in terms of monetization, even as the Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) subsidiary enjoyed far greater smartphone market share.

More revenue on fewer downloads

The App Store brought in gross revenue of $14.2 billion in the third quarter, up from $11.6 billion a year ago. In comparison, Google Play revenue grew 24% to $7.7 billion. In other words, Apple represented roughly 65% of all spending on mobile platforms, with Google representing the other 35%, despite the fact that it powers over 75% of all mobile devices globally, according to StatCounter.

Furthermore, Google Play enjoyed almost three times as many first-time app installs in the third quarter compared to Apple, again underscoring how much weaker monetization is on Android. The search-giant's platform is more popular in emerging markets where consumers have less discretionary income.

Apple and Google only recognize the net revenue they receive as commission in their financial accounting. Both companies take a 30% cut of digital sales including in-app purchases, while that cut drops to 15% for long-term subscriptions. Apple includes App Store results in its services business, while Google Play is aggregated within Google's other revenues. Neither company has reported third-quarter results yet.

Games are the bulk of spending

Mobile gaming continues to be incredibly important to the industry, accounting for an overwhelming 74% of spending. That's down modestly from the 76% share of mobile spending that games represented a year ago.

Apple users opened their wallets more for mobile gaming than their Android counterparts, with the App Store generating $9.8 billion in revenue from that category. Google Play brought in $6.5 billion from games, according to Sensor Tower's data. Google Play saw roughly 8.7 billion mobile-game downloads, towering over the App Store's 2.4 billion mobile-game downloads.

Apple has always enjoyed a significant advantage over Google in terms of app monetization, which the Mac maker likes to frequently point out to developers. The company has paid out a cumulative $120 billion to developers since the App Store launched in 2008.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Apple. The Motley Fool has the following options: short January 2020 $155 calls on Apple and long January 2020 $150 calls on Apple. The Motley Fool has a disclosure policy. This article originally appeared in the Motley Fool.