China’s double digit in-app sale decline in streaming and gaming platforms in 2023 dragged global sales down by 2 percent. Yet, video streaming platforms like TikTok and Disney+ drove up in-app spending by 11 percent despite the global decline. The TikTok in-app purchase that accounted for the bulk of its income was the purchase of credit that can be used to tip favored creators and live streamers.
TikTok became the first app to surpass $10 billion in cumulative consumer spending on in-app purchases. This helped power mobile app sales to a totally new year, especially in a year that the revenue from games was down. This showed high resilience in the game industry while the industry as a whole dealt with a global drag down of 2% due to China’s double-digit sales decline.
The director of corporate marketing and insights at data.ai stated that “Social apps and the creator economy pioneered new pathways to monetization beyond advertising.” TikTok laid the groundwork through its content creator tipping mechanism. In 2024, direct consumer monetization in social apps through in-app purchases is set to grow 150% to $1.3 Billion as competition ramps up.”
Spending in apps grew in comparison to games as consumers spent on streaming, user-generated content and dating apps. While this is the case, advertising was still the bigger revenue driver with a rise of 8% in 2023 to $362 billion, which accounted for two-thirds of mobile sales.
As an overall too, consumers increase their time spent on their smartphones again with Indonesia ranking at the highest with over 6 hours per person per day. The average among the top ten markets were 5 hours of daily app usage. This indicates the spending in apps increased by 3% in 2023.
What was new this time was that artificial intelligence became a key pathbreaker for attracting new users. With generative AI and interactive chatbots, users were enthralled with options.
TikTok’s milestone might be a fresh start to the year of AI, growth in consumer tech and technology as a whole.