Apple’s App Store suffered a 5% year-on-year decline in net sales in September, according to a note from Morgan Stanley analyst Erik Woodring. This is the biggest drop in App Store revenue since the financial services company began tracking its data.
wood ring said gaming was the main driver of the decline, as the industry experienced a 14% year-over-year revenue decline. He noted that net sales growth for the top 10 markets for the App Store slowed, excluding regions such as China, Taiwan and South Korea, which grew or stayed the same. These top 10 markets account for nearly 87% of App Store revenue.
The analyst’s comments were based on data from Sensor Tower, which told londonbusinessblog.com that Apple posted nearly $6.9 billion in revenue in September, down from $7.2 billion last year. It said the percentage difference between its own analysis and Morgan Stanley’s note is likely due to rounding.
Sensor Tower also noted that Google Play had an 8% year-over-year revenue decline, with gaming spending down 14%. The company published a report earlier this week signaled global app revenues are down 5% year-over-year.
Morgan Stanley blames the global economic downturn on declining App Store revenue. As a result, people are shifting their spending from digital goods to more essential items.
“We believe the recent App Store results show that the global consumer has placed a little less emphasis on App Store spending in the near term as discretionary revenues are allocated to areas of pent-up demand,” Woodring said. wrote in the note.
Morgan Stanley believes the December quarter could deliver better results due to the extra week of sales and currency movements. Notably, Apple recently increased the App Store prices for in-app purchases in multiple countries in Europe and Asia to adjust the exchange rate compensation. Last month, a report from analyst firm Apptopia noted that developers have increased the prices of apps by 40% year-over-year.
According to analyst predictions Apple registered $19.71 billion in services revenue in the quarter ended September. While that shows a 7.9% year-over-year growth, the number falls short of Wall Street’s forecast of $20.25 billion.
Apple did not immediately comment on the story.