Signs That The Digital Sky Is Falling

Bummer. A new report from Moffett Nathanson asks a pertinent question that you just know is going to lead to a bad answer: “Has U.S. Digital Consumption Growth Run Out of Steam,” this latest missive asks. Let the grim news commence:

“For the first time in 2Q2016, aggregate Internet minutes growth in the U.S. across all devices has slowed to single digits,” the summary begins. That may mark the “beginning of the end” of the “multi-year cycle of mobile driven volume growth which has propelled outsize usage and revenue gains across the digital ecosystem.”

(I’d like to say, “Well said!” but really....)

The report notes a couple things: We seem to have topped out on smartphone sales, so revenue growth won’t come from being able to charge for more and more users jumping in, but only from justified CPM increases based on increased consumption. (On the other hand, that does seem to be the way the rest of the ad world functions.)



And secondly, app users tend to go to the same places and do the same thing. Moffett Nathanson says 73% of smartphone users time is occupied by just three of their apps, and 93% of their time by their top ten apps. (This mimics our cable habits. Give us 500 channels and we'll watch 16.)

The researchers conclude, it’s vital to have a “seat at the table” by now, or else you’re likely not to get fed much of a meal at all. (MediaPost's Wayne Friedman fleshes out other parts of the report in his story.)

Here’s another shocker. While the hours growth among all smartphone users went up 16% in June alone, the growth was disproportionately the result in use by the population aged 55 to 64--and you can insert your negative conclusion right here. That means good news for Facebook, where granny goes, and bad news for apps like Snapchat.  Use by millennials when up only 3 to 4%.  

Maybe everything’s topped out?

Well, maybe. “The solidification of mobile apps’ position as the dominant Web portal may be setting up a new walled garden,” this report says. Some of the problem is that “discoverability” at app stores “is flawed and has made it very difficult for new apps to attain a critical mass of monthly users.”

By MoffettNathanson’s count, in the last  year the number of apps with more than five million unique visitors has grown only 7%. The number of apps with more than 20 million unique visitors in the last year has grown by exactly. . . one.

Next story loading loading..