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EC: 5 million jobs in app sector by 2018

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The EU’s app sector has gone from zero to digital superhero in less than five years. By 2018 it could employ 4.8 million people and contribute €63 billion to the EU economy according to a report presented in Brussels today. The study, carried out by GIGAOM and NUI Galway for the European Commission, shows that Europe’s app developers are up to the challenge of taking the global lead. Currently, EU and North American developers generate the same levels (42% each) of app revenues in crucial EU and US markets. Although the future is bright, developers have raised concerns about the skills gap, connectivity and fragmentation which could put the app boom at risk.

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Today the app economy employs 1 million developers, and 800,000 people in marketing & support posts. This could rise to 2.7 million developers + 2.1 million support staff by 2018. EU buyers and advertisers spent €6.1 billion on apps in 2013, 30% of total global app spending, growing to €18.7 billion in 2018. Consumer spending combined with advertising and contract work could lead to €63 billion annual revenue for the app sector within five years.

Neelie Kroes, Vice-President of the European Commission, said “In the face of increasing youth unemployment, these figures give me new hope. The app sector is one area of the digital economy where Europe can really lead. But we have to address concerns about connectivity and fragmentation – yet another reason to complete the telecom single market!”

The study shows that:

  • EU games app developers lead the field: 28 EU leading companies created 40% of the top 100 grossing apps in the EU and US. Three of the top-five companies are Nordic games developers (1st King.com, 2nd,Supercell, 5th Rovio) with German, French, Spanish and UK app developers also finding success outside their native markets.
  • Growing market, growing jobs: In 2013, developers earned €11.5 billion making apps for consumer goods, banking, media, retail and other clients. They can expect to earn up to €46 billion through contracts of this nature in 2018. The app boom is creating jobs, for example contract developers Golden Gekko (London/Barcelona) plans to grow its staff 40-50% next year and London-based Grapple Mobile was a 3-person firm three years ago, employs 120 now, and intends to double next year.
  • Addressing the digital skills shortage: roughly 38% of independent and in-house developers said EU companies had difficulties competing with US salaries, 31% and 33% said that developer education was lagging, around 30% said startup developers lacked business expertise, and quarter of all surveyed said there were not enough developers. Worryingly only 9% of developers are female.

The Commission is tackling Europe’s digital skills crisis in a number of ways. Firstly, by partnering withindustry and other organisations in the Grand Coalition for Digital Jobs. In parallel, by working with schools to bring digital skills right into the connected classroom. Finally, by supporting grassroots initiatives such as EU Code week, organised by Neelie Kroes’ young advisors. The first ever EU Code Week reached 10,000 people in 26 countries in November 2013. This year’s Code week will take place on 11-17 October 2014.

Technical bottlenecks and fragmentation were also a cause for concern. Roughly a quarter of developers wanted to see 4G develop more quickly in Europe. Around 35% were frustrated by the lack of interoperability between platforms like Android / iOS. A majority of developers complained of their de facto total dependence on platforms developed by American giants, with subsequent revenue impact.

Neelie Kroes said “All apps and all mobile devices rely on broadband networks. Yet today, the framework for European telecoms is shattered and constrained. Meaning poor wireless connectivity, connections that can’t easily cross borders, apps and services that are blocked or throttled by network operators, prohibitive surcharges to use your mobile abroad. In tomorrow’s world, where even cars are connected, where we rely on mobile apps even for our healthcare – resolving them will be absolutely critical. “

Information on European App sector

The report, “Sizing the EU App Economy” was presented at a workshop in Brussels where Neelie Kroes,Rovio’s Chief Marketing Officer Peter Vesterbacka and representatives of the digital community discussed the future of the EU app economy.

Apps are self-contained programs or pieces of software which are mostly often designed for mobile devices or social platforms. For example, apps can advise you on the most efficient public transport route, help you bank online, track your runs or bike rides, match you with a potential partner, give health advice, games to entertain and relax. On the business side, many companies develop apps in house, or through contractors to support their main business, whether they are in financial services, consumer goods retail, media, etc. They use apps to add to their customer experience and utility, and to help market and sell their goods and services. According to estimates, 94.4 billion apps were downloaded globally during 2013.

A digital single market of more than 500 million EU consumers has huge potential for Europe’s digital business and app developers, but many are frustrated by inconsistencies which make it hard to sell their bright ideas across borders. The Commission is working to simplify EU rules on copyright and licensing todeliver greater access to online content. An ongoing consultation will feed into a white paper on copyright due before Summer 2014. Greater connectivity, including the high-speed 4G and broadband connections which fuel apps, are among the targets of the Commission’s proposals to deliver a Connected Continent, currently being debated by the European Parliament.

The study is part of Startup Europe, a Digital Agenda initiative supported by Neelie Kroes to promote ICT and web entrepreneurship in Europe and to help the companies flourish in Europe.

It includes six activities: The Accelerator Assembly, the European Crowdfunding Network, The Web Investors Forum, the Leaders Club, the Startup Europe Partnership and improving Web Skills via MOOCS (being launched in 2014) Activities to map the startup ecosystem, such as this study, support Startup Europe and help define evidence-based policies which can help web entrepreneurs to start and stay in Europe.

In addition, a the Public Private Partnership on the Future Internet can help with funding and mentoring web entrepreneurs that use the technologies developed in previous projects. Funding is also available through Horizon 2020.

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