Apple App Store's revenue dropped by five percent in September, according to a note from Morgan Stanley analyst Erik Woodring.
The five percent dip in App Store's revenue is the biggest drop in the service's revenue since the financial services company started monitoring its data in 2015, as per TechCrunch.
Gaming Sector Revenue Plunges by 14%
According to a report written by Woodring on Monday, the decline in App Store was observed in the market including the U.S., Canada, and Japan.
Woodring's analysis was based on the Sensor Tower's data. It is a firm that monitors app downloads and sales.
One of the biggest reasons for the decline of App Store review is the 14 percent year-on-year revenue plunge of the gaming sector.
According to Woodring, apart from China, Taiwan, and South Korea, the net revenue for the top 10 markets for App Store decelerated. The previously mentioned markets grew or stayed flat.
The top 10 markets where App Store decelerated comprise almost 87% of the platform's revenue.
TechCrunch noted that Apple recorded almost $6.9 billion in revenue for the month of September. The said recorded revenue from the previous month was down from last year's $7.2 billion.
According to CNBC, because of economic concerns, Apple customers may be spending less on digital items. Consumers are currently experiencing "soaring inflation and recessionary risks" worldwide.
"We believe the recent App Store results make clear that the global consumer has somewhat de-emphasized App Store spending in the near-term as discretionary income is reallocated to areas of pent-up demand," Woodring stated in the note.
Read Also: App Store's 5 Most Expensive Apps - More Expensive Than iPhone?
Decline in App Store Revenue is Due to Economic Downturn
According to Sensor Tower, Google Play will also have an expected 8% revenue decline year-on-year due to the 14 percent drop in the gaming sector's spending.
Meanwhile, Morgan Stanley analysts expect Google Play's drop in revenue to be 9% in September.
Due to rounding, there is a difference in the percentage between Sensor Tower's analysis and Morgan Stanley's note.
Earlier this week, Google posted a report saying that the revenue for global app declined by 5 percent year-over-year.
According to Morgan Stanley, the global downturn in the economy could be a contributory factor for the declining revenue of the App Store.
Because of soaring inflation and recessionary risks, people are more likely to purchase essential items than digital items.
According to CNBC, Apple takes between "15 percent and 30 percent of app purchases and in-app purchases made on iPhones and other Apple devices."
While the tech company doesn't report App Store sales, Apple includes it as part of the services business.
Based on Morgan Stanley prediction, in the September quarter, the company's total services revenue will have an 8% growth with $19.71 billion.
Despite the year-on-year growth in services revenue, the number still did not meet the $20.25 billion expectation of Wall Street.
Because of the extra selling week and currency exchange rate fluctuations, it is expected that the December quarter may have better results, according to Morgan Stanley.
It can be recalled that Apple recently increased the App Store prices for in-app purchases across multiple countries in Europe and Asia due to currency exchange compensation.
Read Also: Apple App Store to Allow External Payments in the Near Future
