BRUSSELS: The app sector in the European Union (EU) is forecast to generate €63bn in annual revenue by 2018 and will employ nearly 5m people, according to a new study for the European Commission.

The study, "Sizing the EU App Economy" from Gigaom Research and the National University Ireland, Galway, found the EU's app economy currently employs 1m developers as well as 800,000 people in marketing and support roles.

But this total is expected to grow significantly over the next five years, leading to the employment of 2.7m app developers in 2018 plus 2.1m people in support roles, or 4.8m staff in total.

App developers in the EU earned €17.5bn in 2013, the report found, with €6.1bn of the revenue coming from in-app sales, in-app spending and advertising (30% of total global app spending) and perhaps a surprisingly large €11.5bn from contract work.

Of note for marketers is the finding that revenue from consumer spending and advertising is expected to more than triple to €18.7bn by 2018. Revenues for the entire sector will rise to €63bn once contract work is factored in, the report claimed.

"In the face of increasing youth unemployment, these figures give me new hope," said Neelie Kroes, vice-president of the European Commission, who co-presented the findings at a workshop in Brussels last week.

"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," she added.

In addition to these concerns, the report warned that developers face the challenge of increasing users' willingness to pay for apps and there remain a number of technical bottlenecks, such as a general lack of interoperability between different platforms.

If these and other problems can be overcome, the report said, a digital single market of more than 500m EU consumers has "huge potential" for Europe's digital commerce sector.

Data sourced from the European Union; additional content by Warc staff