In the latest earnings call, Apple COO Tim Cook reiterated that the Mac-maker has paid out over $2 billion to developers. These transactions were the financial result of over 10 billion downloads of the more than 350,000 apps available in the App Store. While iTunes electronic sales have been steadily increasing, the logical assumption that it’s the app sales and not the music, movies, television and books being sold driving success. So how much of that app revenue is actually making its way to the average developer?
According to 148Apps.biz, there are approximately 370,000 iOS apps from 78,000 publishers with an average price of just $2.52 U.S. per app. While there may have been over 10 billion app downloads, that number spreads the $2 billion that Apple has paid to publishers over its three-year lifespan very thin. These numbers translate into an economy where there is just over $8,500 per publisher per year to go around. Keep in mind that a publisher may be just a single developer, or a whole team of analysts, developers, testers and managers.
Looking at the numbers in a slightly different manner, consider the recently published AdMob survey that indicates most smartphone and tablet owners are using their devices to play games. This breakdown is supported by the fact that 43 of the top 100 paid apps in the App Store are games. Assuming an exponential distribution of downloads, where the cheaper apps are being downloaded more often than the expensive ones, we can extrapolate how many downloads it would take to account for the $2 billion in payments to publishers.
By breaking out games from the rest of the apps in a 60/40 split of revenue (40 percent going to games), you can see why games in particular are more lucrative than other types of apps. What this analysis doesn’t take into consideration are the runaway success stories that would only skew the data even more. This analysis assumes an even distribution across all apps based solely on the textbook supply vs demand premise that cheaper apps sell larger volumes.
While the latest research from comScore may show how people are spending their money on new smartphones, it doesn’t show how people are spending their money on apps. According to this data, if the app market is to continue to thrive, alternate funding models that aren’t based on the sale of apps in the App Store will need to take shape.