GigaOM » App Developers

An overview of the photo and video app market

suite48 — Fri, 30 Nov 2012 15:04:22 +0000

The photo and video app market is a sizable one undergoing rapid changes right now. With low barriers to entry, this is a market that also consists of a large number of developers and is certainly not limited to a handful of well-financed startups. This report examines trends to watch in the photo and video app markets and ranks the top-selling apps in the U.S.

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PlayHaven raises $8M to make mobile developers money

Ryan Kim — Tue, 13 Nov 2012 16:00:20 +0000

Developing a mobile game means juggling various goals from monetization and promoting your other titles to engagement and getting players to come back. That’s been a job that startup PlayHaven has helped developers manage and now the company is getting $8 million to expand its efforts and move into Europe and Asia.

The latest funding was led by new investor GGV Capital, with help from existing investors e.Ventures and Tandem Entrepreneurs, and comes on top of $3 million previously raised. I caught up with PlayHaven last year when the company upgraded its platform to handle real-time messaging through HTML5 overlay windows. The improved platform enabled developers to shift quickly between generating revenue through ads, promoting their other apps and getting users engaged through rewards and incentives.

PlayHaven wants to use some of the funds to build out its consumer insights and customer management tools. The company’s overall goal is to help developers maximize the lifetime value of their players.

This is actually the third business model for PlayHaven, which started out as a social network for gamers called MyGameMug before moving onto to create communities for mobile games. PlayHaven competes against companies such as Tapjoy, Chartboost, Flurry and others who are helping developers better monetize their games.

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Most app developers make less than $500 a month (chart)

Rani Molla — Thu, 04 Oct 2012 21:16:46 +0000

We know that not every app is Angry Birds and not every app developer is Rovio. But just how tough are things for the workaday app developer? In a recent GigaOM Pro study (subscription required) of app developers, more than half of the respondents say they make less than $500 a month from their paid apps (see chart below). Perhaps not surprisingly, app development isn’t a full-time job for most of them. Some 75% of 352 respondents either hold another job or do app development only as a portion of their main job. (The picture is even grimmer for developers of advertising-dependent apps — a third of those developers make less than $100 a month in ad revenue, according to the study.)

On the high (and much more rare) end of the spectrum, about 5 percent of app developers in the survey make over $20,000 a month. These developers tend to be part of big app firms.

Click to enlarge
Rani Molla/GigaOM

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Development strategies for the app-developer community

Thu, 27 Sep 2012 06:55:21 +0000

App developers are the cornerstones of the multibillion-dollar app market, supplying the talent behind the creation of the millions of apps on the market today. However, the developer community — composed mainly of individuals or very small companies — remains largely unknown and often underrepresented in the app market. And many developers view apps as projects rather than products, making monetization difficult. Given these challenges, those organizations and companies that can bring tools, resources, and a collective voice to this group will be an important factor in the evolution of mobile-app development.

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So you’ve created an app; now why hasn’t anyone discovered it?

Ouriel Ohayon, Appsfire — Sun, 16 Sep 2012 17:30:56 +0000

You’ve gone through the Apple’s app review process and patiently waited (sometime very patiently) for a green light. Your new app is now live. You look at your server logs — no explosive growth. You look at your iTunes connect report the following day — no magical revenues. You scroll through the Apple App Store rankings — you’re not even there. You run a search in the App Store to make sure your app is indeed listed: yes, it’s there.

So you wait a week, two weeks … No gold rush for you. You’re app is not taking off. Why can’t all developers find their way and be successful? Why is success limited only limited to a few? You want to blame the Apple’s App Store for not having the right discovery mechanisms built for your app. But the reality is, this is not just Apple’s fault.

Most developers underestimate how hard it is to be successful in Apple’s App Store. And even if Apple is improving things, it’s not going to be enough. Ever since the App Store launched, I’ve been frustrated with app discovery. We all have our obsessions. I’m obsessed with finding great apps, which is why I cofounded Appsfire, a company focused on finding a solution.

But why is this problem so hard to solve? The answer is not straightforward. Let’s look at the various angles.

The developer side

It’s not enough to build a great app with a nice design and a nice user experience. A mobile app is a business, and it has to be managed like one.

If an app doesn’t solve a critical need in a beautiful way, it has little chance of survival in the long run.

The marketing plan, including knowing your own competition, has to be built and implemented before you even launch an app. Remember, apps are displayed in iTunes, which is a content store.

Apps need to be analyzed and optimized based on usage data and lifetime value. Many developers are still obsessed with low CPIs (cost per install) rather than trying to get the best users and keeping them engaged.

Launching an app is not just a design exercise backed with solid code. It’s a real business. Some of app studios have become so big (e.g. Zynga and Outfit7) that they don’t even need any sort of favor from Apple or Google to get massive visibility. They just self-promote their app.

The Apple App Store side

Apple announced 700,000 live iOS apps (close to one million have been created so far) and a newer app store. They also announced that 90% of all apps were downloaded every month. But everyone knows that only those apps in the top ranks or highlighted by Apple get any real traction.

So, is Apple doing enough for your new app?

Well, many developers forget that it is only a store. It’s not a marketing or advertising company.

Yes, Apple released a new version of its App Store. And just like any other online retailer, Apple does not let developers control the majority of the discovery process (even when they feature you).

What can Apple do to make life easier for developers?

A speedier review process would help developers iterate faster. A better interface for app management/analytics would be useful. Separate apps in the games category from non-games to give the other 20-plus categories a better chance. Those would all be nice upgrades but not dramatic changes.

What would be a dramatic change? Killing the top charts.

Rankings are the primary way consumers discover new apps. This is why so many app developers are trying different marketing techniques and bots (before bots were blacklisted by Apple) to get into the top ranks.

Killing the ranking system would force users to be more active in finding apps. And it would give more chances to more developers.

But it’s unlikely to happen.

The consumer side

Most smartphone users have more than 75 apps on their device. Only a few are regularly used. Most are forgotten and sometimes uninstalled. That’s the tough reality.

Consumers have a hard time finding good apps. But, paradoxically, they don’t care enough to read reviews, compare apps or even search for apps. On mobile people are lazy.

People need trusted sources to make quick decisions. This explains the growing popularity of third-party discovery solutions. They provide a good shortcut to decisions, just as shopping engines have done for e-commerce sites.

And trust in app discovery is probably the most important missing brick today. It is hard to build, communicate and maintain, because it requires a consistent effort of transparency, engineering, expertise, relevancy and independence

The App Store is not enough. It is built the same for everyone.

This explains why Facebook has developed the App Center. But that’s far from enough. You can’t trust your friends with every single decision they make. The solution is more about a specific taste graph for apps. And Facebook is not there.

The ad networks’ side

Millions of users find out about apps though advertising or paid discovery. (Something Apple does not include in its $5 billion paid to developers).

But the mobile ad industry is still young, and mobile advertising is not yet very consumer friendly or advertiser friendly. Banners are annoying, intrusive and inefficient. Many times they don’t even look like advertising.

An app developer can easily get lost, and understandably so, in the jungle of ad networks, each claiming billions of impressions per week, with different pricing structures, ad units, tracking technologies (when they work) and little commitment on results.

Paid app discovery is very hard and (to be successful) very expensive. It is not just not enough to buy advertising to succeed — thousands of developers do. It is complex, time consuming and expensive to run an efficient mobile ad campaign.

Bottom line

You can’t attribute the (lack of) success of an app just to one single factor. Building a business with a mobile app is hard, because it involves a long list of parameters very few developers really understand or can control.

We’re in the early days of the mobile app business. There is no “magic recipe” for mobile app success. It is more about experimentation than following a prescribed list of directions.

And everyone can learn how to cook this way. Those who make it will try and fail until they succeed.

Ouriel Ohayon is the cofounder of Appsfire, a discovery and promotion network for mobile apps. Prior to Appsfire, he founded the French edition of Techcrunch and ran early stage investments for Lightspeed Ventures and Gemini Israel funds.

For more on this topic, attend GigaOM’s Mobilize conference, where Ouriel Ohayon will take part in an onstage conversation about how developers can disrupt the app distribution model. (September 20 – 21, San Francisco)

Image courtesy of Flickr user vikasiamoto.

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Readers weigh in: future prospects for Twitter

Tue, 21 Aug 2012 17:14:36 +0000

Twitter is a mainstream communications technology that plays a critical role in news and content discovery. The company has spawned a business ecosystem of third-party developers and services that create apps and data analysis. But as it evolves its business model, Twitter has also generated controversy around its changing developer and user policies. Twitter feels like it is at a crossroads, so GigaOM Pro took a quick pulse of the tech community’s opinions on the company’s future prospects, its likely business model, and its role in the overall technology industry. The results are presented here, with analysis.

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Mark Cuban leads $1M investment in app seller Apptopia

Ryan Kim — Thu, 26 Jul 2012 14:26:12 +0000

When Apptopia debuted in April, it bet that there would be enough app developers looking to unload their entire app to a group of eager sellers. Now, three months in, Cambridge, MA.-based Apptopia is doing solid business. And that has attracted the attention of investors including Mark Cuban, who is putting in half of Apptopia’s $1 million seed round.

The seed funding, which also comes from a number of angel and VC investors, will help Apptopia add four more employees to its team of eight as it looks to scale up to handle more buyers. Apptopia faces the pleasant problem of having more buyers than sellers at this point. Jonathan Kay, the co-founder told me that he has about eight buyers that have more than $150,000 to spend on applications. Apptopia is scrambling to find apps to fit these buyers’ needs.

Apptopia, which has more than 300 apps, operates like an auction, allowing app developers to list their apps for sale. Buyers with the winning bid get the app’s source code, IP, customer list, data and revenue as well as a non-compete agreement from the seller. Kay said Apptopia has sold 50 apps to date at an average of about $4,000 per app. The market has steadily been growing and did more than $100,000 in sales in its third month, double the previous month. That reflects both more sales and a higher price point for apps. Kay said the site just booked a $25,000 sale of an app, the largest to date.

“I have some big buyers, who have weirdly large budgets and we’re getting inbound interest from developers [that are] doing well but they just want to get out. People are saying they’re making thousands of dollars but they’d like to cash out for a years worth of revenue right now.”

Apptopia raised $400,000 prior to its launch from Expansion VC. The company plans to not increase headcount in Boston and San Francisco, but also pursue a new related project.

Kay said the buyers range from app development shops that want to round out their portfolio to companies looking for an easy way to get into the mobile app market. He expects more apps to go up for sale as developers learn about Apptopia as a lucrative exit option.

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The evolution of the virtual goods market

Thu, 07 Jun 2012 16:43:55 +0000

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Viewdini: Could this app be Verizon’s first pass at toll-free mobile data?

Kevin Fitchard — Tue, 22 May 2012 20:51:14 +0000

Verizon Wireless revealed a new incarnation of its old V Cast streaming mobile video service on Tuesday; this one built on the back of its new LTE network. Called Viewdini, the Android app aggregates content from premium video services such as Hulu, mSpot — now a Samsung-owned property — and Netflix as well as Comcast’s Xfinity and Verizon’s own FiOS programming.

Verizon didn’t reveal any details about how this high-quality, long-form content would gel with its restricted data plans when the app launches later this month, but I suspect Viewdini may be Verizon’s first venture into the ‘toll-free’ mobile broadband: Rather than charge the customer for the gigabytes of video consumed, it charges the content provider.

Lately Verizon has been talking up the idea of reversing the mobile data business model (as has AT&T), giving its customers unlimited access to any video or over-the-top content service so long as the owner of the service pays the carriage charges. So far Verizon hasn’t implemented any specific policies – that we know of – but if it can secure the cooperation of content providers, it’s only a matter of time.

Viewdini would fit perfectly with that model because video consumes enormous bandwidth relative to other services. If Verizon customers were to make regular use of TV show and movie streaming they would quickly max out their data plans (or enter into throttling territory in the case of its grandfathered unlimited customers). Without any kind of tweak to Verizon’s capping policies, Viewdini practically invites customers to run up huge overage charges, which would hardly be a customer relations coup.

But the apps-charging structure provides a clue as to how Verizon might offer that pipe for free. “By simply searching for a title, topic, or star’s name, viewdini will let customers know which services have mobile video for streaming, and whether it is available at no additional charge, by subscription, to rent or for purchase,” Verizon stated in its press release.

In each case, Verizon could skim a little from the top of each purchase, for instance collecting a portion of a movie rental or purchase fee. In the case of subscription video services like Hulu Plus or Netflix, Verizon could take a share of monthly revenue from every subscriber that used Viewdini or just charge the video providers flat per-gigabyte or per-stream fees.

Verizon plans to expand its initial line-up to movie studios and other TV sites. If it is able negotiate revenue sharing deals with every service it aggregates, Verizon could easily offer Viewdini as completely toll-free app.

That would make a lot of consumers happy, as they’d be free to stream away without worrying about their data caps, but it could have a chilling effect on the application developers. Netflix and Comcast may be able to afford bandwidth fees, but smaller companies may not be able to – especially if they’re offering up their content for free.

Comcast is already facing criticism that it’s running afoul of net neutrality rules for capping residential broadband data while giving a free ride to its own Xfinity traffic. But the net neutrality rules don’t apply wireless, so if Verizon wants to go the toll-free route, there’s nothing to stop it.

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How to stand out in the app development game

Erica Ogg — Mon, 23 Apr 2012 16:48:41 +0000

With more and more developers jumping on the mobile apps bandwagon, standing out in the sea of apps is becoming more difficult. There are 25 billion apps in Apple’s App Store, 450,000 in Google Play and 82,000 in Microsoft Windows Phone Marketplace. So it takes some strategizing to pick a category where you can succeed and also find a loyal base of users who will spend money on and in your app. Which categories are the best bet? And what does it take to make a successful app in not just the popular gaming market but also in areas like weather, news and productivity apps? Developers, this one’s for you.

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