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Freemium Gaming Business Models: Here for Good!

Posted in Gaming by Manas Ganguly on July 8, 2011

Gaming takes the cake in terms of Apps and its stickiness with users.Average mobile gamer plays approx 7.8 hours per month where-as an iPhone user plays the most at 14.7 hours per month & Android users play 9.3 hours p.m. This data was released by Nielsen for Q2,2011.

An interesting survey of top 100 grossing games on the Apple Apps store in January and June of 2011 by Flurry yields an interesting trend in terms of gaming. Games occupy more than 75% of all top 100 grossing apps in the app store, it’s the single most dominating business model in the mobile apps industry today. The interesting result of this survey is the growth of revenue from Freemium games at the cost of share decline of Premium-paid up games.

Stickiness is the key to success of all gaming because this then provides compelling spending opportunities and branding spaces for consumers as well as sponsors. The best example is that of Zynga which with its Farmville and Cityville franchises has worked its way to a $1bn IPO.

A freemium model with in-app purchases, is perceived to be advantageous as it can induce higher trial and usage rates. Also, when a network of friends opts in to play together, their group profiles and consumption can be an interesting hunting ground for brand ads and sponsors. Those who consider buying or paying money on the gaming app will anyways be doing it if the game appeals to them. Thus in terms of appealing to larger initial masses, a freemium app definitely beats out a premium app. The other problem with a premium app is that without any trials on the game, it is a difficult choice to invest on the game upfront to the users.

Freemium and Free-to-play is here for good.

Predictions for Mobile Apps stores (2011): Getjar

Posted in Applications and User Interfaces by Manas Ganguly on January 11, 2011

2010 has been the year of Mobile Applications. Going forward, mobile apps will continue unabated growth in the next 5 years horizon.

Here’s an Interesting set of forecasts from Getjar, the 2nd largest app store on the future of mobile application stores.

1. GetJar forecasts a consolidation amongst app stores in the near future.The numbers would go down from ~5-6 survivors in 5 year to about ~2-3 large stores in 10 years.

2. Closed app systems (i.e. Apple’s iTunes) would need to open up or fail as these stores feel pressure from developers and consumers.

3. More and more people will access the internet/services from apps in the next five years. Hence, URLs will become obsolete, as consumers access more services via apps than the on the web. GetJar predicts that successful mobile app companies will be raking in $100 million or more in revenue in 2011.

4. Brands will continue to flick to mobile platforms, developing apps for more and more platforms. GetJar estimates that the brand spend on apps will be roughly equivalent to today’s spend on web presence.

5. GetJar predicts that tablet devices will explode in popularity, with Android OS tablets in particular benefiting from lower price points, and open platform, and wide spread availability from common retailers.

Apple Apps Store: 250K Apps, Break Even, 70% paid downloads and 5 billion downloads

Posted in Applications and User Interfaces, Value added services and applications by Manas Ganguly on August 29, 2010

Two years and 49 days after its launch, the Apple Apps store passed the quarter million applications milestone just in time for the September Apple event. There were 251,007 applications from 50,304 publishers available for download for the iPhone, iPad or iPod touch. Appshopper.com estimates the total at 253,777 apps, including 24,334 for the iPad. This one is “One Up” for Apple: 70% of app download on Apple are paid apps which pales Google’s 36% paid apps.

New stats from 148Apps state that books (with 17%) have now overtaken games (14%) and entertainment (11%) in the Apps stores.The Apps store has downloaded 5 billion Apps downloads.The Apps store has generated a revenue of $249 million for Apple since its launch 2 years back and is on the verge of breaking even on its costs.

Another report by Piper Jaffray’s Gene Munster lays down the following key findings:

• $1 billion generated for developers since the store launched on 7/10/08 suggests gross app store revenue of $1.4 billion, $429 million of which Apple keeps after paying the developers’ 70% cut.
• App pricing data suggest that 81% of apps are free and 19% are paid, with an ASP (average selling price) of $1.49.
• Apple’s gross margin on the App Store is about 44%, according to Munster, assuming 70% goes to the developer, $0.20 plus 2% of the ASP to the credit card company, and 1% for storage and delivery.
• Apple has generated a total of $33.7 billion in gross profit since the App Store launched, to which the App Store has contributed $189 million, or 1%.
• Over the same time period (Q4 2008 to Q2 2010), the entire iTunes store has generated $3.6 billion in revenue, to which the App Store has contributed $429 million, or 12%.
Munster’s numbers suggest that iPhone, iPad, and iPod touch users download more than 16.6 million apps per day, nearly double the 8.9 million daily rate of iTunes tracks downloaded.

A few numbers on the Apple Apps stores:
Total Active Apps (currently available for download): 252,894
Total Inactive Apps (no longer available for download): 49,769
Total Apps Seen in US App Store: 302,663
Number of Active Publishers in the US App Store: 50,606

A graphic on the numbers in the store: Applications and Games

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