Mobile apps -- Show me the money

Julia Dimambro/Cherry Media
04 Jul 2011

As the owner of an eight year old, self-funded mobile erotic business I have intently followed industry news and developments on apps, app platforms, app stores and app monetisation. I have been waiting for the tipping point where sustainable ROI becomes standard before investing in it for either Cherry or its partners.

And I’m still waiting…

I hear the magical stories about Rovio and download figures from the Apple App Store indicating I am missing the boat, but when I dig below the surface of the media hype I tend to find, in terms of making ‘real’ money, it’s only the developers who are getting paid high development fees from companies who work on the ‘We must have an app’ strategy (ignoring a viable reason to have one, realistic customer demand – they just have to have one!)

I’ve spoken to dozens of mobile companies, from different continents, with different business models and budgets and have yet to find one that tells me that they are making reasonable revenues from apps.

The global stampede to be a part of the ‘app phenomenon’ is creating a fiercely competitive and over-populated market place. Don’t get me wrong, I can clearly see the contribution that apps are making to mobile entertainment uptake, handset sales and the migration to a direct-to-consumer marketplace, but from a commercial point of view, we are seeing an ever decreasing price average and worse, the gradual elimination of consumer’s expectation to actually pay for apps. A report released in January 2011 by Distimo found that the average cost of downloading an app in December 2010 was considerably cheaper compared to January 2010.

I notice all the time that the industry media and press only really detail downloads, very rarely revenues. Some app stores keep download stats for individual apps a secret. This obviously saves the lower performing publishers from any embarrassment. Thus you only hear download figures for the more successful apps, but whilst these sound impressive, they don’t mean much without the retention rate. How many people are still using the app a week, a month, or a year later? How many are upgrading to a paid premium service - or paying at all?

Another point worth noting is that ‘download figures’ can sometimes be a bit slanted. The Facebook app has been downloaded 100 million times from GetJar’s app store (December 2010), making this the most downloaded app from any store. Mobithinking rightly comment that this is not really a download app, it’s a short cut to the Facebook mobile site – Facebook is a web app, available for anyone with any Web-enabled handset.

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