Professional Documents
Culture Documents
Introduction
T
The number of hey find us restaurants, give us news, connect us with
tablet users in the friends, keep us entertained, and even help us avoid traf-
fic. Mobile apps have become an integral part of the daily
U.S. is projected to lives of millions of people, and in just a few short years they
increase to nearly have altered the media landscape irrevocably. With millions of
people using smartphones and tablets to go online daily, its
90 million by 2014. no wonder that Internet giants like Google and Facebook have
turned increasingly toward delivering their content via mo-
bile applications. And theyre not the only ones. Other content
producers, including traditional media outlets, such as the New
York Times, have created apps that expand their reach to mobile
device users.
2011 2014
0
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Apples App Store made its debut in July 2008, creating the world
of third-party app publishing for mobile devices. From just 500
Apple App Store
Apple App Store
third-party applications at its launch, the number of apps has
grown to more than 500,000, with tens of billions of apps down-
$ 85
loaded overall. Half of all app downloads are games by far the
$15 most popular segment with entertainment apps a close second.
60
Though Android-based smartphone users are slated to out-
number iPhone users soon, they are less active in app down-
40
67% loads, and Androids market share of app revenues remains
20
37%
Other
small. This can be attributed in part to the higher proportion
of free apps on the Android Market 67% of all Android apps
0
$15 are free, compared to only 37% distributed through Apples
App Store4. The Android Market follows a similar structure
for developers as Apples App Store, with the developer taking
70% of the price of the app, and various intermediaries, such as
Apple App Store
mobile phone carriers, the remaining 30%.
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37
2012 Monarch Media, Inc. All rights reserved.
White Paper | Mobile App Development
For Amazon tablets like the Kindle Fire, apps can also be pur-
chased through the Amazon Appstore for Android. Early indica-
Thanks to a robust tions are that this venue is less developer-friendly than either
app developer Googles Android Market or the Apple App Store. In the Amazon
community and a Appstore, developers are paid either 70% of the sale price of
each app or 20% of the list price, whichever is greater5 mean-
growing number ing the price set by the developer may not always be the price
of cross-platform Amazon sells the app to customers for, unlike the Apple App
Store, which allows developers to set their own price.
developer tools,
there is clearly
Conclusions
wisdom in With Apples current market dominance and active, established
developing and user base, it is a clear winner for any developer who wishes
to focus exclusively on one market. Android OS-based devices,
delivering content however, are gaining a steadily larger market share and An-
on more than one droid devices are by far the most popular in lower-income
platform. brackets in the U.S.6 and in the international market.7 Thanks
to a robust app developer community and a growing number
of cross-platform developer tools that enable content produc-
ers to more easily create apps for multiple mobile operating
systems, there is clearly wisdom in developing and delivering
content on more than one platform.
For speed and simplicity Build Your Own App solutions cant be
beat, with some providers bragging that their solution is as fast
and easy as creating a blog post. However, there are significant
limitations to these companies offerings. Build-your-own apps
are geared largely toward content producers that will have a
high volume of updating content and lean heavily toward RSS-
centric features, and are not necessarily geared toward revenue
generation (some only provide support for free apps, and oth-
ers do not provide support for in-app purchases). In addition,
the ready-made nature of these solutions doesnt lend itself
well to innovative apps that offer users a rich feature set.
Conclusions
With the variety of options available for producing an app, it
is particularly important to identify your needs and what type
of content you will be delivering before selecting a method.
For highly complex and feature-rich apps, choosing an exter-
nal developer or developing internally (where the expertise is
available) is ideal. For delivering existing Web-based content,
choosing a tool like PhoneGap that converts Web code into the
native mobile format is the most cost-effective option. Though
Build-Your-Own App solutions can be relatively inexpensive,
they are suitable primarily for those who wish to get a large
volume of content out quickly and cheaply without offering any
Even before unique or complex features.
your app has
been created ROI and Monetizing Your App
and is ready for Even before your app has been created and is ready for dis-
tribution via an app marketplace, you will want to consider
distribution via an whether and how to monetize your content. The most
app marketplace, popular way to do this is by charging for your app and collect-
you will want to ing the direct sales revenue the 70% that Apple, Amazon,
and Androids app markets award to the developer. For certain
consider whether types of apps and content books and other media that will
and how to not be updated, or those that provide a valuable service users
are willing to pay for, a one-time purchase price is a suitable
monetize your means of generating revenue. Alternatives exist, however, and
content. are growing in popularity within the developer community.
Many developers are now choosing to make their apps avail-
able as a free download for the user and focus on monetizing
through other means.
There are clear reasons for doing taking this approach. Down-
load trends in all major app stores show that, not surprisingly,
users heavily prefer free-to-download apps. For example, on
Apples App Store downloads of free apps outnumber those of
paid ones by more than 10 to 1. 8
Luckily, there are ways to capitalize on this trend. You can gen-
erate revenue in ways that do not rely primarily on direct sales,
including:
Selling in-app advertising
Offering in-app sales
Applying freemium features and content
Advertising
Today, more than 45% of app developers say they rely on in-
app advertising to create revenue.9 Each of the major online
marketplaces provides support for developers who wish to
advertise within their apps Apples iAd and Googles AdMob,
in particular are well integrated with the overall app experi-
ence and provide a plethora of options for in-app advertising. If
you are developing apps for Apples App Store or the Android
Market, these are probably your best options for integrating
and monetizing advertising.
In-App Sales
In 2011, 4% of iOS In a recent survey, the number of developers focused on reap-
apps used an in- ing revenue primarily from direct app sales has decreased by
nearly 10%. Nearly all of these have instead shifted to in-app
app purchasing sales generate revenue. The most recognizable example of this
model to generate model is the free-to-play game, which allows users to download
and play games for free, but peripheral items and upgrades
revenue, but these must be purchased within the game for a fee.
apps generated
The percentage of revenues generated by this method is par-
72% of total iOS ticularly striking in the iOS market. In 2011, 4% of iOS apps
sales. used an in-app purchasing model to generate revenue, but
these apps generated 72% of total iOS sales.11 Much of this
revenue derived from in-app upgrade purchases within free-to-
play games (estimates suggest that roughly half of all App Store
revenues are generated this way), but there are alternatives for
non-game apps utilizing this method, as well. One example is
the New York Times, whose mobile apps are free to download
and provide free front-page access and a limited number of
article views per month. Users can upgrade to unlimited access
for a monthly fee.
Freemium Apps
A final alternative to relying on direct sales revenue is the so-
called freemium approach, where both a free and a paid ver-
sion of the app are made available. This model is excellent for
2011 iOS App Purchases new entrants to the app market, as it will allow you to quickly
4% of iOS apps
attract a large user base by providing a free app and then con-
used in-app verting some into paying customers by offering a paid version
purchasing model
with premium features and content.
72%
A potential pitfall of this approach is the difficulty in maintain-
96% of iOS apps
used direct-app
ing an appropriate balance between the free and paid versions
purchaing model of an app if there are no features or content that would entice
a user to pay after trying a free version, profits will be limited.
28% An alternative that circumvents this issue is to offer a free ver-
sion of the full app with ads, as well as a paid version that elimi-
income from income from nates ads.
in-app purchases direct-app purchases
Conclusions
The model of revenue generation that is most appropriate for
purchases purchases your app depends heavily on its content and features. The in-
in-app direct-app
app sales model has proven highly lucrative, but its success has
Final Thoughts
As the mobile landscape evolves, the one constant is the wealth
of options available to those who wish to deliver content digi-
tally. The rapidly growing user bases and competitive app
markets for both Apple and Android devices make it a wise
decision to develop cross-platform wherever possible. The
ideal mode of development is ultimately dependent on the type
of content to be delivered identifying whether you need com-
plex interactive features, or if an existing Web codebase can be
leveraged will go a long way to minimizing the cost of develop-
ing your app and maximizing your ROI. Finally, choose care-
fully when monetizing your app free or freemium apps are
downloaded at much higher rates than paid apps and can be
effectively monetized with ads, but unique, high-value services
can be well suited to the pay-to-download model and still de-
velop a large user base. Identifying the most appropriate route
to monetization will be instrumental in the success of your app
on the marketplace.
Works Cited
1
Aaron Smith, Smartphone Adoption and Usage, Pew Internet,
July 2011. http://pewinternet.org/Reports/2011/Smartphones/
Summary/Key-Findings.aspx
2
Ibid.
3
Mia Lamar, Strong Demand for Kindle Fire Sets Record Holiday
for Amazons Kindle Line, The Wall Street Journal, http://online.
wsj.com/article/BT-CO-20111229-704727.html, December 29,
2011.
4
Mike Wehner, Apple Approves Its 500,000th App, but Do You
Care?, Yahoo News, http://news.yahoo.com/blogs/technology-
blog/apple-approves-500-000th-app-care-160140999.html, May
24, 2011.
5
Amazon Appstore Developer Portal FAQ, Program Overview,
https://developer.amazon.com/help/faq.html#Program%20Over-
view
6
Smith, Smartphone Adoption.
7
Chloe Albanesius, Android Captures 52 Percent of Global
Smartphone Market Share, PC Mag, http://www.pcmag.com/ar-
ticle2/0,2817,2396404,00.asp, November 15, 2011.
8
Pricing for Success: Industry Trends and Best Practices, 2011,
Distimo, http://www.slideshare.net/distimo/pricing-for-success-
app-industry-trends-and-best-practices, 2011.
9
Appcelerator/IDC, Q3 2011 Mobile Developer Report, http://
www.appcelerator.com/company/survey-results/mobile-developer-
report-nov-2011/, November 2011.
10
Ibid.