In 2014 Gartner released a study showing that less than 1% of apps had potential to be financially successful, and the "free to download" was the most profitable category. That type of apps got 10x more downloads that the paid ones. With a broader user base, it is easier to find successful monetization strategies as charging for upgrades for example. When you look at those figures by iOS app category, it becomes staggering. Only game apps reached $1 average per download being the overall average below $0.60 per download, as it shows the 2015 study from SensorTower. Please see chart below.
If those revenues seem little, it becomes even harder to understand how not to lose money when the cost of acquisition of new mobile users have been climbing year after year. In 2015 that average crossed the $3 per user according to the Fiksu study. Please check the chart below.
Simple math. Most apps will be losing money if they try to grow their user base. And that is one reason why the few apps are making money today are the ones who went viral - but that is something you cannot control or even successfully plan.
If apps have become one of the cornerstones of the new digital economy, how those companies will survive and provide for their partners especially after the 4th Industrial Revolution wave hits? 47% of American jobs are at risk of being displaced by new technologies in the following years, and many will have to venture as a fallback plan. 40 years ago, most of the small entrepreneurs would think about a small retailer, a mom and pop shop. Today that entrepreneurship translates into an app. And that means we need to rethink the model on how we will generate real value for customers and how can we profitably acquire new users.
To make this picture even more challenging, the big tech companies got organized to keep a lion share of your app profit including a revenue cut per download. Of course, that is a lot of value on the infrastructure, security, standardization of development and marketplaces provided. But at the same time when you need to acquire new users, the same tech companies will be central actors on that play too and keep another share of your advertisement budget.
There is something wrong with this model. We need a new frame and new rules to make the digital economy profitable to the majority and not only the top 1%.
Do you want to join this conversation? At collectivebrains.org we are discussing the problems and the solutions. Only collectively we will find the ways and pave the roads of this new era. It is time to act.