Mobile Games: Have we learned anything at all?

It seems games publishers are an ungrateful group. A couple of years ago you heard them (myself included) endlessly complain about deck placement, carrier content managers who didn’t call them back, lacklustre revenue shares or outrageous porting requirements. Then came the App Store and the rest is history. Right? Wrong. The carrier is now called Apple, the deck is called the app store and although you only have one handset to develop for the submission process makes the carrier submission process look almost inviting by comparison. Although the revenue share is much better then it was with carriers the “open” nature of “set-your-own pricing” has – predictably driven prices downwards. As more people have piled in pricing has eroded so badly that only the highest quality games (mostly branded games titles) are able to maintain their margins. So if in the carrier model the winners were the likes of EA, Gameloft and Glu, the Apple model winners are more mixed. The big winners on the App Store are consumers who have an amazing choice of free and low cost games, small developers who would never have made it onto the decks of carriers and some of the larger publishers who have high quality branded titles who’s franchises they actually own. So although the winners seem to have changed one of the industry’s most fundamental challenges remains: how does it build enough scale to give rise to the next EA Games or Gameloft?

Part of the answer is what many iPhone developer don’t want to hear: cross platform development. Gaming is a mass-market pastime that appeals to people everywhere and more people have phones than PC’s. It should work. Tackling other platforms to ensure people all over the world can enjoy games regardless of platform / handset will help drive the viral awareness of games and generate word of mouth. Research has repeatedly shown that recommendations are one of the best ways to drive adoption (as is free trial). That’s hard to do on only one platform. The other part of the answer lies in the business model itself. Some people will simply never pay for games. The reasons are many but in a recession where people have to prioritize voice / text they will forego the rest (including games). Furthermore, in emerging markets like India where over 95% of the population are on pre-paid cards, paying for games simply isn’t an adoption. But this challenge is also part of the solution.

Innovative developers have shown that they can make money from games and apps without charging consumers. Flirtomatic, a mobile dating service, sells virtual goods. Google pays Opera Mini, the popular mobile browser, for search results. With mobile web usage surging in the emerging world and the mobile becoming an integral part of people’s lives the possibility for mobile advertising to finally deliver is starting to become a reality. Could in game ads be the solution to monetizing games in the 3rd world?

Patrick

Open vs. Closed App stores: where do we go?

Apple has removed Google Voice from the App store today. Although frustrating for Google and consumers this is a simply a reality of working within the App Store world. Developers may ask themselves whether they prefer a Closed App store or an Open one. The reality will be, and already is if you look at smart developers like ebuddy, EA, Google, and Nimbuzz, that successful developers will have to develop cross platform and consider multiple distribution channels to reach consumers.

Through all the hype developers are starting to realize two things: First, not everyone will make a fortune on the iPhone. With over 65,000 apps and no in-store merchandising tools developers will struggle to get cut through. Adwhirl estimated that getting into the top 100 on average costs a developer over $2500 / day. how many can really afford this level of spend before recuperating their royalty check from Apple? Two, closed gardens have their drawbacks (ask developers who have worked with carriers). In Apple's case these seem to be a) Unclear editorial guidelines on what gets on and what doesn't and b) applications that may be significantly better then Apple's own software may not make it due to conflict of interest with Apple.

The more important picture though is what this means for consumers long term. Consumers at the end of the day will be looking for and should have access to the best possible content no matter who makes it. If Opera or Bolt offer a better browsing experience then Safari consumers should have access to them. If Spotify offers a better music alternative to iTunes then it should be available. Sadly, this is not likely to be the case on the iPhone and this has been proven repeatedly over the past few months. The strangest thing is that you can't really say it's distinctly Apple. After all you can install other browsers and music applications on a Mac's OS X.

One thing remains certain: given today's environment consumers aren't likely to find the best Apps just on the iPhone. That's bad news for iPhone users but good news for the 99% of the world who might reap the benefits of frustrated but highly innovative developers ;)

Patrick Mork
VP Marketing
GetJar

how to make money from free apps

There's a common misconception that you can't make money from giving away free apps. This really isn't true. Here's a brief summary of business model's I've seen that leverage the free distribution of content to make money for developers:

1. Freemium content - place a demo / freeware version of mobile software which then upsells to a fully paid version. This has the advantage of encouraging consumers to download the app without fear of bill shock

2. In application advertising - tried and tested by people like Greystripe, HOvr and others. Features ads running either in a wrapped manner (loading and exit screens of the app) or integrated within the app. Money is split between the technology provider, the content owner and the carrier (if they are distributing)

3. 3rd party. Classic example here is Opera Mini. The browser is free for download but any search that a consumer does using this browser is paid for by Google. Google pays Opera for the searches as a way to encourage use of its search engine.

so in a nutshell, just because its free doesn't mean smart developers cant make money from it. As most consumers only keep apps on average 3-4 weeks on their phones and aren't willing to shell out money for apps we believe free apps is the way to go. Then again premium will have a role to play if the content is branded and of exceptional quality.

cheers

Patrick

A word about app stores

By now we've all seen the news of Ovi going live this week. Undoubtedly there was a lot of talk about what Nokia was doing for better or for worse.

The last few weeks and months have seen a deluge of announcements from Blackberry App World, to Ovi, to Vodafone, to Qualcomm, to Carphone Wharehouse just to name a couple.

In fact there has been so much news that we're seriously wondering if investors, press and bloggers are starting to develop "app store fatigue" with all the news.

So what does this all mean at the end of the day? Let's look at it from the point of view of the two groups of consumers: Consumers and applications developers

From an applications developer most of what we've seen should be good news. Why? well simply that more stores opening mean more choices for developers and more channels to market. Given my background I always use soft drink analogies. Why are Coke and Pepsi universal brands? Partially because they are universally available. From supermarkets to mom & pop stores to kiosks to fast food restaurants you can find Coke and Pepsi nearly anywhere. When I was at pepsi we use to laugh that in many parts of the world you can find soft drinks more readily available then water. Food for thought ;)

Apps should follow a similar logic though. If you think of the consumption pattern of consumers apps are simple mobile "snacks". Whether it's a game, instant message applications or a horoscope app it's something you do with your spare time, in short bursts and it's disposable. In fact market research I've seen shows that many apps on average only have a 3-4 week lifespans on a consumers handset until they get replaced by something else.

So in effect, apps are almost like fast moving consumer goods (FMCG's). Quickly consumed and quickly disposed off. So by default they should be simple to find and should almost everywhere. They should also be very cheap (or free) and quick to download and easy to learn how to use.

So in that sense more stores is good news for both developers and consumers. For developers it means:

a) More routes to market
b) More volume --> more revenue
c) More choice aside from traditional operator portals
d) better learning. Different channels will behave differently and target slightly different users in different markets so developers should benefit from having more data about the consumption of their apps across a great variety of geographies, target audience and channels.

Most importantly for developers though: all this noise about stores means greater consumer awareness about apps. If you look at GetJar for example our downloads increased by 300% in the last 12 months since Apple launched it's app store. People all over the place and feeling the effect. Inevitably people who might not have an iPhone will ask: "can't my phone run apps?"

So what does this mean for consumers? Well a couple of things:

a) more choice. The boom has created a gold rush as developers rush to create the latest hit.
b) more quality apps. As more and more apps hit the market differentiation will be critical. with most if not all app stores offering reviews of their apps, poorly designed apps will be consigned to the digital trashcan of time within days.
c) more value. A benefit for consumers and maybe a curse of developers and brand owners. Open market systems like the App store will allow developers to set their own prices. Either through lack of marketing training, greed or shortsightedness many developers will cut price in an effort to get volume. Ultimately consumers will be the winners
d) apps for the masses! Yes, unbelievably it's true but one thing is often neglected when talking about apps: they can run today on the majority of handsets and not just smartphones. At GetJar for example smartphones are an important part of our downloads but in no market do they make up more then 60% of our downloads. Actually in most developing markets they make less then 20-30% of the traffic. For many people in markets like Indonesia, Brazil or Pakistan apps are perhaps the first pieces of software they have ever really experienced.

So on average I'd say both developers and consumers benefit from the surge in app stores. time will tell which survive and which don't. Catch my next blogg where I'll discuss what i think makes a good app store ;)

have a great weekend,

patrick.

Vodafone and app stores - where do MNO's fit in?

By now we've all seen the news on Vodafone's push into the app market: the question here is whether MNO's have a role to play?

from out point of view at GetJar the answer is YES. We've proven this by tying up with the likes of 3UK, Smart, Cellcom and a number of others.

Even before Vodafone's announcement yesterday, we had already done a deal to have GetJar on Vodafone Ireland.

But operator's clearly have to recognize their strengths and weaknesses in deciding how to play the app store game.

Their strength is the trust behind their brand, relationship with consumers (particularly on the billing side) and the API's they potentially provide developers to help reduce the problem of fragmentation.

The weakness is in content management and really understanding what consumers truly want from apps. They aren't set up to manage the vast amount of content out there or even less the avalanche of content that is about to come. Witness the past 12 months. Most carriers have actually reduced the size of their content teams and the number of providers they deal with. Not the reverse. This results in less content for consumers and, perversely, less traffic from content.

The ideal scenario is for them to embrace an open model by encouraging the use of their API's, helping to distribute content both on portal and on the device but to leave the sourcing and management of content to those who really understand the business.

Let's hope they seize this opportunity and make it a win-win for everyone.

P

Working mobile apps into your marketing mix

The exponential growth of the apps market provides brands with some amazing opportunities to connect with consumers in any market, anytime. Below are some of the agencies and brands that are maximising this potential.

Recent months have seen an explosion in the mass market uptake of mobile apps. Their appeal is prompting growth in the range and availability of the apps themselves and in the number of app stores, signalling to brands that there is a new communication channel to use when reaching out to consumers.

Consumer demand for apps is growing massively -- operating as the largest independent app store, GetJar alone provides some 35 million downloads per month and recently passed the 400 million downloads mark. And we've all seen the huge impact Apple has made as they break through the one billion downloads barrier. Demand is global, and wherever there are mobiles there are apps being downloaded in volume for applications as diverse as video, maps, games, browsers and social networking.

App consumers are also developing a distinct set of habits and preferences for marketers to take into account when planning campaigns, as we recently found when we talked to a group of 2000 heavy mobile users from across Europe about when, why and how they use their apps.

Our research revealed major growth areas such as social networking, which was the number one app choice for consumers. It also clearly indicated that mobile is beginning to take over from the internet as the primary communication channel for this kind of social contact.

Games still occupy an important niche in the app market (some 24 per cent of our respondents said games were their first choice of app type), which is hardly surprising. But what did come as something of a shock was that a massive 62 per cent said they now play games more on their mobile than on their console or PC.

These specific preferences are also part of a wider change in habits for mobile app users -- 70 per cent of our poll group said they now prefer to use their mobile to surf the web and just short of half use their mobile to access their primary sources of news, at the expense of all the traditional channels.

Brands are embracing apps
All of these trends have their own implications for the marketing mix. Brands are increasingly incorporating apps in their communications strategies because they enable them to reach consumers in a creative and personal way. The act of downloading and running each app is the first step in an ongoing interactive process which maintains contact between brand and consumer.

Brands as diverse and Honda, Warner Bros, Coca Cola and even the British Army have gone down the development route, creating bespoke apps to support a specific campaign.

According to Scott Seaborn, Head of Mobile Technologies at Ogilvy Group, the interactive communication offered by apps is key to their appeal: 'The most useful apps for brands are those that support communication between the brand and consumers. We've seen growing interest from major brands to provide app utilities such as Kodak's ski resort guide, as well as highly original ideas such as Fanta's recent app which generates sounds only teens can hear.'

Agencies are finding apps attractive because mobile is increasingly seen as the glue between TV and all the other communication channels. 'The creative scope that apps present to agencies are making them attractive options to the advertising industry and the brands who fund the campaigns,' explains Seaborn. 'Apps are increasing viewed as the mobile equivalent of TV, offering the most effective way to build awareness and engage with a consumer.'

The scope is growing all the time -- brands are now also being given the option to exploit broader third party channels and wrap advertising around the most popular (or most relevant) apps. So, as users download an app, open it, complete a level on a game or at any other given point they can be shown an ad. That advert can lead to all kinds of options, from branding and awareness activity, to directing the user to a mobile site, to even downloading another new app entirely.

Those brands that can more effectively build their knowledge of app consumers will effectively create a more personal and interactive experience with consumers, but keeping pace with their preferences and habits will remain a central part of the challenge.