These days Distimo has published its report “2012: Year in review” and I would like to summarize the findings I’ve found there and how they impact in mobile games from the point of view of the tiniest and humble jemchicomac studio.
How quick you can reach 1m users in 2012
72 hours, that’s the case of Line Pop: even better, they reached in this time 1,75m downloads, Draw Something needed 9 days. Dan Porter, OMGPOP CEO claimed that they only spent marketing money during the first launch weekend, reaching the 6th position in the billboards and the rest was possible due to word-of-mouth. Dan confirmed that “The only place to advertise an app is in another app, Nowhere else matters.”
How much money is out there?
iOS daily revenue pool is $15m, while Google Play is “just” $3,5m. Roughly speaking the total revenue pool in apps and games are circa $20m per day. A simple calculation shows a revenue pool of +$7bn/year, just for the revenue coming from paid apps + in-app payments. Advertising revenue seems to be outside this calculation.
The portion of the revenue coming from in-app grew from 53% to 69%, but paid-only strategy is still alive: 35% of the revenue from top-1o publishers was derived from one-off fees. Personally, I believe that in-app share could grow in 2013 to 75-80%, and keep capped to these values, meaning that one-time fees will keep as a viable business model for certain apps/niches.
This revenue pool comes mainly from games with a very long tail on the rest of categories (without a clear 2nd position), including typical suspects like “Music”, “Productivity”, “Communication”, “Travel”…Despite the high difference in the average pricepoint (lead by Navigation , a.k.a. GPSish apps reaching 11$ per app), non-games apps generate <2% of total app business revenue pool, where games has an average price-point between 2-3$.
In summary, if you want to get money from app stores, go for IAP-based games, any other app categories has no revenues 😉 Of course non-gaming apps can be profitable by the service provided and not for the direct revenues from selling via the app store (ex. Spotify).
This drives me to the idea on how IAP can be increasingly turned into the subscription mechanism for non-gaming services and perhaps 2013 could be the year where this business model would take off.
The winner takes it all?
Last point is if appstore is a “the winner takes all” model. 7 apps (games) gets 10% of the revenues, and the rest is formed by a long-tail of developers and publishers. It seems that there is enough space for organizations of any size delivering games via appstores. However this remaining 90% is crowded by millions of new apps, where games are correspondingly a big chunk of them.
Data provided by Distimo from Jan to Dec 2012 shows that this 10% tends to be less crowded even with few blockbusters ruling. The relative size of the pie keeps constant for the big guys, meaning that the pie grows equally than the revenue of leaders. I presume that when the market finally will stall, the big guys share will grow, but I do not believe this will happen during 2013.
Bottom line: Still room for indie games in 2013!!!
In summary, looks like there is still room during 2013 for small games to make money in the mobile space. Investing on developing games is far better than on any other kind of app, where revenues from apps are very small even for large companies. 2012 has been the year where business models has shifted from one-time fees to IAP, but looks like the former model leave chances to succeed as a niche.
2012 has showed also that there is options to becoming popular with small budgets on marketing, where mobile-to-mobile marketing looks the right way to spread the word together with other social media strategies.
Billions of dollars will be available for anybody trying out during 2013. Let’s go for it!