Mobile Orchard’s Dan Grigsby recently found an interesting way to analyze the data given out by the iPhone App Store - particularly in the areas of popularity and price. With this information, we’re going to derive a few conclusions about the economy behind iPhone applications as well as come up with some speculations..
This is the first in a series of posts to analyze the data from late November 2008 and answer the following questions:
- Which type of company is making the most money from iPhone apps? (this post!)
- Given the rush to the bottom in terms of sacrificing pricing for popularity, are cheaper apps significantly more popular?
- What are the different price vs popularity profiles for various application categories?
- Which apps are making the most money overall?
- Is it better to sell more copies of an application cheaply or fewer at a higher rate?
- When comparing price and popularity, which apps are outliers and why?
(Note: As we publish posts covering each question, the questions above will link to the later posts.)
Who’s Making The Most Money In The Games Category?
As a taster, let’s focus on a single category - the Games category. It’s the most popular category on the store and the most money is at play there. Here’s a graph based on our data:
Each point represents an application. The x (bottom) axis represents price rounded to the nearest dollar. Free applications have been removed as due to their number they do not help with the correlation and increase the data density too much. The y (left) axis represents popularity. Popularity is typically between 0 and 1, but with free applications removed, the highest ranking game (iHunt - in this case) gets just 0.177.
Price * Popularity = Earning Potential
Despite iHunt being the most popular non-free application in the category, however, it ranks just tenth if you multiply the popularity by the price. By such a metric, the top performers in the category are:
| Rank | Title | Price | Popularity | Price * Popularity |
| 1 | Crash Bandicoot Nitro Kart 3D | $5.99 | 0.115 | 0.689 |
| 2 | Super Monkey Ball | $9.99 | 0.051 | 0.509 |
| 3 | Texas Hold’Em | $4.99 | 0.079 | 0.349 |
| 4 | Fieldrunners | $4.99 | 0.071 | 0.354 |
| 5 | Bejeweled 2 | $2.99 | 0.116 | 0.347 |
| 6 | Asphalt 4: Elite Racing | $7.99 | 0.041 | 0.328 |
| 7 | Spore Origins | $7.99 | 0.029 | 0.232 |
| 8 | TETRIS | $7.99 | 0.027 | 0.216 |
| 9 | Strategic Assault | $1.99 | 0.095 | 0.189 |
| 10 | iHunt | $0.99 | 0.177 | 0.175 |
What’s noteworthy from the data above is that the top games in terms of revenue (projected by multiplying popularity by price) are not the most popular games overall and nearly all of the top ten are by established players in the games market - Vivendi, SEGA, Apple, PopCap, Gameloft, Xen Games and Electronic Arts. Only Fieldrunners and iHunt are by independent developers (Subatomic Studios and John Moffett respectively).
So established players make the most money. Hardly a shock, but when there are over 2,000 games in the category, it’s amazing to see it hold true so consistently. It helps prove, however, that established brand values are important when it comes to making money, not a low price. Crash Bandicoot, Super Monkey Ball, Bejeweled, Spore, and Tetris are all well known and comfortably established outside of the iPhone world. Competing with these powerful brands requires something extremely compelling, such as Fieldrunners, which has been very successful primarily due to word of mouth (and that it’s a Tower Defense game, which have long been popular online in Flash form).
Still More to Come..
We have the same data (and more) for all of the App Store’s categories, and will continue to analyze it in a series of posts - so keep your eyes peeled. If you’re not already a subscriber to Mobile Orchard, head to our homepage and follow the links on the top right. You can subscribe via e-mail or RSS feed.
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Ira Mitchell 12.02.08 at 3:53 pm
I’m a sucker for a good game (Fieldrunners, Frenzic, Quordy…) and I’ll even pay for them. With one noted exception (”Spore Origins”, I’m looking at you) I feel like I’ve gotten my money’s worth.
I’m really looking forward to reading about productivity apps which I’m inclined to research (and pay) more.
thedragon 12.02.08 at 6:49 pm
I don’t mean to sound daft here, but how exactly are you coming up with a popularity number? Is it based on number of downloads? Or is it based on reviews? Because I have a very hard time believing that iHunt is at the top of either of those stats.
Sam McDonald 12.02.08 at 7:23 pm
Thanks a lot, this is some really good information. By assumption I have always thought that $0.99 cent apps where making the most money, since more and more company’s have been going that route. It is nice to know that I was wrong.
KiltBear 12.02.08 at 7:40 pm
An item that goes unmeasured here is Apple’s influence when it specifies an application “featured”. Super Monkey Ball is expensive (comparatively) AND was/is the most hyped game in iTunes. It was the first game apple advertised in the pre-opening of the App Store, and it has had a heavy push ever since.
If I could get my money back for it, I would.
Dave 12.02.08 at 7:50 pm
You conclude that since established players appear to make the most money, it must be because of brand loyalty.
Could it not be that the major players simply have more money and resources to develop high quality graphics and audio, and are able to polish their games more than an independent developer?
For an independent developer to hire a quality graphic artist to design graphics for an entire game is quite an upfront cash outlay. All of the established players have people like that already on staff. For them, it’s just a matter of resource prioritization. In many cases, they might be able to reuse assets from versions of the games for other platforms.
New entrants to the games market may not have those advantages.
Or, I could be completely wrong…
Mark 12.02.08 at 8:01 pm
How is popularity calculated? You say it’s a value between 0 and 1, but you don’t say what it actually means or how you determine it.
John Allsopp 12.02.08 at 8:15 pm
“established players make the most money. Hardly a shock, but when there are over 2,000 games in the category, it’s amazing to see it hold true so consistently”
I think the effective lack of demo versions really skews the market in favor of established brands - a recognized name is in effect an indicator of quality, and so lower risk.
Great work on this, by the way, very interesting stuff.
Aaron Freimark 12.02.08 at 8:27 pm
Or perhaps established players know how to price their app correctly?
r8ix 12.02.08 at 9:12 pm
What is the measure of popularity? Are you using actual download numbers? if so, where are you getting them? If not, then what does the popularity value mean?
sfmitch 12.02.08 at 9:17 pm
Please explain where the popularity number comes from.
ecarr 12.02.08 at 9:19 pm
Could you provide a definition for “popularity”? As a multiplier of app price, it is a pretty big variable that is driving you analysis and it is unclear from this article how it is being calculated or what it represents (other than a 0-1 value). Thanks for the interesting analysis.
Chris 12.02.08 at 9:49 pm
It would be interesting to see lines of constant Earning Potential (EP) on the original scatter plot.
Partners in Grime 12.02.08 at 11:19 pm
Great titles. Great prices.
Rod Begbie 12.02.08 at 11:39 pm
The numbers are a bit off, as they don’t take *changing* price into account. For example, I happily paid $10 for Bejeweled when the App Store launched (http://appshopper.com/games/bejeweled-2), so it’s conceivable the PopCap has made more than, say, Fieldrunners.
David 12.02.08 at 11:44 pm
Thanks for the analysis! There is a typo in the Price * Popularity column for Texas Hold’Em: It should be 0.394 instead of 0.349.
arn 12.03.08 at 2:12 am
You are making an assumption that the popularity index is actually proportional to the number of sales. In that a popularity index of 0.5 is actually twice as many sales as an index of 0.25. I don’t think you can easily make that assumption.
arn
Tom Robinson 12.03.08 at 4:38 am
How do you determine popularity? Sales figures aren’t public, so is it based on rankings, or position in the top apps lists?
Tim Nash 12.03.08 at 4:43 am
“established brand values are important when it comes to making money, not a low price”.
Also important is that established companies know what price gives them a reasonable chance of making money. This is a new market for every developer and independent developers are following the pricing of similar apps instead of pricing to make money on reasonable volume of sales.
Layton Duncan 12.03.08 at 6:53 am
Coincidentally I’ve posted some hard data today from our App Store pricing experiments which may be of interest here: http://www.polarbearfarm.com/blog/?p=21
The post explains my thoughts on the App Store as it stands, and suggests some improvements which I think should be made, and the reasons why.
DBL 12.03.08 at 9:51 am
“Free applications have been removed as due to their number they do not help with the correlation and increase the data density too much.”
Nice soft shoe, there. If you are studying ‘how to make $$$’ then it makes sense to remove free apps, but if you are studying ‘how to be popular’ then removing free apps is obviously skewing the study and making it useless. The problem is, your conclusion: “competing with these powerful brands requires something extremely compelling”. Or maybe, possibly, free? The conclusion you draw goes beyond what is allowed by your data. By leaving out free apps, you’ve given up the right to make such sweeping statements about ‘powerful brands’ vs. independent developers, since you’ve rendered yourself blind to one of the main ‘word-spreading’ advantages employed by those who have yet to break into the public consciousness. A proper look at this would include the free apps and parallell the download rates with hits on the developers’ sites, with some attempt to track resulting ad revenue and any subsequent donations and/or additional non-free purchases that might result from winning ‘converts’ and followers to the free product.
In other words, your study asks independent developers to fight with their best arm tied behind their backs, and then declared the big commercial entities the victors.
Sorry, useless study. Thanks, anyway.
Nate 12.03.08 at 11:12 am
I liked your post. I wrote a response to John’s post on TapTapTap’s blog yesterday and then you guys published this. It is nice to see that not only the .99 apps are making $. I’d still like to see a better Top Paid Apps list - a combined use of different measures of the apps (volume, revenue, customer satisfaction, etc.) instead of just a volume measure. The incentives still need tweaking.
Rich 12.03.08 at 11:34 am
Shouldn’t ihunt be excluded here? If memory serves wasn’t it free for quite a while before it went pay? That seems to be a common thread among apps in the “hot” or ” top” lists. Nothing against the author of the app but the reviews Seem to generally indicate it’s not worth paying for. Wondering if this is going to skew your results.
name 12.03.08 at 1:32 pm
how did you get this data in a batch?
ATLPlayer 12.03.08 at 2:22 pm
Yep, just like on the PC, only the big, well marketed games sell well.
I never understood the hype on the App Store.
The App Store reminds me of the shareware sites of old. Just a bunch of crappy software made by amateurs. No one but the most hardcore people have the time to sort and filter through that mess.
It’s easier to gravitate to the established names because you know what you’re getting. You can move on to other more important things rather than spending an hour figuring out what to buy. That’s a non-starter long term.
Spiff 12.03.08 at 4:23 pm
Apple is an “established player in the games market”? AH AHA AHAHAHAHAHAHAHA.
Peter Cooper 12.04.08 at 9:44 pm
Just to answer a common point.. the data is for the late November period. It’s not an overall result. So it doesn’t mean Crash Bandicoot was pulling in the most money since day one, but just over the recent period. Unfortunately we can’t establish (yet) what period Apple’s data are calculated over..
Spiff: Not as such, but they have immediate home advantage on their own store.
Eric Thomason 12.24.08 at 2:57 am
I think Dave has it right. Profitability isn’t simply a function of popularity x price; cost to develop and the (perceived?) quality delivered factor in as well.
In other words established brands may invest more in their games and deliver higher quality which in turn means that they can charge more at a level of popularity which generates the highest revenue. Without the cost to develop though, it is impossible to tell if this is the best strategy.
I think the trouble is that the company that “make(s) the most money” isn’t necessarily the one that generates the most revenue. In fact the top revenue generator could even lose money. It could be that lower quality, lower price and *much* lower cost to develop is the most profitable model.
I enjoyed the article - it is thought provoking.
iPhoneUser 12.31.08 at 1:41 pm
Now that 2008 is over can you please do this report again and share the data with us?