Opportunities in the App Economy

App Economy The New Paradigm for Winning

Opportunities in the App Economy - Version 1.0 2 License Agreement Opportunities in the App Economy - The New Paradigm for Winning by MediaAgility is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License. http://creativecommons.org/licenses/by-nc-sa/3.0/ Please feel free to post this e-book on your blog or email it to whomever you believe would benefit from reading it. Thank You. Trademarks and copyrights MediaAgility, and the MediaAgility logo are trademarks of MediaAgility. All other product or company names mentioned are used for identification purposes only, and may be trademarks of their respective owner(s). MediaAgility www.MediaAgility.com sales@mediaagility.com 1-(866) MEDIA-V1

Opportunities in the App Economy - Version 1.0 3 Table of Contents 1. Introduction 5 App Economy - What is it? l Understanding the dynamics of App Stores l 2. Current Status and Future Prospects 8 l the App Economy currently stands? Where l the App Economy is heading? Where 3. What Drives the App Economy? 10 Key drivers in the apps business l Variety m of App Stores m and Games Entertainment apps Advent m of New Paradigm Platforms m1 Dollar Apps 4. Monetization in the App Economy 12 Advertising l Paid Applications l “Freemium Model” l l Goods Virtual Subscription-based apps l land Surveys Offers MediaAgility www.MediaAgility.com sales@mediaagility.com 1-(866) MEDIA-V1

Opportunities in the App Economy - Version 1.0 4 Table of Contents 5. App Economy - Challenges Ahead 14 App Economy - Challenges Ahead l Monetization m HTML5 m Marketing m Conundrum for Developers Fragmentation m mcreating Cost of Apps for diverse platforms 6. Strategies to win in the App Economy 16 Fundamentals l 1. Creating a successful App o Understanding Users’ Requirements o Uniqueness o User-Friendliness 2. The Basic Rules o Creating the Buzz o Retention o Generating Sustainable Revenue-Stream 3. Three strategies to net the Apps Economy o Universal presence of Apps o Creating Enterprise Apps o Leveraging the Confluence of Smartphones and Social Media 7. References 19 MediaAgility www.MediaAgility.com sales@mediaagility.com 1-(866) MEDIA-V1

Opportunities in the App Economy - Version 1.0 5 1. Introduction App Economy - What is it? Behind the insane world of social gaming and entertainment apps lies the whole new business vertical that’s been casting fortunes for many. The world of apps - the bite-size pieces of software - might appear geeky and full of inanities to common online users. These apps aren’t in anyway pointless or insane, neither they solely belong to the tribes of developers and techie guys. In fact, the world of apps presents a sea of money-making opportunities for all those who have been seeking to blend their creativity skills with the Internet. There’s emerging an interesting applications ecosystem that’s ushering in a paradigm shift in the way businesses are done. Whenever there’s a mention of app stores, Apple App Store for its iOS offerings dominates peoples’ perception. Apparently, people tend to associate the word ‘apps’ to smartphone space only. To a surprise of many, this isn’t exactly the case. Anything that’s connected to the web can have an app store of its own. Google, Amazon, Microsoft, Facebook, among other Internet giants have already unleashed their app stores for a variety of their offerings. Apps ecosystem showcases tremendous growth potential for all and the critical question at this point of time is: “What does the term “App Economy” exactly mean? Well, App Economy’ is an umbrella term that essentially implies creation of a well-defined economic environment wherein third-party developers and companies design, develop and trade their apps on different platforms, like smartphones, tablet computing devices, Internet TV, social media sites, and any other platform connected to the web. Unarguably, the opportunities in app economy are abound! Everything rests on how you harness them to good effect. This is where this informative book would offer its expert assistance. It’ll give you a bird’s-eye view of the entire apps ecosystem, along with strategies that could help you make the most of what’s on offer... MediaAgility www.MediaAgility.com sales@mediaagility.com 1-(866) MEDIA-V1

Opportunities in the App Economy - Version 1.0 6Understanding the dynamics of app stores 4. Consoles App Stores - This is another plain where developersOne of the best things these app stores have done is that they have have been thriving to bring their apps. Be it Nintendo’s Wii console,bridged the gap between big application development companies Xbox Live, or even smart TVs and video set-top boxes, these appand small or even individual developers. stores are very much familiar to today’s web-savvy consumers.While so much has already been trumpeted about app stores and 5. Internet App Stores - These app stores include browser plug-ins,their potential of being industry game-changers, the term might still server applications, and other software stuffs that can jazz up yourbe a jargon for you. Well, an app store, as the term suggests, is a kind web browsing experience. Google has already launched a fully-of virtual marketplace where users download applications, paid or featured applications store for its signature web browser Chrome.unpaid, for a wide range of platforms, including smartphones, 6. App Stores for Government - It’s not just about businesses, butdesktops, tablet computers, social media portals, etc. Although the the apps phenomenon has also influenced the public sector. Thereonline space is swamped with a variety of application stores, these are app stores, such as Apps.gov, which provide host of usefulcan broadly be classified under following categories: applications that can be used in conducting day-to-day governmental activities.1. Mobile App Stores - These form the bulk of the apps businesstoday. Almost all the notable smartphone manufacturers, such as 7. Netbook App Stores - Amidst all the hype surrounding apps forNokia, iPhone, Android, BlackBerry, Samsung, LG, etc have floated smartphones and PCs, netbooks are the ones that have largely beentheir app stores. going unnoticed. However, this under-explored domain is now being viewed as a new business opportunity, with the Intel AppUp2. Desktop App Stores - This kind of app store is still into its platform and its implementations by retailers like Croma App Storenascent stages. Device manufacturers are now looking forward to in India.tap into these widely distributed screens. Apple has already takenthe initiative with the announcement of a full-fledged app store forMac. In addition, there are reports(1) that Microsoft’s upcoming Well, an app store, as the term suggests, is a kindWindows edition, Windows 8, will be launched with a sophisticatedapp store integrated. of virtual marketplace where users download applications, paid or unpaid, for a wide range of3. Social Media App Stores - Owing to their viral nature, social platforms, including smartphones, desktops,media app stores are one of the most dynamic properties in thevirtual arena. You’ll find app stores for almost all the popular social tablet computers, social media portals, etc.media portals with Facebook leading the pack. MediaAgility www.MediaAgility.com sales@mediaagility.com 1-(866) MEDIA-V1

Opportunities in the App Economy - Version 1.0 7 A Sampling of the Broad Array of App Stores Government Retailers andIndependent Vendors Social Computing Service Providers/ Phone CarriersHardware/ Software/ OS Vendors Desktop Netbooks Mobile Cloud Consoles/Others MediaAgility www.MediaAgility.com sales@mediaagility.com 1-(866) MEDIA-V1

Opportunities in the App Economy - Version 1.0 8 2. Current Status and Future Prospects Where the App Economy currently stands? Be it some popular social game on Facebook, or Apps for the Kindle e-Reader, applications are simply flooding the web-supporting devices. And in this scenario, it can indeed be said that the App Economy stands at the threshold where it will be the key determinant of the Internet’s next big winners. Apple presented a profitable business model in the form of App Store that inspired others in the smartphone industry to go for having virtual marketplaces for their devices. Nokia Ovi Store, Google Android Market, BlackBerry App World, Samsung Apps, are some of the examples. There are presently around 38(2) apps stores with numbers of apps have gone in hundreds of thousands, just to give you a perspective about the vastitude of apps business. Subsequently, all this fervor surrounding app stores caught the attention of other Internet giants lying outside the smartphone space. Amazon, for instance, is testing its Kindle Development Kit for Active Content in a limited beta. It won’t be surprising to see if Amazon launches a full-fledged app store for its iconic electronic reader device Kindle sometime soon. Additionally, the online retailing giant has already made its Kindle app available for the Android 2.0 platform(3). MediaAgility www.MediaAgility.com sales@mediaagility.com 1-(866) MEDIA-V1

Opportunities in the App Economy - Version 1.0 9 Where the App Economy is heading? Over the time, these apps have emerged as tools for businesses that help them to seamlessly interact withGLOBAL their customers irrespective of the platforms they are using. Talking about the smartphone industry, a research commissioned by Getjar(4), has projected that the global mobile phone app industry would reach to a humongous $17.5 billion by 2012, which is by far more than that of worldwide CD sales, which it predicted would stand at $13.83 billion for that year. In terms ofMOBILE APPS number of downloads, the research document reckoned that the mobile apps download would zoom up to 50 billion in 2012 from 7 billion in 2009. Besides, another research done by the analyst firm Yankee Group(5) pointed out that the mobile apps business in the US alone would stand at $1.6 billion in 2010, and itMARKET would rise to some $11 billion in 2014. . 60,000 50,000DOWNLOADSAND 40,000 (Figure in Millions) 30,000REVENUE 20,000 10,000 No. of Downloads Revenue in Millions 0 2009 2010 2011 2012 MediaAgility www.MediaAgility.com sales@mediaagility.com 1-(866) MEDIA-V1

Opportunities in the App Economy - Version 1.0 10 3. What is driving the App Economy? ? Key drivers in the apps business Having presented the future panorama of the app economy, we can now move on to discussing those key factors that will propel its growth in the coming future. Clearly, apps business isn’t just a flash in the pan, but it exhibits the potential to become the industry game- changer. So let’s have a look into some of the important factors that would steer the app economy: Variety of app stores: Amongst a number of critical factors, the one that holds the key is the advent of a huge variety of app stores. Earlier, these app stores were largely confined to smartphones and portable music players only. But, with the arrival of a slew of web-supporting platforms, such as tablet computers, Internet TVs, and social media websites, the avenues in the apps business have become more extensive. Now, businesses use these apps to stay in touch with their clients and prospects on a regular basis, leading to explosion of apps on diverse platforms. Games and Entertainment apps: What actually has made these app stores overwhelmingly crowded and dynamic destinations? A rough look at the entire picture would suggest that it’s our increasing appetite for entertainment and games that has brought in this significant change. Just jot down a list of top ten most popular apps around you. Chances are good that your list would end up with a major proportion of games and entertainment apps in it. These apps are enormously popular among the users and the trend doesn’t seem to be waning in the foreseeable future. In fact, rise of diverse platforms would further fuel up the adoption of entertainment- related apps. MediaAgility www.MediaAgility.com sales@mediaagility.com 1-(866) MEDIA-V1

Opportunities in the App Economy - Version 1.0 11 Another major factor that has contributed to the commendable growth of apps ecosystem is the coming of new paradigm platforms, such as smartphones, cloud computing, netbooks, and social computing. Advent of the New Paradigm Platforms: Another major factor that has contributed to the commendable growth of apps ecosystem is the coming of new paradigm platforms, such as smartphones, cloud computing, netbooks, and social computing. Apparently, these platforms, especially the smartphones, have played a pivotal role in catalyzing the development of the apps economy. Advancements in cloud computing, social media, netbooks, and evolution of smartphones into super smartphones would continue to steer the apps economy in the coming future. Dollar 1 Apps: Gone are the days when these apps were considered as pricey entities and you have to burn out a hole in your pocket to download one general-purpose app. Things have changed substantially with the masses of developers herding on these app stores. Now you can find a bunch of handy apps sporting price-tags worth $1 to $2. Such an affordability gives you the flexibility of having various esoteric apps and then combining them all to turn them into a complete solution for some specific purpose, say traveling. MediaAgility www.MediaAgility.com sales@mediaagility.com 1-(866) MEDIA-V1

Opportunities in the App Economy - Version 1.0 12 4. Monetization in the App Economy Amidst all the hype surrounding the notion of app economy, the most logical question that might leave you scratching your head could be : “Where’s the money in the app economy?” During the initial days, mobile apps used to be paid content only and users had to pay to download something. But, with a flood of applications, all the noise and gravity has pulled the price points down substantially, and from here it should logically go free. So, in this situation the following models are evolving - Advertising: This is perhaps the backbone of the app industry, particularly when the users have tightened up their wallet and shying away from directly spending to use apps at the backdrop of the global credit crunch. Mobile advertising has been serving marketers for more than a decade now, and marketing through apps seems to be the next advertising paradigm in the offing. Paid Applications: Paid applications would continue, at least for a few years to come, to be the principal revenue stream of the app economy. As iterated a couple of times earlier, the overcrowding of app stores have knocked the prices down. Besides, pricing has come forth as a major challenge for publishers in the present atmosphere. Freemium Model: Marketers and publishers have somewhat struck the right chord with a groundbreaking concept called “Freemium Apps”. These are free to download apps that offer consumers the basic functionality, and subsequently generate revenues by offering incremental values and content options within them. Around one-third of top-grossing apps on the Apple App Store consist of these freemium apps, according to a recent research(6). MediaAgility www.MediaAgility.com sales@mediaagility.com 1-(866) MEDIA-V1

Opportunities in the App Economy - Version 1.0 13 Virtual Goods: Some apps, especially games, have championed this kind of revenue model, which involves upselling virtual goods and items within the apps. You must be familiar with various social games, such as Farmville, that have been using this money-making framework. Subscription-based Apps: Though not as popular as their one-time transaction and free version cousins, these apps are being looked as the mighty future of the app economy. Some subscription-based apps such as Napster, Netflix, Hulu, are already there on the app space, and more and more streaming services are busy developing their own subscription-based iterations. Offers and surveys: One useful way of leveraging the audience is by displaying in-game offers as pop-ups. Clicking these pop-ups direct users to offer- walls, where they’re asked to fill surveys in exchange of virtual currency or points. This significantly enhances the offer-based advertising revenues for developers and publishers. MediaAgility www.MediaAgility.com sales@mediaagility.com 1-(866) MEDIA-V1

Opportunities in the App Economy - Version 1.0 14 5. App Economy - Challenges Ahead Like almost every entity in this world, app industry too is mired in its own characteristic set of staggering challenges and roadblocks. At this juncture, however, it can be said that the industry is faring in “the positive direction”. Amidst all the excitement encompassing the apps ecosystem, there exists a slew of challenges. Some of these are: Monetization: The app industry has been thriving hard to unleash a profitable yet sustainable monetization stream. While companies like Zynga, Rock You, etc have done considerably well so far, there are a host of small development outfits that have largely been going unnoticed in the crowd. Some novel monetizing techniques, particularly freemium apps, have given industry a glimmer of hope though. But here too, the big developing firms having widely distributed apps would have the largest share of the pie. Paid applications too are no more a safe bet at all, especially in an environment where the competition has been soaring like anything. HTML5: The uncertainty over how HTML5 would evolve is a major cause of concern for developers seeking to exploit the app economy. Some industry experts even opined that the strength of these app stores would fade away once the HTML5 standard is rolled out in its full form. As a matter of fact, HTML5 is being pegged as the future of mobile advertising, and the launch of Apple’s new iAd service seems to have consolidated this standpoint. However, it’s still not clear whether this whole phenomenon would result in a complete HTML5 takeover, or this would complement the apps business in some more constructive ways. MediaAgility www.MediaAgility.com sales@mediaagility.com 1-(866) MEDIA-V1

Opportunities in the App Economy - Version 1.0 15 Marketing conundrum for developers: With these app stores drenched with millions of apps from all sorts of development outfits, small developers have been finding it trickier to catch the eye. Using social networking sites, micro-blogging, affiliate marketing, word of mouth, are some of the useful techniques that the developers are using to cope with the visibility challenge. Fragmentation: Fragmentation isn’t as bothersome to the iPhone developers, as it has been for the developers working on platforms other than those of Apple’s, particularly Android. Fragmentation has reportedly(7) been a major limiting factor for Android in its awe- inspiring journey of becoming the top-notch mobile platform. Cost of creating apps for diverse platforms: One of the major roadblocks developers are facing with is the availability of a broad range of platforms. Owing to discrete form factors and specs, developers have to cough up considerable amount of money and efforts to churn out apps for various platforms. MediaAgility www.MediaAgility.com sales@mediaagility.com 1-(866) MEDIA-V1

Opportunities in the App Economy - Version 1.0 16 6. Strategies to win in the App Economy App Economy presents an ocean of opportunities for entrepreneurs seeking to make the most out of this emerging business phenomenon. This isn’t a cake walk though, and only people with definitive strategies backed by systematic execution can bear fruits in this domain. Creating a successful app Building successful applications takes a lot more than sound development skills and creativity. What are those ingredients that can make any app popular, so much so that people start recommending it to their friends. What is that ‘secret sauce’? Well, let’s figure this out.... Creating successful apps involves some general business rules to be followed, and these rules can be summed up as 3Us of the app industry, which are: Understanding user requirement: This holds the key in any type of business including that of apps. However, because of the high degree of dynamism, users’ demand becomes more critical in the app economy. Uniqueness: It’s cliche but important - general apps have become obsolete and people are now looking for something unique. Users should understand clearly how the given app is going to be useful for them, and why the app is unique. Conclusively, the unique value proposition (UVP) of the app should be communicated crisply to them. User-friendliness: Irrespective of their uniqueness and usability, apps sporting complicated user- interface and incomprehensible features fall flat in the market. Developers have to work hard to make the features of there apps easily-navigable. MediaAgility www.MediaAgility.com sales@mediaagility.com 1-(866) MEDIA-V1

Opportunities in the App Economy - Version 1.0 17 The Basic Rules Success in app economy too, as in other business domains, hinges on to adhering to business thumb rules. There’s no magic, but plain focused execution can do wonders. Some useful things to be kept in mind are: Creating the buzz: This is the most significant component that chips in the success of any application. It entails keeping the noise pitch high during the launch of any application. Creating robust launch power can be done in several ways in the apps business, some of which may involve, leveraging other apps and cross-selling users into them, or even leveraging social networks to spread the word. Retention: Once the app has gained ample launch power, the onus is shifted to retaining the acquired consumers. This is where creativity, stickiness, elegance, and efficiency of the developer would come into play. Generating sustainable revenue-stream: A sustainable revenue-stream is the next step in this series, and after having a sufficient count of users on-board, it’s sensible to leverage the audience and go for some well-defined revenue channels. MediaAgility www.MediaAgility.com sales@mediaagility.com 1-(866) MEDIA-V1

Opportunities in the App Economy - Version 1.0 18 Three strategies to net the Apps Economy Opportunities in the app economy are boundless, but the key question here is “How to capitalize upon them”? Well, let’s just unriddle this... Universal presence of your apps: We are surrounded by a raft of web-connected platforms, and a majority of them are going for having app stores. In this situation, companies should have a ubiquitous presence to have maximum penetration. Development outfits should keep an eye on diverse research studies to stay abreast with the changes in app economy framework and keep checking about the platforms that are doing well. Creating Enterprise apps: Creating service endpoint apps for enterpise is always a safer bet in this highly competing environment. Though the entertainment apps, such as social games, are presently leading the packet, but then the space there is heavily crowded and vying. Things are more or less similar in the utility apps domain. With the arrival of super-smartphones and tablet computing devices, these enterprise apps depict tremendous growth potential for developers and publishers. Leveraging the confluence of smartphones and social media: Emergence of smartphones, and the arrival of social media on them, has brought a big shift in the way businesses do marketing. Apps on social networks have been doing better than the other apps in terms of number of active users and revenue generation. One classic example of this phenomenon is Farmville, which has more than 80 million(8) monthly active users across the globe, and the count is shooting high with every passing day. The reason behind the grand success of this popular game is that a sizable proportion of the gamers have been playing it using their smartphones. MediaAgility www.MediaAgility.com sales@mediaagility.com 1-(866) MEDIA-V1

Opportunities in the App Economy - Version 1.0 19 References 1. Ars Technica http://arstechnica.com/microsoft/news/2010/06/leaked-windows-8-slides-an-app-store-for- windows-ie9-beta-in-august.ars 2. Business Insider http://www.businessinsider.com/mobile-apps-are-hot-hot-hot-even-more-so-than- you-thought-2010-3 3. PCMag.com http://www.pcmag.com/article2/0,2817,2374495,00.asp 4. Guardian http://www.guardian.co.uk/media/pda/2010/mar/17/ mobile-apps 5. Wall Street Journal http://blogs.wsj.com/digits/2010/03/17/studies-forecast-rapid-growth-in-mobile- apps/ 6. GigaOm http://gigaom.com/2010/11/10/one-third-of-top-grossing-iphone-apps-are-free/ 7. Ars Technica http://arstechnica.com/open-source/news/2010/06/ars-explains-android- fragmentation.ars 8. Mashable http://mashable.com/2010/02/20/farmville-80-million-users/ MediaAgility www.MediaAgility.com sales@mediaagility.com 1-(866) MEDIA-V1

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Opportunities in the App Economy

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