The Business of iPhone Games


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By Anil Mohan
Lecture on the business of iPhone games for an undergraduate class at Indiana University, Bloomington

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  • 04/14/10
  • Avg price is $4.74, and only two 99c gamesThe most popular iPhone game is only the seventh best in terms of revenuesSweet spots selling shedloads of a premium game like Call of Duty or The Sims 3 – and then $2.99 selling a casual gameAlso note: 15 of the top 20 Top Grossing Apps on the App Store are games
  • The Business of iPhone Games

    1. 1. iPhoneGames<br />
    2. 2. Games are available in your pocket, without needing to buy a separate device.<br />
    3. 3. Convergence<br /><br />
    4. 4. The Big Numbers<br />Addressable base of 50m+ devices<br />30m iPhones and 20m iPod touches<br />More than 3 billion App Store downloads<br />15 of the top 20 Top Grossing Apps on the App Store are games<br />Of the 65,000 available applications, roughly 11,000 are games (compare to 732 Xbox360 games)<br />The iPhone gaming market controls $250 million USD in revenue since its launch in July of 2008, making it larger than any console’s digital game service (XBLA, PSN, WiiWare/VC)<br />
    5. 5. PlayStation Portable took 3 years to ship 25 million units<br />
    6. 6. The equation<br />
    7. 7. 30% cut that Apple demands in return for providing the purchasing infrastructure and delivery platform<br />Convergence – the delivery platform is the same device as the playing platform<br />Developers are self-publishing via iTunes<br />
    8. 8. Developers Striking It Rich<br />10m Paid iPhone games sold by Gameloft since the launch of the App Store<br />$1,687 Revenues per hour of development time forNimbleBit’s Scoops ($269,929 total)<br />2m Tap Tap Revenge 3 downloads in a week last Christmas after going free<br />10 days How long it took Playmesh to rack up 1m free downloads of iFarm<br />13.5m Downloads of Backflip Studios games in seven months ($1.75m of revenue)<br />79,422 Doodle Jump’s sales on Christmas Day alone<br /><br />
    9. 9.<br />
    10. 10. Mobile games represent about 25 percent of the entire game development community, or more than twice the 12 percent from before. Apple's presence is believed to have spurred on most of the growth<br />19 percent of all game developers are writing for the iPhone and iPod touch. The figure is more than twice as high as for the DS and PSP<br />
    11. 11. Xbox 360/PS3 Game ≈ 350,000 person hrsiPhone Game ≈ 2,000 person hrs<br />
    12. 12. How the iPhone market works<br />Most games get lost in the clutter of so many iPhone apps<br />The market is very top heavy – between 10 and 15% of iPhone gaming titles take up 90% of revenue<br />Success is short-lived<br />72% of games still played after 30 days<br />But only 23% after 60 days, and 16% after 90 days<br />
    13. 13. Top Grossing Games chart<br /><ul><li>Avg Price: $4.74</li></li></ul><li>The difficulty of distinguishing your game from among of tens of thousands apps becomes key<br /><ul><li>As competition heats up app makers are dropping prices to stay on top of the download charts
    14. 14. iTunes AppStore ‘Top 100 list’ is the most popular way of reaching users, becoming a marketing tool
    15. 15. Because developers need to keep apps cheap to make sure that download levels are high enough to get on the top lists, they have less incentive to invest a lot of time and money in creating higher quality apps.
    16. 16. Rise in free-apps paid for by advertising</li></li></ul><li>App Store<br /><ul><li>Note that for mobile market, things are different from a traditional console market where it’s the hardware that fights against each other
    17. 17. As a result, it becomes a battle between whose app store is more popular</li></li></ul><li>The Future<br />36 million Number of iPhones that Apple will sell in 2010 (Piper Jaffray)<br />$2.8 billion iPhone games revenues in 2014 – 24% of handheld market (DFC)<br />
    18. 18. iPhonevs Android<br />Android is an Open-Source mobile OS<br />Customisable UI – across many devices and manufacturers<br />Android Market – similar business model to AppStore, except no approval process for apps<br />Currently 20,000 apps available for Google's Android<br />