This week, we’re focusing on paid applications (for our post on piracy, see here). By providing some analysis of paid applications, we hope to answer some common support questions and give developers a sense of how their application’s performance compares to the ‘typical’ paid application.
Our Estimates
Pinch Media has a model which we use to estimate the size of the App Store as a whole, based on the relative performance of both paid and free applications using Pinch Media, as well as the ranking of applications using Pinch Media in Apple’s App Stores around the world. Based on our pool of data – which covers over 10% of all downloads – we believe approximately 610 million of the over 2 billion App Store downloads so far have been of paid applications, or approximately 30%. We believe this translates to approximately $900MM in overall developer revenue since the launch of the App Store. Paid application downloads drive the large majority of App Store revenue, although this revenue is not evenly distributed among developers.
Although paid applications make up 30% of the downloads we see, they’re about 77% of the 100,000 titles available in App Store. There’s definitely a disparity between the typical downloads of a paid application and the typical downloads of a free application. However, paid applications can still reach a large audience – more than half of iPhone/iPod Touch devices in our database have installed and used a paid application.
The ‘Typical’ Paid App
If we take the data on the thousands of applications running Pinch Media, and weight it so it corresponds to the actual distribution of iPhone applications (our data has a slight tendency to come from highly-ranked applications with more downloads), the average paid app performs as follows:
~9,300 downloads
(vs. average free app downloads: ~71,000)
~$12,100 revenue
(net to developer: ~$8,500)
That’s not to say this is a common result! The arithmetic mean can be misleading. App Store sales and distribution are ‘top-heavy’, with the most popular applications receiving a very disproportionate amount of sales. A small segment of developers do dramatically better than this average. Most do much worse.
Downloads aren’t linked to price
While it’s common wisdom that lower-priced applications are downloaded more than higher-priced applications, we don’t see this in our data. The average $0.99 application using Pinch Media is not downloaded substantially more often than the average $4.99 application. We still see dramatic changes in sales when any one particular application adjusts its pricing – an application selling X units at $0.99 will sell a small fraction of that at $4.99. We suspect that the relatively strong performance of $4.99 applications are a reflection of their quality, and a sign that the App Store will support higher prices for an engaging experience. Users only start to display strong sensitivity to price at price points above $4.99.
Paid Apps are used more than free apps
Paid applications as a whole are used slightly more often and for slightly longer periods than free applications – potentially a reflection of application quality or a consequence of increased user attachment to items that they’ve paid for. Lower application usage by pirates (see our previous blog post) suggests that paying for something does increase a user’s attachment to it. Usage by price point is harder to explain – $4.99 applications are used significantly more than $0.99 applications, but $9.99 applications are used significantly less than $4.99 applications.
The Presentation
Last Word
This post was adapted from a presentation at the last 360iDev. Look forward to more of the insights we shared at the conference in our upcoming posts, by subscribing to our RSS feed and following us on Twitter. If you’re an app developer and are interested in tracking your own user statistics, you can sign up with Pinch Analytics for free.
- Greg Yardley
Today’s App Developer’s Corner features Matt Martel of Mundue, makers of one of the most successful games on the app store, reMovem. The following is Matt had to share with us about his experience as an independent developer.
Give us a quick overview about yourself and company.
I’m a long-time Mac developer, relatively new to Cocoa. I started doing iPhone development in early 2008 when the SDK was announced. I founded Mundue LLC in July 2008 in order to publish my own apps. It was originally a part-time effort for both myself and my wife Trish. Today we have 9 casual games on the App Store. Our latest reMovem Halloween Edition was released in early September to coincide with the current holiday season.
Why did you move into the mobile space and what was your incentive to use the iPhone platform?
I wrote a Mac version of the reMovem game several years ago, but never released it. Then I rewrote it in Qt to be cross-platform (Mac OS and Windows) but still didn’t release it. Then I rewrote it when I started doing Cocoa, and when the iPhone SDK came out it occurred to me that this would be a good fit for the iPhone. After finishing an iPhone app for my day job, I spent a couple of weekends developing the free version of reMovem. I thought there was a great opportunity to publish to the App Store with its existing large customer base and worldwide presence.
How did you turn your concept into an actual business?
It debuted two weeks after the launch of the App Store, and became an overnight hit. I spent a couple of weeks developing more modes and released them as the paid version of reMovem. Because the free version was so popular I was expecting the paid version to be at least a modest success. However, we knew we needed to develop more apps and I immediately started working on the next one, which turned out to be iKeno. We released two additional games by the end of the year.
What would you say has been the most successful strategy/avenue for promoting and increasing visibility for your apps and your company?
We promote our apps in many ways: press releases, in-app ads, print ads, web site ads, cross-promotion within our own apps, Facebook fan pages, and twitter accounts. We promote our company in person at conferences and user group meetings, and I run a local iPhone developer meetup in the Boston area. We believe our most successful strategy has been the hybrid free/paid model for reMovem. The free version is used to upsell to the paid version with additional game modes. We also translated reMovem into 13 languages in order to increase its appeal throughout the world. I think in the early days of the App Store we were able to maintain the momentum of reMovem by having frequent updates. Fortunately it made Apple’s 2008 top ten free games list. Any mention by Apple is golden, and this helped keep reMovem free in the top 100 for several months. In January, one of our other games, inFact World, was featured as a “Staff Favorite.” This led to a 20x spike in downloads briefly, followed by a slow decline as it was rotated to the second, then third, page on the iTunes App Store main screen.
How has Pinch Analytics helped with app development, promotion, and marketing?
By adding analytics to some of our games we have a deeper knowledge of how users interact with them. For example, we know that a significant percentage of iPod touch owners are still on iPhone OS 2.2.x, and we will continue to support them as long as it is practical. Pinch Media’s analytics enabled us to recognize a recent milestone when the one billionth game of reMovem free was played. That represents something just north of 2,700 years of cumulative game play. This is just since we began counting in January. Wow!
Do you have any piece of advice that you would like to share?
For the indie developer it’s not enough to be a good programmer. You may need to wear many hats: testing, marketing, graphics, PR, etc. Don’t short-change any of these roles. All contribute to the quality of your product and ultimately to your success.
Take a look at our web site http://www.mundue.net and http://www.removem.net for more information on our games. My development blog is at http://blog.mundue.net. And if you would like to track how your marketing strategies translate into resulting user behavior, register for an account at Pinch Media and let us know if you have any questions getting started.
-Adit Shukla
A Brief Overview:
A few months after the launch of the App Store, developers began reporting unexplained spikes in their new user numbers, spikes that were completely irreconcilable with iTunes Connect reporting on new downloads. After investigating, it unfortunately became clear that this wasn’t an error in our reporting, but instead was due to application piracy.
To help developers better understand their traffic (and to cut down on customer support requests!), Pinch Media introduced jailbroken phone and pirated application detection to our analytics library and reports this June. We wanted to get developers a better handle on where their users were coming from, as well as some insights into the costs of piracy – both in terms of lost sales and in infrastructure costs, since many applications have a server back-end.
It’s been months since we introduced jailbroken detection to our library, and we’ve begun to get a better understanding of the jailbroken ecosystem, which has remained reasonably steady. To date, Pinch Analytics has received data from approximately 4.0 million jailbroken devices. About 38%, or around a million and a half of those, have used a pirated application. This estimate is low – application pirates take steps to avoid detection – but it’s worth pointing out that an individual who jailbreaks their phone is not necessarily an individual that steals applications.
Piracy is a global phenomenon, and rates of piracy in the United States are relatively low compared to other countries. The below chart shows pirated installs as a percentage of total installs, segmented by country:
Interestingly, piracy is negatively correlated with per capita national GDP.
Just over 60% of paid apps using Pinch have been pirated. This estimate is also low, since application pirates occasionally disable our tracking. When an application is pirated, an average of 34% of all installs are cracked — in other words, about half of legitimate paid downloads.
Typically, pirated applications see a significant increase in usage immediately after the application is cracked and distributed, followed by 2-3 weeks of comparatively high but decline activity and culminating in low but significant piracy over the lifetime of the application.
Pirated applications are used less frequently, less intensely, and for a shorter overall length of time than purchased applications. For instance, the retention rate for pirated installs follows the same overall pattern as the retention rate for legitimate purchases, but drop-off is significantly higher.
Frequency and duration of use follow similar patterns, with pirate usage lagging legitimate usage.
We suspect application pirates use applications less for a few reasons. First, because a purchase has not been made, pirates are less qualified – their attachment to the application is much more tenuous. Second, pirates often install applications in bulk – and with more applications to choose from, pirates spend less time in any. Third, all jailbroken phones (whether the application is pirated or not) suffer from increased application crash rates, which may result in more-frequent uninstalls.
All of our stats point to a common conclusion: pirates stick around less than an average user.
Try Before you Buy?
Many pirates argue that their piracy is legitimate, because it allows them to ‘try before they buy’ and therefore ensure they’re receiving good value for money. To test this, we first set a baseline for typical conversion rates by looking at several dozen ‘lite’ to paid application pairs. ‘Lite’ applications are relatively common in the App Store, and by giving the user a sample of the paid application experience also provide an opportunity to try before buying. The average “lite” to paid conversion is approximately 7.4%. In other words, about 1 in 14 people who try a free ‘lite’ application go on to purchase the paid version.
If application pirates are purchasing applications in order to try before they buy, we would expect to see a similar conversion ratio. In fact, pirated-to-legitimate conversions are approximately 0.43%. About 1 in 233 installations of a pirated application eventually become a legitimate purchase.
Last Word
This post was adapted from a recent 360iDev presentation. Look forward to more of the insights we shared at the conference in our upcoming posts, by subscribing to our RSS feed and following us on Twitter. If you’re an app developer and are interested in tracking your own user statistics, you can sign up with Pinch Analytics for free.
- Greg Yardley
Today’s App Developer’s Corner features David Steinberger of comiXology.com, an online source for comic book geared apps and services. The following is what David had to share with us about how he has focused on the iPhone platform in his business.
Give us a quick overview about yourself–your team and company.
My name is David Steinberger and I run (along with John Roberts, my business partner) comiXology.com and our suite of comic book related services and apps. We have two main iPhone apps: comiXology (for print comic) and Comics (for digital comics).
Our goal at comiXology.com is to create an ecosystem for comic book consumers, and to introduce more people to the joy of reading comics. Through our services and applications, we connect comic fans to great comics (physically and digitally), publishers, creators and local comic shops. You can connect to local retailers and order books to pick up at the store.
Our team consists of many people helping with: web, editorial, service and app development.
Why did you move into the mobile space and what was your incentive to use the iPhone platform?
The iPhone is compelling for any graphically-oriented product or media, so it’s jumping off point for comiXology’s mobile apps strategy. Passion for comic books is very personal, and it just makes sense to be able to carry the passion with you to read or check in with what’s new at any time.
Our first app for the iPhone, comiXology, shows a list of what comics and merchandise are arriving at your local store, along with all our editorial work from the website (columns, podcasts, etc.). It lets comic book aficionados prepare their pre-order lists for comics that are coming out on Wednesday (new comic book day!). With the graphic orientation of the iPhone, showing tons of covers and preview pages became not only possible, but very compelling.
As for digital comics, the density of pixels on the iPhone screen combined with the power of the processor and SDK made digital comics really work for the first time, arguably on any device. The comics look amazing on the screen, and our patent-pending approach to presenting them really works well on the iPhone.
Wired.com said that we had “solved the problem of reading comics on the small screen.”
How did you turn your concept into an actual business?
Creating the business comes from a combination of 3 years of hard work and receiving the backing of individuals that believe there is a big market out there. Our goal has always been to become a unique player in the comic book market, and we’ve achieved that position. We’re a consumer-oriented business that connects disparate parts of the market via technology, and extracts a small bit of value from each part. So, we have a terrific consumer experience that gives us revenue producing subscription services for retailers, amazing PR opportunities for publishers and creators, the ability to sell mobile apps and digital comics, etc.
What would you say has been the most successful strategy/avenue for promoting and increasing visibility for your apps and your company?
We are the market leader in iPhone comics for one reason alone: we have the best of what’s available in the form that both consumers and reviewers of apps prefer. Making a great product that people want to use is absolutely #1. Without it, any other strategy is useless.
Now, of course we support our app with lots of standard marketing moves, reaching out to reviewers, buying some advertising, putting together great PR with our content partners, and more. We’ve also recently added tweeting directly from the app so people can tweet about the comic they just purchased. But without a high quality, beautiful, well-functioning app to support it, none of that would matter.
How has Pinch Analytics helped with app development, promotion, and marketing?
It’s been great to get to know our users better, and we’ve recently made even more changes to our analytics code to capture more information. The analytics code was a snap to integrate. We’re actually approaching 10 years of accumulated use time of our app, and that’s an amazing statistic to know. Most importantly is to see what’s working and what’s not working for the consumers, and our next update should give us much more of that information.
Do you have any piece of advice that you would like to share?
On the analytics side: be very thorough on the analytics side from the start. We missed a few opportunities to get data from our app that would help us promote more effectively, gain new partners, and support our consumers. Take the time to pick out all the actions you’d like to know about, and analyze that information to make a better consumer experience. Tracking what is used the most in the app, or what is used the least can indicate usability problems or let you know people are using the app in an unexpected way that you can improve in your next build.
On the app dev side: Build a feedback function into your app. This is invaluable.
On the customer service side: Answer every feedback email. This builds loyalty and one-to-one relationships with consumers. This will increase the value of your brand.
Chceck out comiXology for the latest about comics for the iPhone platform. And if you would like to track how your marketing strategies translate into resulting user behavior, register for an account at Pinch Media and let us know if you have any questions getting started.
