The development of mobile applications is becoming a big business. It is estimated that it will be worth $70 billion in 2017. In this context, it is clear that the mobile app market can be a significant source of income for people who are considering making a business out of an app.
Global app stores revenue
Global app revenue generated within the App Store and Google Play increased 40% in 2016, from $25 to $35 billion, according to an App Annie report. The Apple store accounted for almost 70 percent of that total.
If Android independent stores and mobile advertising revenue are included, worldwide app revenue was $89 billion last year. These numbers do not include offline merchandise sales from retailer apps or online-to-offline services such as Uber, as their payment process does not use billing systems from app stores.
Most of the revenue, as usual, came from games. This category accounted for 75% of the revenue on the App Store and 90% on Google Play.
App monetization models
In the mobile applications market 89% of applications are free. You may be wondering how this is possible? Of course, mobile users prefer free apps. Therefore, putting a price on your app may not be the most profitable strategy to monetize your app.
Probably the freemium model is the most used to monetize an application, it consists of free applications that offer upgrades or additional premium content. This model is so popular that it is responsible for 69% of App Store and 75% in the Google Play Store. However, it is only effective for applications with a high number of downloads.
Another successful way to monetize is through advertising within the application, but this strategy is losing ground against the freemium model. One of the reasons for this shift is that users find advertising on mobile applications intrusive.
If you are going to advertise within your app, keep in mind that the average screen size is 3.5 inches, so make sure adjust the size of your ads accordingly. If you want your ad to occupy the entire screen, the user should have the option to close it or it should disappear automatically when the content of the app has been loaded.
For paid apps, the expectations for 2017 are that the average price will be reduced by 8 cents. This change reflects user preferences as no one likes to pay for apps.
1. Clash of Clans
The Finnish company Supercell launched Clash of Clans in the Apple Store in 2012 and in its first 4 months more than 3 million people were already playing it. Children, young people and adults from more than 130 different countries compete against each other in this strategy game, set in a world of vikings, warlocks, warriors and spells.
The revenue of this game is over $1,153,911 per day. It has been a top seller for iPad in 122 countries.
Spotify is the streaming music leader with 40 million users worldwide and a catalog of 30 million songs. In terms of platform, Spotify comes out ahead because of the large number of plugins that can be installed on the Mac or Windows desktop player to view song lyrics or receive Last.fm recommendations. Spotify’s revenues hit $2 billion in 2015, growing its income by 80% over the previous year.
3. Game of War
If you want to learn about monetization strategies, you should check out Game of War which generates over $11 million a month worldwide.
Game of War paid $4 million for an advertising campaign this year. While only 3% of the audience actually pays to play, the game generates $1 million gross per day, so they can easily afford that kind of advertising campaign, right?
4. Mobile Strike
Another case study is Mobile Strike, a modern warfare action game, which allows you to build a base and train elite troops to fight enemies on the battlefield.
You begin the game with 100 units of gold, bundles range from 600 units for approximately $5 to 20,000 for around $99.99. No surprise that is ranked 6th on the list of top grossing games and has a daily revenue estimate in $587,600.
Another successful non-game app is everyone’s favorite dating app, Tinder. They are making $799K per month, part of this total comes from running ads, but that only accounts for an estimated 5.8% of its total revenue. The rest comes from the premium members, users who do not have much time to flirt.
Tinder Boost places the user’s profile above all the other profiles in his geographical area. Within 30 minutes, the member paid for Tinder Boost will be the most popular user in his area, which according to its creators increases x10 the likelihood of people seeing his profile.