By Robert Kubiak
An app store is a online store where you can download anything from social media to games to shopping apps. There are two prominent app stores, the Apple App Store and Google Play. In this digital age, these two app stores are vital to the health and growth of our technology. The app store gives independent people the ability to put out their own apps for people to buy which gives people employment as well as large corporations and investment into mobile app companies.
Apple has “Created...1.35 million jobs in the ‘App Store ecosystem”. According to Fortune. This includes independent people and large companies. Do you remember Flappy Bird? The creator was a man in Vietnam named Dong Nguyen. According to Forbes Flappy Bird got $50,000 a day from advertisements which is crazy considering Nguyen was just 1 man. Then let's see about a company. Supercell’s Clash of Clans, according to Forbes made an annual revenue of $892 million from advertisements and in-app purchases.
Oh yes, the dreaded microtransactions. Microtransactions are purchases you can make in the app to enhance your experience whether that be optional or necessary things. If a company makes a game for free on a phone, there will most likely be in-app purchases or microtransactions so that the creators of the app can still run the app. These are very common in almost every mobile game, but no one does it better than EA games. When EA released their Madden NFL Mobile and Star Wars: Galaxy of Heroes, Smartasset reports that EA’s extra content business increased by 21% since the quarter before that.
As I was watching the New Years Eve ball drop I couldn’t help but noticed that there were advertisements for Tik Tok all over the streets. Tik Tok is a new “social media” app that had apparently made enough money to have advertisements at the New Years Eve ball drop in Times Square. That means that this app was able to compete with companies like Planet Fitness, a fitness gym giant, and Capital One a very large credit card company, for advertisement space. This showed just how much money a mobile app that has been out for only a year can gross. This will also increase the demand for Tik Tok because of all other publicity it got.
This also means that there are many, many businesses that you can invest in that create mobile apps. Not all app companies are public even after they blow up. Some companies you can invest in such as Rovio Entertainment, the creators of Angry Birds, and others are not public such as the aforementioned Supercell.
Also, the companies that own the app stores are getting lots of money out the buying of apps. According to the TechRepublic to keep your app on the app store you need to pay a yearly fee of $99 and the Google Play store has a single fee of $25. This is a huge amount of money when you take into consideration that there are, according to Statista, 2.1 million apps on the Google Play store and 2 million on the Apple App Store. For the apple store alone that it $198 million a year! That is not including the standard 30% royalties the companies get on everything sold from their app store. That means that Apple could easily gross over a billion dollars a year with different prices and sales of each app. This is very profitable for companies with app stores.
Bibliography:
“App Stores: Number of Apps in Leading App Stores 2018.” Statista, 2018, www.statista.com/statistics/276623/number-of-apps-available-in-leading-app-stores/.
Josephson, Amelia. “The Economics of Mobile Apps.” SmartAsset, SmartAsset, 11 Dec. 2015, smartasset.com/investing/the-economics-of-mobile-apps.
Mackenzie, Tim. “App Store Fees, Percentages, and Payouts: What Developers Need to Know.” TechRepublic, 7 May 2012, www.techrepublic.com/blog/software-engineer/app-store-fees-percentages-and-payouts-what-developers-need-to-know/.
Reisinger, Don. “Here's How Apple Is Impacting the U.S. Economy.” Fortune, Fortune, 4 May 2017, fortune.com/2017/05/04/apple-us-economy-impact/.
Spence, Ewan. “The Vital And Depressing Lessons Flappy Bird Can Teach Indie Developers.”
Forbes, Forbes Magazine, 18 Feb. 2014, www.forbes.com/sites/ewanspence/2014/02/18/the-vital-and-depressing-lessons-flappy-bird-can-teach-indie-developers/#bcc895737920.
There are a lot of apps out there that have microtransactions. If you take Facebook for example there are ads everywhere so you know they are for sure making a lot of money because Facebook can be accessed all over the globe from no matter where you are. All you need in a computer and internet then you are part of the life line of the globe. In some game apps there are ways where you can buy extra things for that game or even to remove ads. Companies make the option to remove ads more expensive than how much that company is receiving to have that ad on their game. There are a lot of games where you can buy in game things. There is an unlimited amount of times of what you can buy so as long as you buy things the company will receive the profits then it’s their faith to do whatever they want with that money. They can pitch it towards a product, pay employees, pay other companies, a lot of options that come with opportunity cost.
ReplyDeleteWhen a person usually goes into the App store (for Apple) it usually shows hundreds of games that people recommend in the home screen which will also bring in more revenue for these producers. Even though many people may recommend these games or these games are increasing in popularity my question after reading your post is....Do those producers still have to pay to get their game on the recommended page or does it just automatically proceed to that page once it hits a certain popularity level? If I had to guess those companies most likely had to pay not just the average yearly App store fee but probably an additional fee in order to bring their game to the front of the millions of others out there.
ReplyDeleteWith only one platform for iPhones and one platform for Google phones, phone companies are able to charge more for people to keep their apps on the app store. This can almost be compared to a sort of monopoly, but it isn't, as patents and company choices being what allows these companies like Apple and Google to make their own decisions. Technology also allows for advertisement to be a large form of income for app developers. Although micro-transactions are sources of income as well, advertisements are the most prominent form.
ReplyDeleteA lot of apps have ads but sometimes they have options to pay to remove ads. For spotify for example, you can either sit through ads or pay to remove them completely with premium. I wonder which option, either ads or paying to remove them, makes the app companies more money? Is the cost to remove ads equal to the cost of the revenue keeping ads would bring for that user? This could also provide evidence for how tolerant consumers are to having to experience ads every time they use an app.
ReplyDeleteI know that microtransactions have become a huge source of revenue within any type of game/app. Not just on mobile phones, but in things like PlayStation and Xbox games such as NBA 2k and Fortnite. These microtransactions are often complained about, but people still buy them to get the coolest looking character they can possibly have.
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