Monday, October 18, 2010

iPhone vs Android App Sales Numbers

This is a numbers post comparing my experience of selling the same apps on iOS devices and on Android.

A few weeks ago, the Android Market merchant accounts were opened to Canadians and I was finally able to publish the pay versions of my Android apps. I had been waiting for this for almost two years. I made the first prototype of Speed Bones on Android before the iPhone version since I didn't realize Canadians were not allowed to sell in the Android Market. When I learned this fact, I bought a mac mini on eBay and ported the game to iPhone OS thinking I would publish the Android version later when Google updated their store. My apps had relatively good success on Apple's App Store staying in the top 10 apps of the medical section of the app store for more than 6 months.

About five and a half months ago, tired of waiting for Google, I released Speed Anatomy for free on Android supported by an Adsense banner. I would release the more advanced versions, Speed Bones MD and Speed Muscles MD when Google opened it's store to me. To my surprise, the game was much more downloaded on Android devices than on iOS devices at more than twice the rate.

Speed Anatomy, Android (ad supported): avg. 2600 per day

Speed Anatomy Lite, iOS (ad supported): avg. 1100 per day

Now this is not a direct comparison since on Android I give the full version of Speed Anatomy for free (with ads), while for iOS devices I give a Lite version with a little less content, and a full version without ads. One of the reasons for this was that I was initially getting very good CPM on Adsense when it was in private beta (see previous blog post) so I was moving towards monetizing my apps this way instead of selling them. I had planned to do the same for the iOS versions. Unfortunately, the high CPM didn't last when Adsense for mobile was opened to more people. It's now probably less than a fifth of what it used to be.

Part of the strategy in releasing the free version early was to create a user base for Speed Anatomy so that when I released the MD versions, I had some traction and the rankings of the new pay apps would be pushed up from all the users upgrading at the same time (Somehow I hadn't I thought of this strategy before I was basically forced to it by Google). I was enthusiastic about this because I was regularly receiving e-mails from fans who wanted the MD versions released on Android.

I was excited a few weeks ago when the pay side of the Android Market was finally opened to Canadians. I quickly finished the Android versions of Speed Bones MD and Speed Muscles MD and published them. At the same time I pushed an update of Speed Anatomy with a link to the two new versions. Android makes this really easy by allowing links to the Android Market that lead to a list of all apps from a particular developer. Another plus for the Android Market is that updates are instantaneously available, that is, mere seconds after I upload an binary through the web site, I can download it on my phone.

Even though by that point in time I had more than 400 000 downloads of the free version, a fairly big user base with the number of banner clicks higher in the free Android version than in the free iOS versions, sales of the MD versions have been somewhat disappointing. It has only been a few days but combined revenues or the two apps are less than half what I get through Apple.

I'm not sure how to explain the difference. It doesn't seem to be a problem of visibility since the free version is doing well.

If you look at other pay apps in the Android Market you will observe that in general they do not seem to be doing very well on Android. The top app in the health category has between 5000-10000 downloads total since it was released in March. That is an average of less than 45 downloads per day (download numbers ranges are available for every apps in the Android Market).

One issue that might explain the problem, and is annoying to deal with regardless, is that the Android Market app is buggy. Everyday I receive at least one support e-mail from users that have tried to install one of my apps but got it stuck on an 'installing' state. There is a solution that requires clearing the cache of the Market app which seems to fix the problem however I wonder how many people simply give up instead of sending me mail.

Another hypothesis is that I might still be disadvantaged by being Canadian. For example yesterday I received a support e-mail for someone who is usually able to purchase apps with his credit card but wasn't able to pay for my apps. The Google Checkout support site states: "The types of cards accepted through Google Checkout are based on the seller's location.". This is bad because the reduced sales numbers lower my rankings and result in even lower sales numbers.

I get a few e-mails per day about failed credit card transactions. It's possible that this happens with Apple also and that they simply hide it from us but it's worrisome nonetheless. All of this also amounts to an annoying level of e-mails and considerable amount of time spent answering support mail for stuck installations.

Some people blame piracy. I didn't use Googles new copy protection scheme on the apps. I'm not very fond of DRM and believe piracy shouldn't be as much of an issue with 99c software. I's possible I'm wrong. Maybe people will still steal to save a few pennies.

Another annoying aspect of Android Market is that it doesn't take care of levying sales taxes. I'll have to work with my accountant at the end of the year to figure out how much I owe.

In brief, for me, the Android Market compared to Apple's App Store generates double the downloads on the free versions, less than half the downloads on pay versions, requires more support, is a little spammy with my inbox and leaves sales tax accounting to me. Plus it seems like I may still be disadvantaged being Canadian. Given the ad revenues on the free version and the fact that porting an app is less work than doing one from scratch, Android is still not a bad business for me. It provides a nice amount of extra revenues on top of my iOS sales. All sources of revenues included, it probably generates almost 50% of what I get from iOS versions.

Wednesday, October 13, 2010

The New App Stores Economy. Resuscitation of the American Dream on a Global Scale.

One of the interesting aspect of being part of the new mobile apps business is that the business model is not just an evolution of standard global business practices but a whole new kind of economy. App stores and markets take creators and consumers, two parties that have traditionally been separated by layers of cubicle based work and make them closer than they have ever been. This creates an exciting new cyberland of opportunity for consumers, engineers, artists and creators in general.

Large global media businesses are being replaced with smaller ones that rely on a thin layer of web based automated business processes. This results in smaller more efficient teams and more cozy relationships all around even to the point where consumers have access to leaders inside the businesses through online commenting, forums, blogs, twitter and e-mail. It's the friendly family outlet on a global scale.

Just the other day, I was setting up an account. I was having a bit of trouble getting it to recognize Canadian banks so I clicked on the live online help button. Twenty seconds later, I was chatting away with Jessica Mah founder and CEO of the company.

This is not the most novel part of this new economy. Web technologies have enabled incredible changes in the ways everyone communicates for the past 10 years. What mobile app stores bring in addition to that is the use of these same web technologies to streamline not just communications but the whole task of doing international business. A lot of business support personnel and middlemen are being replaced with technology.

From the perspective of us creators, things are simplified a lot. The marketing and the accounting tasks of selling creations are reduced significantly such that we can manage it ourselves with very little help. This means, for example, that a 14 year old kid with a knack at coding stuff up can sell his work in the same stores as the big multinational companies and if he is good, it might have as much visibility and sell just as well. Very little capital and no investors are required to do a startup. Creators simply need to build great products. In my experience, the stores' mechanisms give a fair amount of visibility at a price much lower than anything available through traditional marketing mediums.

The smallness of the teams can be extreme. As an iPhone and Android developer, I am the engineer, the designer and artist for my products. I don't need a CEO, I don't need a conventional marketing department, I don't need a finance department. Everything is automated. There is no manual work to do transactions even internationally. If I was to employ another body, it would probably be another creator, not a business support person.

On top of all this, if creators need more help, they can use the same kind of low overhead online stores that they use to sell their creations for hiring employees that will gladly implement the more tedious parts of their vision. It's very easy to start relationships with artists, developers or assistants from lower cost countries such as Russia, Eastern Europe, India or the Philippines through sites such as Elance.

From the perspective of the consumer, it's good too. The first obvious benefit is lower prices, e.g. $.99 apps. Since overhead is very low, pricing can be lower. This effect is multiplied by the fact that markets are international and profits come from huge volumes on small markups. They also get a more personal and personalized products because of the cozy customer-creator relationship.

Another benefit is the reduced reliance on advertisement for visibility. Instead of learning about new apps trough ads, potential customers go to the store which will suggest the most popular and the newest apps and even make recommendations based on their own profile and past purchases. These recommendations will more likely match what they want instead of what advertisers are trying to push on them.

Of course, there are downsides for those who used to profit from inefficiencies in the legacy system. It's probably not a good time to have a pure business background in the tech sector. A lot of these skills are being commoditized and replaced by technology.

From the customer's perspective, the downside might be that the downward pressure on price and risk can prevent the more capital intensive projects from happening or else these projects are designed to constantly squeeze out money from them through things like in app purchases.

Tens to hundreds of millions of dollars are sometimes spent on creating console games, no one in their right mind would spend that kind of money if they didn't know they had the insider knowledge and contacts to have visibility and a good spot in the distribution channels or if they couldn't get the necessary margins to pay for huge marketing campaigns.

I don't think most developers want to spend millions when they have to compete for their spot in the app stores with $.99 apps that can cost less than twenty grands to make. The more grandiose projects may be at a disadvantage. If this is what you prefer as a customer, you might be disappointed in the selection in this new economy. In the new apps stores, we see that a lot of the apps that would be more costly to develop are actually remakes of old classics that are cheaper to make and likely to sell well.

There is cultural aspects to all this. Humans are social animals. People want to listen to the same music, play the same games and watch the same screen shows as their friends. Things that become culture are natural monopolies. They can be tautologically popular, popular because they are popular. People often won't even admit they like something if it's not popular enough. Large media companies used to make sure that when they spent huge amounts to create something, they could fill the distribution channels enough for cultural movements to form around their products. When this status was reached, it wouldn't matter if there were more enjoyable or less costly competitors out there. This is why control of the distribution channels by a few big players was important. As anyone who has witnessed the effect of being featured in a store, it's not the inherent value in the good being sold that carries the highest monetary value, it's having the most visible spot. The book you see going into a book store is the one that's going to sell even if there is a better one hidden in the back.

With the new app stores, creators are playing in a more democratic playground where algorithms often decide who wins. This means more control to the people. People actually chose who wins, but it also means that big original projects may never come to be.

Overall I think this new economy is positive as it brings more diversity, more choices, more opportunities at lower costs. There is tremendous business efficiency in this system. There's less waste, barrier to entry is diminished, old is replaced by new more quickly and there is less opportunity for monopolies to form. In a way, it's capitalism at its best an I'm excited to be part of it.

Friday, October 8, 2010

Speed Geography Lite Released!

The free Speed Geography Lite for iPad is now available on the App Store.