Micropayments the future for app fortunes
It’s well-established that the vast majority of cellphone applications offered for sale make a pittance. But some firms are pulling in a genuine fortune with the potential for even more thanks to an Apple policy change.
BusinessWeek has profiled some of those companies, including Zynga, the firm behind games such as Farmville and Mafia Wars. Though not officially available as an iPhone app yet, the games can be played through the Facebook site.
Though the games themselves are free to use, there are charges for some of the features involved. For example, players can pay a few cents to buy virtual seeds to plant in their virtual games. You might think that’s a) not something most people would do, and b) not going to add up to much anyway.
But it turns out these tiny payments add up to a whopping $100 million a year. That’s one hundred million dollars. And while that’s hardly typical, it’s not unique. A $3 app which simulates the work of T-Pain is said to be helping its creators rake in three million bucks a year.
The Business Week report also reveals that, as is often the case in the tech world, the real money comes from investors rather than sales. One venture capitalist has earmarked $100 million to fund app developers.
There are two schools of thought on whether the picture the report paints of a booming industry will prove accurate in the long term. One side of the argument is that the sales rate is unsustainable. While the figures are distorted by the inclusion of free apps, there have been repeated statistics showing users quickly get bored of apps and rarely use them, which may eventually persuade them to stop spending as much cash. And the reality that the vast majority of developers make virtually nothing from their work may eventually deter even those with genuinely marketable ideas.
However, the counter argument is that mobile device ownership and use continues to grow and that app stores will increasingly become more attractive and easier to use. There’s also been a recent decision with the potential to boost the market even more: Apple will now allow developers to produce apps which are free to download but have associated optional costs, such as subscription charges – or the micropayments which the likes of Farmville have already exploited in Facebook.
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