The Economics of Apps

Volker Hirsch (@vhirsch)

Mobile 2.0 Europe - Barcelona - 17 June 2010

Mobile Apps...

... can be a bit of a nightmarehttp://fraizochocolat.wordpress.com/2010/02/

You do everything right...

... on the inside...http://blogs.fayobserver.com/faytoz/files/2008/10/davinci_toothed_gears_original.jpg

... on the outside...

http://picasaweb.google.com/lh/photo/f-4eoJyuiitoJIPDaqrMJQ

... and on marketing

... and of course with Carriers

http://www.ruralmarketingservices.com/images/marketing_road_sign.jpg

Something is still missing...

http://www.latest-wallpaper.info/free-money-wallpaper.htm

The Discovery Dilemma

http://www.lanfaxlabs.com.au/images/all-detergents-3-IMGP3918.JPG

THe $ Dilemma (carrier model)

total revenue

after VAT

after carrier

after distributor

after porting & QA

after License

after production

after overheads

THe $ Dilemma (carrier model)

2

THe $ Dilemma (app store model)

THe $ Dilemma (app store model)

The Mobile Web then?

http://gapingvoidgallery.com

And again: loads of them...

What is Social?

Social refers to the interaction of organisms with other organisms and to their collective co-existence [...]

Source: Wikipedia

http://commons.wikimedia.org/wiki/File:Bhgs_crowd.jpg

And so what ???

1,700,000,000

4,600,000,000

1,800,000,000

2,250,000,000

Internet users (PC, Mobile, Web Cafe)

unique credit card holders

tooth brushes in use

mobile phone subscriptions

475,000,000circulation of newspapers

825,000,000registered cars

4,000,000,000FM Radios

various sourceshttp://upload.wikimedia.org/wikipedia/commons/8/85/Numbers_grid_in_NY.jpg

Prof Dr Karin Knorr-Cetina, Sociologist

Concept: Object-Centered Sociality

https://svn-create.freedesktop.osuosl.org/public/create/docs/logo/images/light_bulb_off3.jpg

You need Context!

http://flickr.com/photos/nolifebeforecoffee/124659356/

My app a Social Object?

http://adsoftheworld.com/media/print/lego_video_game?size=_original

It always was!

Let’s recap: Social is interaction in context

Object

http://upload.wikimedia.org/wikipedia/commons/e/e0/Petanque_players_in_Cannes_(France)_2003.jpg

It’s about Engagement

- People Interact by nature.

- Fans can be Fanatics!

- An app and the environment in which it is set matters to its fans.

Apps are powerful social objects

http://www.windsorfinejewelers.com/media/catalog/product/cache/1/image//t/a/tacori-platinum-round-diamond-semi-mount-engagement-ring.jpg

What

- Create Fanatics.

- Provide avenues for people’s passion.

- Incorporate people’s strongest community: their friends!

- Keep it in context, i.e. in the app.

How

- High-Scores (Reward) but make them customizable (Relevant).

- Connect to the community (Avenues of Passion).

- Person-to-Person Challenges & (Playful contextual interaction).

- Awards / Rewards (Fanatics).

- In-app transactions & Virtual Currencies (Contextual Monetization).

Source: Bain Consulting

74% of all buying decisions are made on a friend’s recommendation

http://www.cartoonary.com/madagascar/images/madagascar-marty-alex-gloria-melman-penguins-julien-2048x1536.jpg

Discover

Engage

Monetize

Cross-promotions, Friend Finding, and Social Network Integration let people connect to each other and get the word out.

Increase installed base

challenges and achievements engage users and let them share their app experience.

Increase user activity

Downloadable content and in-app currencies drive additional revenue streams

Increase revenues

Discover

Increased installed basefrom more people downloading the games

Increased activity in your app:people use it more often

Engage

Increased revenuesfrom additional revenue streams

Monetise

123,296,966,069,453

The Law of Big Numbers

One last thing:

Connect to any social network

* Already integrated

**

*

*

*

** Scoreloop is the official partner for mobile gaming

*

don’t forgetthe “other”

smartphones!

And maybe the other folks are noteworthy, too...

Core Social

- Social Tools (High-Scores, Player-to-Player Challenges, Recommendations [using any source available], Awards & Trophies.

- Full virtual currency (supports in-app purchases, item downloads, dual currency)

- Multi-platform: iPhone, Android, BREW, Symbian, MeeGo, RIM, Web.

Image Creditshttp://upload.wikimedia.org/wikipedia/commons/8/85/Numbers_grid_in_NY.jpg http://gapingvoidgallery.com http://upload.wikimedia.org/wikipedia/commons/e/e0/Petanque_players_in_Cannes_(France)_2003.jpg http://upload.wikimedia.org/wikipedia/commons/5/56/Bhgs_crowd.jpg https://svn-create.freedesktop.osuosl.org/public/create/docs/logo/images/light_bulb_off3.jpg http://www.easy-access.com/garagelo/coloring/tools.gif http://www.scorpioshoes.com/accessories-42/shoe-care-44/dr-martens-shoe-polish-black-8128.htm http://picasaweb.google.com/lh/photo/f-4eoJyuiitoJIPDaqrMJQ http://img.wallpaperstock.net:81/car-mechanics-wallpapers_11816_1024x768.jpg http://www.mixedforyou.com/fineart/Renaissance/Flying%20Machine,%20Leonardo%20da%20Vinci,%201490.jpg http://blogs.fayobserver.com/faytoz/files/2008/10/davinci_toothed_gears_original.jpg http://www.adsinn.com/wp-content/uploads/2008/01/1100109100-1.jpg http://adsoftheworld.com/files/images/video-game.jpg http://www.thealarmclock.com/euro/images/flirtomatic.png http://img.glu.com/WSOP_Mobile/images/WSOP_header_logo.png http://villageshow.co.uk/assets/images/trophy.jpg http://images.internetsafety.com/www/images-pm/safe-eyes-mobile-logo.jpg http://www.foldingbikehut.co.uk/images/Toolbox%20Travel.jpg

@vhirsch

http://vhirsch.com/blog

volker@scoreloop.com

+44 7843 599 678

http://scoreloop.com

Thank you!