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IPFS News Link • Technology: Software

The Way You Buy and Use Apps Is About to Change Big Time

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Turning apps into money has always seemed like a fairly straightforward proposition. Sell the app, get the money. Or better yet, give the app away, and sell upgrades inside it. But while the basics remain largely the same, the alchemy that goes into it has changed significantly. How you buy apps, and where, and what kind, is going to change a lot in the next few years. It's already started.

A new report from app analytics firm App Annie lays bare just how far the app landscape's tectonic plates have shifted. As you might expect from such a complex, interwoven ecosystem, a host of factors come into play. The geography has changed. The business models have evolved. Even the devices are different. That means challenges for some developers, opportunities for others, and a world of choice for consumers.

Subscription Salvation

Let's make one thing clear: In-app purchases, the insidious upgrades and add-ons that crowd your credit card statement, aren't going anywhere. Neither are in-app ads. "Advertising and in-app purchases are the two dominant methods of generating revenue," says Eric Thompson, data analyst for App Annie.

And why would they? The top revenue earners in 2015 were all either in-app upgrade monsters, like Clash of Clans, Game of War, and (yes, still) Candy Crush Saga. The blanket category of in-app purchases, though, was also buffeted by the continuing rise of recurring charges to services like Spotify and HBO Now. "Subscription revenue made incredible gains," says the App Annie report, "thanks to strong demand for video, music, and dating apps."

Subscriptions are worth highlighting for a few reasons. First, they're recurring, and predictable; there's no sense of exasperation trying to get to the next level. More interesting still is that 2015 was the year subscriptions finally broke out of their streaming video and music niche, thanks largely to Tinder's introduction of a controversial paid tier. Despite a March introduction of Tinder Plus, Tinder still ranked in the top five apps in worldwide, combined iOS and Google Play revenue.

Other dating apps have found similar success, though on a smaller scale, both at home and abroad. The more important for the app economy, though, may be whether other app types can shift to a subscription model as well. The short answer? Don't get your hopes up.

"I think that there are inherent limitations to the subscription model," says IDC mobile analyst John Jackson. "They will tend to continue to coalesce around a relatively narrow set of services." Jackson adds that there's plenty of opportunity for break-out hits within those niches, but the idea that someone would subscribe to, say, a calendar app month after month seems far-fetched.

Or games, for that matter. Speaking of which, what about games?

Pay to Play

That there are more mobile games than ever is obvious. That the mobile games that find the most success are coming from increasingly diverse sources is less so, and makes for a far more exciting app future.

"Although the individual apps leading the revenue charts remained relatively steady in 2015, beneath the surface there have been massive shifts in the mobile gaming market," according to the App Annie report. "Games are maturing at a faster rate, while mobile gaming revenue has become less concentrated."


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