We’d like to share some of our findings in the market research we’ve done so far. This is all desk research, as that is the most useful and viable way for us.
Firstly, an introduction from: http://www.businessinsider.com/how-to-figure-out-if-your-iphone-app-will-get-you-rich-2009-8 (with some of my own additions)
The Basic Facts
• 45 million iPhone and iPod Touch devices [Apple Earnings Announcement] (This has since increased to 55 million, according Apple Executive Andrew Nagle on November 17th 2009 – 30 million iPhones, 25 million iPod Touchs)
• 54% of iPhone and iPod Touch users are in the US as of June 2009 [Admob Mobile Metrics Report]
• The iPhone comprises 68% of worldwide iPhone OS devices and the iPod Touch makes up the other 32% [Admob Mobile Metrics Report]
• Only 75% of users actually download apps [Pinch Media]
o The most frequently downloaded free apps reach approximately 30% of devices [comScore]
o The most frequently downloaded paid apps reach approximately 3% of devices [My calculations - explained later]
Right off the bat, there’s a few back of the envelope calculations to make: 54% of the 45M devices are in the US which means ~ 25M devices. The US has about 300M people. That means about 8% of the general American population has one of these devices.
Entrepreneurs are optimists by nature, and it’s tempting to think that 100% of people will buy your product. After all, your product is awesome, right? But reality is a quite different story. In fact, only about 3% of users have purchased the most popular paid apps. To determine that number, I used sales figures from one of the all time best selling paid apps, Firemint’s Flight Control game. According to Firemint’s Alexandra Peters, sales to date have been 1.4 million. As a percentage of the 45M Apple devices, this is ~ 3%.
This establishes the entire market’s raw potential. It’d be nice to have the same success as Flight Control had, but we can’t afford to assume we will. So, we made case studies of a few games for more information. Here’s a couple of them:
Case One: http://www.taptaptap.com/blog/donkeys-and-pickaxes/
The developer team ‘taptaptap’ saw an earning of approximately $360,000 NET for two apps (one generating only 3% of that NET) over the period of one year (August 2007 – August 2008). Here’s a look at their most recently documented 7-day income for both apps:
Where To?
• what it is: makes your iPhone behave more like a real GPS device by helping you find points of interest around you
• price: $2.99
• number sold: 3,193
• gross sales: $9,547.07
• more info: at the App Store
Tipulator
• what it is: the tip calculator that’s actually fun to use
• price: 99¢
• number sold: 353
• gross sales: $349.47
• more info: at the App Store
Now, it is worth noting that both of these applications were released very close to the iPhone’s launch, giving them great coverage and appeal, as well as comparatively limited competition. On the other hand, the number of iPhone users has increased ten-fold since these figures were documented. On the other hand, so have the number of competitors.
The developer notes a few additional key points in the article. Firstly, coverage and marketing in the right places is absolutely crucial. This is something we have documented and discussed from the very beginning, and will continue to do so. Secondly, coverage in the right places is also important. The developer notes that while Tipulator was ranked in the top ten apps of the ‘Finance’ category, it’s sales were comparatively weak. The categorisation of our own app must be carefully considered when the time comes.
Case Two: http://www.markj.net/iphone-hit-tennis-sales-stats-marketing/
Hit Tennis is a simple iPhone tennis game, but with really fun engaging gameplay designed specifically for playing tennis with the touch screen. You swing your finger across the screen to hit the ball, controlling strength and direction, so you get the feeling of real rallies as you play. As such, it’s comparable to our own project as so far as targeted utilisation of the iPhone’s multi-touch interface is concerned. The first 6 month’s sales figures were fairly positive too.
Priced at $1.99 from December – May, it shows that sales will continue despite circumventing the 99c price-tag (which many claim is required for the success of an unknown app). However, it’s worth bearing in mind that Tennis is a popular sport. Consider Tennis on the Nintendo Wii, for example, and its popularity amongst gamers of all types. Simply having the word ‘Tennis’ in the title would grant a degree of popularity, based on familiarity/notoriety. Following the usual release and Christmas peaks in sales, the developer had a spot of luck in February, in the form of an iPhone TV ad that Apple ran:
January through April I worked on other projects and did no promotion of Hit Tennis, but I got a little lucky. A competing Tennis app Touchsports Tennis was shown for a few seconds in Apple’s TV ad for the iPod touch in February. It got people looking for Tennis in the App Store, and as my basic SEO was OK of course they found my app and I got increased sales. I was not tracking app store rankings at the time, but this sales spike probably lifted my rank in the sports games category, leading to ongoing sales in March.
Over March, the developer noted a decline in sales of the equivalent of one unit per day. To combat this, at the end of March, he revised the price of the game to 99c. This produced a sales boost as can be seen in the graph above. However, whether the sales boost was down to the price change or the update which pushed it to the top of the App store’s ‘New’ chart, must be considered. The fact that, as the above graph shows, the price drop did not produce a maintained increase in sales suggests, in my opinion, that the update itself was the most productive element. However, it’s important to remember the following:
Version Update and Release Date Trick
Mean time I’d been working on an update. Hit Tennis was my first time programming 3D graphics, so I did everything with simple billboarding 2D textures and alpha masks to create shapes. Pseudo 3D if you will. It worked for the simple game that Hit Tennis is, but several reviews in the app store had said ‘it should be more 3D’, and in fact due to the tennis racket’s 2D existence, it would disappear when you saw it side on. Saving gameplay enhancements for later, for this update I replaced the 2D tennis rackets with real 3D objects. A fun journey which had me learn to buy stock 3D models, edit them with Cheetah 3D (which I highly recommend), and load them into the game using Jeff LaMarche’s Obj File loader.
The update came out on the 28th. Apple had just stopped sending out ‘your app is approved’ emails, but I’d noticed that app approvals have been reliably taking 7-8 days so I knew when to expect it. On the 28th I changed the availability date in iTunes Connect to 28th April. This is the ‘release date trick’. It requires careful timing and a bit of luck to make it work, but when it works it gives a sales boost. As I explained in Understanding App Store Top 100s an app’s release date is important in one place: the default view of a category in iTunes on the desktop. With the release date trick I got Hit Tennis near the top of that page, and it stayed there for a several days. This update almost doubled sales. There were two other effects with the update that may have been factors in the increased sales. The new version triggered several thousand updates per day (see below), proving that I still have a lot of people that play the game. Maybe Apple uses updates in the ranking algorithm and it helped raise my ranking? Secondly, stars are now reported in the app store by version, so the new version gave me a chance to shake off my two and a half stars and start over (I’m now much happier with three stars 
).
With the other case studies we made, we have been able to formulate a fairly solid marketing plan (hopefully), including pricing and placement, as well as cheap ways of advertising. This will be documented here soon!
