According to analysts at research firm Gartner, app monetization will grow more difficult going forward, challenging a large amount of mobile developers to compete for a small revenue pool. According to a special report, by 2018, Gartner predicts less than 0.01 percent of consumer mobile apps will be considered a “financial success” by their developers.
Vice president and Gartner analyst Ken Dulaney described the app market as “hyperactive” in the report, saying the increasing amount of high-quality free apps has changed and increased the expectations for paid apps.
Dulaney says of all paid applications, “90 percent are downloaded less than 500 times per day and make less than $1,250 a day.” According to the report, this is only going to get worse as competition increases.
Gartner’s report goes on to predict that by 2017, 94.5 percent of all app downloads will be for free apps.
“The vast number of mobile apps may imply that mobile is a new revenue stream that will bring riches to many,” said Dulaney. “However, our analysis shows that most mobile applications are not generating profits and that many mobile apps are not designed to generate revenue, but rather are used to build brand recognition and product awareness or are just for fun. Application designers who do not recognize this may find profits elusive.”
Multiple companies have released technology aimed at increasing the value of each download, or the value of each player. For instance, predictive analytics company Playnomics has released its Churn Predictor technology, giving developers advanced warning for when players may leave gaming applications. In this way, developers and marketers can release specific targeting for those players in an effort to get them to stick around, and hopefully spend more money.
The full “Predicts 2014: Mobile and Wireless” report is available on Gartner’s website.