Appnation: mobile is “cannibalizing” TV, ngmoco builds its user base via a “platform effect”


By Scott Reyburn Comment

Flurry CEO Simon Khalaf and mobile industry executives spoke at The CXO Roundtable: The State of Appantion session yesterday at the Appnation IV conference in San Francisco, where Khalaf reiterated the mobile industry boom and ngomoco revealed its method for user acquisition.appnation-logo

This was a two-part session beginning with Khalaf and then a panel discussion moderated by TechCrunch writer Kim-Mai Cutler and joined by mobile industry leaders discussing topics such as user acquisition, advertising and leadership changes.

Khalaf began his 10-minute presentation showing a chart of Flurry’s worldwide events tracked to date on iOS and Android. The chart displayed a massive uptick in events measured by Flurry. He added that Flurry has tracked one trillion events in total.

“The market is booming,” he says. “I’ve never seen anything like this in my entire life.”

Khalaf backed up his statement that the market is booming by referencing Flurry’s recent report where the company said that mobile app usage grew 35 percent in 2012, challenging other media formats such as TV and web browsing on desktops and laptops.

“In under four years, mobile is cannibalizing a 50 to 60-year-old past time in TV,” he says.

Khalaf also debunked three concerns investors may have about investing in mobile including the difficulty with making money in mobile and apps, the high cost to scale an app business and that only a minority of developers are capturing the majority of the revenue. Khalaf refuted the first investor myth by showing a chart displaying the revenue growth in mobile compared to web from 1996 to 2012. In a matter of four years, mobile revenue has caught up to the web (note: the web data doesn’t include Google AdWords revenue).

He debunked the second myth by showing that the cost per visit on web is $0.63 while on mobile apps its $0.22. For the third myth, Khalaf compared the number of companies controlling the majority of revenue on web versus apps. He brought up a recent report by analyst firm Canalys which estimated that 25 developers account for 50 percent of app revenue in the U.S. on iOS and Android by saying that it was “completely wrong.” On the web, five companies control a majority of the revenue which include the likes of Google, Facebook, and Yahoo, while there are 248 companies in the mobile apps space. Khalaf added that venture capitalists want the next Facebook or Google and don’t accept the fact that there isn’t a big player on mobile yet, but rather a bunch of mid-market companies capturing the largest portion of the app economy.

He concluded that “there has not been a better time to invest in this economy.”

In the roundtable portion of the session, Cutler was joined by these four panelists: Tapjoy vice president of sales Geoff Hamm, Urban Airship CEO Scott Kveton, ngmoco CEO Clive Downie and Velti chief marketing officer Krishna Subramanian. The first topic of note was about acquiring users.

Downie chimed in first, explaining how mobile game developer ngmoco wanted to build a user base big enough with its mobile-social gaming network Mobage to generate what he called a “platform effect.” So now that ngmoco has built a user base that comes to its network, current users are now the ones who are bringing new users to the platform by inviting their friends.

“[The ‘platform effect’] is cutting cost of user acquisition drastically,” he adds.

Another topic of note was ngmoco’s and Tapjoy’s recent change in leadership. Downie, the new CEO of ngmoco, said co-founder and previous CEO Neil Young was honest with the team and Young said team leadership needed to change hands. Hamm cleared up any confusion with the departure of Mihir Shah, mobile advertising and publishing platform Tapjoy’s previous CEO, by saying that Steve Wadsworth is not the interim CEO, but the permanent one.

Stay tuned to Inside Mobile Apps in the next couple of days for more Appnation IV coverage.