In a World of 99 Cent Millionaires

Over the past few years there has been a tremendous shift toward open platforms and now there are limitless tools to connect with your friends, increase your productivity, and waste your time. Facebook was a tremendous catalyst for this but now there are millions of applications on the web, some useful, some not, most of which now provide developer APIs. For those of you not aware of what APIs are, they enable developers to quickly integrate their own features directly into another service or build upon existing application functionality. Just yesterday I was using my "Remember the Milk" to do list and thought, "Hey wouldn't it be useful if there was a desktop version of this?" While I could have taken the time to develop a desktop application using Adobe AIR, I decided to forego this activity as it probably wouldn't have been very profitable. The landscape for developers has changed drastically over the past 18 months, during which time tons of platforms have opened resulting in countless new distribution channels. Making Millions From 99 Cents If you hadn't figured it out, my reference to 99 cents is the price that most applications on iTunes that aren't free cost. In an article I read this morning on CNN, a developer was interviewed about how he made over $250,000 in profit in the past two months from selling his applications on iTunes. This developer isn't alone. Many other developers are selling applications by the thousands and turning out a nice profit. This model is a transformation for developers who thanks to becoming an early entrant to the iPhone platform are becoming rich. In contrast to the Facebook platform where early entrants had a clear advantage, the iPhone platform appears to be an equal opportunity for all. Not only are iPhone developers making money from selling thousands of 99 cent applications, but social platform developers are making millions from penny CPMs. Large applications have been embedding ads from the numerous social network ad networks, and are receiving anywhere from 3 cent CPMs to much higher depending on the ad network and accounting for individual custom campaigns. For the most part, these companies are working to generate as many page views as possible, to piece together a reasonable revenue stream. Casual Games Are Big Money on the iPhone If you're looking to strike it rich on the iPhone platform, it has become clear what the best route is to develop casual games. Of the top 10 paid applications on the iPhone, 7 are games, 2 are general entertainment types of applications, and one is utility. That trend continues most of the way down the leaderboard. It's clear that the social games industry which emerged last year in a big way, has become an entire movement of casual gaming. Becoming a leader in the casual gaming space is hard though as all the big players have already entered. SEGA, Electronic Arts, and venture backed companies like SGN and Zynga have all entered the space. My guess is that this space is going to continue to grow and those companies that can develop cross-platform capabilities and have a rapid deployment time will be the most successful. What's the Best Model? So when you can launch applications practically anywhere on the web, and there is always some sort of business model, where is the best place for developers to invest their time? That's for each developer to decide but personally it makes a lot more sense spending your time developing applications that can instantly be sold. Social networks currently don't offer a platform for selling applications. If you don't have the abilities to program for the iPhone though, it may not be the best idea. Additionally, the iTunes platform is increasingly competitive as there are teams of developers behind many of the applications on the platform rather than individual developers. It doesn't mean you don't have a chance though if you you decide to go it alone. Steve Demeter developed a single game which isn't among the top 100 but he was still able to make $250,000 in two months. Where are you currently developing? What do you think the best model is in this fast changing environment. Image used from the Millionaires Club.

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In a World of 99 Cent Millionaires

Nick O'Neill

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Nick O'Neill