Roundtable: The Future of the App Economy

NEW YORK – Sustainable revenue was on everyone’s mind at the APPNATION NYC Mobile + TV 3.0 Summit in SoHo this morning. In a keynote roundtable moderated by APPNATION president and event chairman Drew Ianni, leading executives discussed the future of the mobile app economy.

Panelists included Tim Chang, managing director of the Mayfield Fund; Lars Albright, CEO of Session M; Peter Farago, VP of marketing at Flurry; Scott Kveton, CEO of Urban Airship; and Don Dodge, developer evangelist at Google.

“Most apps are free and have no clear path to revenue,” said Dodge. “They’re hoping that lightning strikes and they’ll be acquired.”

“I’m not sure every app needs to be its own startup,” Chang agreed. “The underlining trend” is the “’modulization’ of the app building blocks on the back end. There are delightful user interfaces on one end, but all the power and processing magic happens in the cloud.”

When it comes to building native apps versus mobile Web, said Dodge: “It’s really simple: It comes down to what kind of user experience are you trying to get and what are you willing to spend? If [your app] doesn’t require things that are native to a phone, go with HTML5.”

At the same time, said Kveton, “I’m really excited about the second generation of [mobile] apps. They take advantage of the inherent nature of the device. They know who you are, where you are, and what you like.”

The in-app purchase seemed to be the future of monetization.  While most users are unlikely to spend a thousand dollars just to own the latest game, said Farago, there are those who would spend that amount on virtual goods once they were already playing.

The game developers would then need to “describe that audience, package it up, and sell it to the advertiser,” he added.

The subscription model “doesn’t fit for a lot of businesses,” said Farago; “It works for your gym, for your newspaper.”

As for advertising, “most apps won’t have enough traffic to make advertising work,” said Dodge.

The revenue models for the app marketplaces will need to change as well. “That 30 percent cut is really tough,” said Kveton. “One of these entrants will change the game by either lowering it or getting rid of it.”

As for television apps,  “Apple, Amazon, and Google have the best chances,” Chang predicted. “It’s not about making money on the device; it’s about making money through the device.”

What did Dodge have to say about that? “We’ll be right there with Apple trying to make it happen,” he said. “Personally, I think the Nielsen guy [CEO Jonathan Carson] was right” in that people watch television while occasionally looking down at a second, smaller screen. “I think it’ll be real-time apps on your phone while you’re watching TV.”