Flurry Reports on the Increasing Spread of App Revenue and the Rise of the App Developer Middle Class
While there’s often much pessimism among developers as far as the challenges of money making on mobile apps goes, analytics firm Flurry’s latest report discusses how the revenue among mobile apps is being distributed. With it, there’s evidence that an app developer ‘middle class’ is forming, as with more revenue being spent on mobile apps, developers do not need to reach the kind of high ranks that they did in the past to make the same kind of revenue. As well, the ‘long tail’ of revenue is getting longer.
Flurry expects the total revenue for mobile applications on iOS and Android to increase from $5.4 billion in 2011 to an expected total of $8.7 billion in 2012. Interestingly, advertising revenue is expected to increase to $2 billion in 2012, from $980 million in 2011, representing a shift from 17% of app revenue to 23%. This may be fueled by the increasing number of free-to-play and freemium apps and games.
Next, Flurry shares data that seems to indicate that there may just be life outside of the top ranks. For revenue from premium and in-app purchasing, apps outside the top 100 are expected to make 68% of the revenue, compared to 45% in 2010. This is compared to the top 25 making 28% of the revenue in 2010, and an expected 15% in 2012. However, considering the increased number of apps on the various stores, this revenue is beig split among more developers.
Flurry also shows that the distribution of revenue within the top 100 is normalizing; while there’s still a tall drop from the top ranks compread to 2010, the drop is less steep now. Where the #6 app in 2010 was making just over 40% of the revenue of the #1 app, the #6 app is now expected to make 60-65% of the revenue of the #1 app, and apps all the way up to the low 20′s are making at least 40% of the revenue of the #1 app.
What Flurry posits is that this all points to the rise of the middle class app developer: there are those getting rich off of the store, but there is also room for comfortable success on the store with all the additional revenue being spread throughout the mobile market. However, with more customers and more revenue to be made, there are also more developers and publishers fighting for slices of the same pie. The money is increasing, but it’s not necessarily getting easy for developers looking to succeed on mobile.