App Marketing Conversations – The App Ecosystem and Opportunities for Developers

by GameHouse

Every week GameHouse will bring you App Marketing Conversations. App Marketing Conversations is a round table discussion with Ryan Morel of GameHouse, Robi Ganguly of Apptentive and Ian Sefferman of MobileDevHQ. The goal of these round table discussions is to share collective knowledge about trends in the app ecosystem, app marketing tips & recommendations, and how app developers can drive their business. If you have suggestions for topics you’d like us to cover, please tell us in the comments!

In our first session, Robi, Ian and Ryan discuss the recent report from AppNation Research on the overall size of the app market reaching $60B in 2013 – largely attributable to physical goods sales – and how app developers can take advantage of these opportunities. Watch the video below and make sure to check out:

 

Transcription:

Ryan: Hi, and welcome to App Marketing Conversations. I am Ryan Morel with Game House. I’m here with Ian Sefferman of MobileDevHQ and Robi Ganguly of Apptentive. So today we’re going to talk a little bit about general appp market sizing. As always, there are tons of reports flying around “research” about trillion dollar markets and all this stuff. So we’re talking a little bit about that today. We’ve talked about this in the past, but it’s always fun to . . .

Robi: Yeah.

Ryan: It’s always to huge down the road.

Robi: It’s funny because it feels like every three months the number goes down, and then every three months the number goes up. But if you look at it over the last three years, it’s almost all up.

Ryan: Yeah. Yeah. It’s like a . . . I don’t know what it’s like, but it’s interesting. So I think there’s a couple interesting numbers that have come out recently, and maybe this one is not so recent. But Apple had paid out, as of WWDC six weeks ago, $10 billion to developers. So in context that has gone up four to five billion I think in six months or so.

Ian: Yeah, that’s about right.

Ryan: That’s going to continue increasing. Tim Cook also said that they were bigger than the rest of every app store combined. So that means that today the market is maybe $20 billion and growing.

Ian: Yeah. Which, by the way, I think he’s probably exaggerating on that, making market size a little bit bigger, especially when you look at it Baidu this week bought a Chinese app store for $1.9 billion. That in itself was really big.

Ryan: Yeah.

Ian: So they’re probably doing a few hundred million in revenue just from that little Chinese venture.

Ryan: Yeah.

Ian: Not really little. They’re not little. They’re at $1.9 billion.

Ryan: And of course that doesn’t take into account any non-Apple or Google transactions, right, so advertising, offer wall stuff, affiliates, it’s a giant overall app market.

Ian: Yeah. So I think we’re probably at 20 to 30 billion in just paid and app purchases, and then you have to add in the other channels as well. How big do you think advertising is for publishers?

Robi: I mean it seems to be growing on the Net. Like the Flurry Store, they’re all telling that advertising and mobile is going to be expanding, and it’s becoming number one in terms of your revenue. So it definitely seems like it’s expanding in terms of the advertisers who are starting to experiment, and more people are doing that, they’re trying to mobilize.

Ryan: Yeah. Which brings us into a little bit of the conversation we just had with you and this other report from . . . it’s part of the APPNATION Research, there we go, that 2013 the entire app ecosystem or revenue generated from within the app ecosystem will be about $60 billion growing to $151 billion by 2017. And the vast majority of that is coming from physical content sales, which is really interesting, so people going and using their device to order something from Amazon or new Apple products or something from Etsy. This has been a really simple way for people to buy the things that they would normally buy on other channels.

Ian: Well, I mean even if I think about myself personally, in the last two weeks I think I’ve done two Amazon orders. I’ve probably taken four Uber rides.

Ryan: Yeah.

Ian: I mean, like right there that’s like $150.  I spent a lot of money. It was like $150 or $200, and that all happened from my phone.

Robi: Yeah.

Ian: The mobile app experience of Amazon is better than it normally is on the web too.

Robi: Yeah.

Ryan: So my question to you is:  Would that money have been spent had you not had immediate access to an app to enable it?

Ian: So the Amazon one in particular would be no, because that one was I am sitting on the porch at my cabin, and I’m like, “Wouldn’t it be cool to have a motion sensor webcam here so when I’m not here and an animal crosses by, it will take a picture of it.” And I’m like, “Yeah, that would be pretty cool.” I take out my phone. Like there was no way that I was going to be like this is so cool that I’m going to get up, I’m going to go and fire up my computer, like I’m going to do a lot more like if I had to, like if there was no Internet at all, I can promise you I wasn’t driving two hours to get to a RadioShack or whatever.

Robi: Right.

Ian: Something like that in particular, absolutely not.

Ryan: So what I just heard you say is mobile and apps enable impulse buys.

Ian: Yeah.

Ryan: And so do you think that is ultimately the big driver of growth moving forward, or do you think it’s just the growth of the smartphone app?

Robi: I think that the impulse buy is the wedge. It’s the thing that teaches all of us that we could spend some money and do this thing, satisfying kind of like initial impulse buying. Oftentimes, it’s a smaller purchase. Like how much was that? What?

Ian: Sixty bucks.

Robi: Sixty bucks. Right. But that’s the step that takes you into thinking about when you’re shopping for your TV going through that and then thinking about shopping for your TV like in the space that you live in and taking pictures and changing the retail experience, like that will come over the next three to five years. I think it’s the wedge and the change of behavior, but it’s awesome because it looks like incremental purchasing too. So it’s even easier to justify investing in that channel.

Ryan: Yeah. I think it’s really interesting, especially since it happens on impulse you know you just go, “I need this now.” Right?

Ian: Yeah.

Ryan: Here’s this thing that I didn’t have. Even in my own personal experience, I’m like, “Oh I really want to buy X, Y, and Z, but I don’t want to go get my laptop.”

Ian: Right.

Ryan: My phone’s right here. People will just use that. Okay. Besides the physical content sales not being a big driver, where do you guys think the big drivers or big opportunities for revenue generation from developers and marketers is over the next 6 to 12 months?

Ian: I think we’ve scratched the surface of what sorts of content and services you can get people to pay for. So I think in app purchases, like the way we’re doing it today is probably not actually the way that it turns into in the future. I don’t know what that looks like, other than I think that if you’re innovative on the retail of that side of the world, you can probably do some interesting things. I think advertising has a lot to go. I mean there’s a ton of room everywhere right now that I don’t think has been touched.

Robi: I mean, I think . . . so you were just talking about new ideas that are not [bringing] in offline stuff and expanding that base. So games is not over. It’s not tapped out, but it’s pretty competitive. But if you want to look into utilities, I still feel like most of the utilities are insufficient to the tasks that they’re trying to solve for, whether it’s like a task manager or word processing or trying to create spreadsheets and documentation and presentations that I want to give. Like the next wave of the office suite, we still haven’t seen the winners there. Right? We’re just starting to scratch the surface, and I think that here in Seattle, we have just started touching the publishing space on the iPad, and that’s a great start. But it’s so early. So there’s a lot of money to be made there.

Ian: Yeah.

Ryan: Yeah. So the market is big.

Robi: Yeah.

Ryan: That’s what I’m hearing you say.

Robi: I think that’s why we’re in this. Right?

Ryan: Yeah, I guess. I don’t know. Okay. Well, I think that’s it. Thanks so much for the time guys. Make sure to like this video on YouTube, share it with your friends, family, whomever. Watch Robi’s video atAppentive.com, Ian ‘s video at MobileDevHQ.com, and check back for more. Thank you.

Ian: Thanks.

Robi: Thanks.

By Ryan Morel

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