Posted by Peter Farago on Wed, Mar 21, 2012
Flurry recently quantified China’s meteoric adoption of iOS and Android applications. While China ranked 10th in application sessions at the beginning of 2011, it finished the year in 2nd place, only behind the United States. With its large population and rapidly emerging middle class, adoption of apps vaulted China into the position of world’s 2nd largest app economy. In additional analysis, Flurry also determined that China has the most market upside, based on calculating those in China who can afford smartphones versus the current installed base.
This report reveals that, for the first time ever, China now leads in new smart device adoption (iOS and Android smartphones and tablets). We also update app usage velocity trends for China and the rest of the world, since first studying this late last year. For this report, Flurry used its entire data set, tracking more than 1 billion anonymous, aggregated application sessions per day. More than 60,000 companies use Flurry Analytics across more than 160,000 applications.
China's Growth Spurt
Let’s start with a look at the fastest growing countries, as measured by app session growth.
Comparing Q1 of 2011 versus Q1 2012, the chart above shows the ten fastest growing countries in terms of app sessions. A session is the launch and use of an application. For example, a consumer who opens a news application and then spends two minutes reading various articles counts as one session. Starting on the left, China leads the world in app session growth, with an enormous growth rate of more than 1100% between Q1 2011 and Q1 2012. China’s growth rate is particularly staggering given that it was already the world’s 7th largest country in terms of app sessions by the end of Q1 2011. This speaks to the country’s sheer population as well as increasing affluence among a meaningful part of its population. Please note that we project the last ten days of Q1 2012.
Building an App? Go East, Young Man!
We next study new device activations between China and the U.S., with amazing results.
The above chart shows new iOS and Android device activations per month in the U.S. and China for the last 15 months, from January 2011 through March 2012. In January 2011, the U.S. accounted for 28% of the world’s total iOS and Android device activations, while China accounted for 8%. In February, Flurry calculated that China surpassed the United States in monthly new iOS and Android device activations for the first time in history. China is now the world’s fastest growing smart device market. For March, we project that China will account for 24% of all iOS and Android device activations, while the U.S. will account for 21%. Again, please note that we project the several days of March to round out Q1 2012.
With China now activating more devices per month than the U.S., this means that the gap is closing between the two countries in terms of installed base. Not only is China already the second largest app economy, but also could eventually overtake the U.S. as the country with the largest installed base of smart device users. We estimate that the U.S., a more mature market, currently has more than twice as many active devices than China. However, China, a faster growing, emerging market, already has twice as large an installed base as the next largest market, the UK.
Apps Without Borders
In this last chart, Flurry looks at the shift in application usage across the world.
The chart above compares mobile app sessions tracked by Flurry Analytics in Q1 2011 versus Q1 2012. The green area shows the percent of app sessions occurring in the United States, the leading mobile app market. While the absolute number of sessions in the U.S. has more than doubled between Q1 2011 and Q1 2012, its share of total sessions has declined from 56% to 46%. In other words, while the U.S. app market is growing rapidly, the rest of the world is growing even faster. Looking at the balance of the top 10 countries (ranks 2 – 10: China, UK, South Korea, France, Australia, Canada, Japan, Germany and Spain), this group has increased in collective sessions by 3.4 times between Q1 2011 and Q1 2012, resulting in an increase in total session-share from 27% to 30%. Further, the rest of the world (another 217 countries across which Flurry tracks user sessions), has grown by more than 4 times, increasing in session-share from 17% to 24%.
No matter how we slice it, the application market continues to grow at unprecedented rates, and increasingly across more borders. With smart devices adoption rates more than four times greater than those witnessed during the 1980s PC revolution and twice as great as those seen during the 1990s Internet Boom, no other consumer technology has been more accessible than smart device application software. It’s literally taking over the world.
Posted by Peter Farago on Fri, Jan 27, 2012
In just two years, tablet computing has gained unprecedented traction. According to research firm Strategy Analytics, global tablet shipments more than doubled during the last three months of 2011, rising to 26.8 units, up from 10.7 million a year earlier. And while Apple continues to dominate the tablet category, having sold a record 15.4 million units during the final quarter of 2011, Android OS tablets have increased their share of the tablet category, growing from 29% in Q4 2010 to 39% in Q4 2011.
The increase in market share is due largely to the entry of the Kindle Fire by Amazon. With Flurry in tens of thousands of Android apps, including many of the most popular, the company estimates that it tracks over 20% of all consumer sessions on more than 90% of all Android devices each day. A session is defined as the launch and subsequent exit (or pause for more than 10 seconds) of an app. For example, a consumer may play a game in one sitting for five minutes. Let’s take a look at the data.
The chart above compares application sessions among all Android tablets before and after the holiday season. For January, we use month-to-date figures, at the time this report was written. Since we’re looking at proportions of use, estimating the remainder of January would not change percentages. For an easier visual comparison, we label Amazon Kindle Fire in orange and Samsung Galaxy Tab in blue. On the left, in November, we see that Samsung Galaxy Tab dominated application session usage on Android, with the Kindle Fire only having recently launched. At that time, the Samsung Galaxy Time was widely considered the only viable competition to the iPad, though a distant second. In January, after the holiday boom in devices and in apps, we see that strong adoption of Kindle Fire, combined with significant downloads driven from the Amazon App Store, resulted in a massive surge in session usage that just edges out the Galaxy Tab. Unrounded, Kindle Fire represents 35.7% of sessions and Galaxy Tab represents 35.6%. Remarkably, and from a standing start, the Kindle Fire overtook the Galaxy Tab in just a few short months. Total Android tablet sessions in January more than tripled over November, with Galaxy Tab sessions increasing by more than 50%. Overall, Android Tablets are growing aggressively as a category.
Amazon Uses Its “Fork” to Eat Samsung’s Lunch
So how can a late entrant like Amazon, with little-to-no hardware DNA, waltz in and knock off a consumer electronics juggernaut like Samsung, a company that also enjoyed strong growth in 2011? This is where we believe things get interesting. In short, Amazon’s launch of Kindle Fire had more in common with an Apple-style launch than it did with aligning with the Android system. To date, the Android world has focused on marketing the operating system and the “power” of the devices, with quality of content and the consumer experience subordinated in priority. With Google managing the Android Market, which lacks content control and a seamless commerce experience, inertia pushes those developers who choose to build for the platform toward advertising models. Developers who monetize through other means tend to make less on the platform. To ensure that it could take full advantage of its unique digital store prowess, Amazon forked the Android operating system.
Apple, on the other hand, understands that great content is the key to increasing the attractiveness of hardware. They learned this hard way during the 1980s when an inferior combination of PC hardware and operating systems overtook Apple computers, primarily due to a lack of software. This time around, for the iPhone and iPad, Apple created a robust economy in which developers could thrive, ensuring their allegiance to innovating for the Apple platform, ultimately making Apple hardware more desirable, and creating a rare, but powerful virtuous cycle. To understand how well Amazon might attract developer support, we studied how well Amazon drives paid downloads in its store versus the Android Market through the Kindle Fire and Galaxy Tab, respectively.
To build this chart, we gathered download data from a “basket” of 5 paid apps that ranked in the top 10 apps in both the Amazon App Store and Android Market during January 2012. We then compared how many of these paid downloads were downloaded to the Galaxy Tab versus the Kindle Fire. From our analysis, we found that the Kindle Fire drove over 2.5 times more paid downloads to consumers than the Samsung Galaxy Tab. This shows that for tablets, the Amazon App Store can already deliver more direct revenue to developers than the Android Market. Even more impressive is that the Galaxy Tab, launched in November 2010, has a much larger existing installed base than the newly launched Kindle Fire. Flurry estimates that the active number of Galaxy Tabs in the market is at least twice that of the Kindle Fire.
Amazon Thinks Different
Amazon’s go-to-market strategy for the Kindle Fire is ground breaking among the Android guard. With its offering, Amazon takes the focus away from the device and operating system, emphasizing content, a differentiated consumer experience and commerce. For its launch, it lined up key content such as Facebook and Angry Birds, as well as offering Amazon Prime, its own streaming TV and movie service. Beyond leveraging its cloud and e-commerce infrastructure, Amazon controls its own store, commanding among the largest aggregations of consumer credit card accounts on the planet. Upon launching the Kindle Fire, consumers must either link to their Amazon account or enter credit card information. This makes the user base 100% payment enabled.
Amazon’s approach to the distribution of digital content is the ultimate razor-razorblade model, where the “stalk” (tablets) is given away for as little as possible and profits are made from the sale of razors (content). Understanding that Amazon is a high volume seller of goods, now becoming ever more digital than physical, sheds light on why they embrace the end-user experience and the religious focus on making the sale of content compelling and easy. Further, it shows us why launching with an aggressive low price penetration strategy for their hardware, priced at $199, was critical to its strategy.
Making the Old New Again
Amazon, who once moved the world from buying goods at retail to buying them online and having them shipped to doorsteps, is now distributing the new form of mobile store via tablets. In a move that reduces the possibility of its own disintermediation, Amazon’s distribution model starts with its own roots: books, music and video (aka “BMV”). Through this move, Kindle Fire is changing the rules of engagement on the Android platform to shape the playing field into one where they, the consumer and the developer win.
Posted by Charles Newark-French on Tue, Aug 02, 2011
Before Harry met Sally in the late ‘80s, the dating process typically involved an introduction from a friend. Then, with the Internet and email, dating evolved. By the time we were watching the movie You’ve Got Mail - and actress Meg Ryan was cementing her status as a romantic comedy lead - the concept of online dating was going main stream.
As a social ritual, dating is a human behavior easily accelerated by technology. And it’s big business. One recent study estimated that nearly 1 in 5 singletons, who have access to the Internet, use Internet dating. Another report stated that 17% of recent marriages in the U.S. were the result of online dating websites. In size, combining North American and European markets, the online dating industry well exceeds $2 billion in revenue. Within the world of mobile apps, the largest category on iOS and Android, behind gaming, is Social Networking, in which dating apps appear. Given the voracious consumer usage we’re observing, it may also be the smartphone’s second killer app.
In this report, Flurry compares the usage of dating websites (combined desktop and mobile web) to native mobile applications over the past 12 months. For Internet consumption, we built a model using publicly available data among the top 50 dating websites from Compete.com, comScore and Alexa.com. For mobile application usage, we used Flurry Analytics data, which now tracks over 90,000 mobile applications. With respect to dating, Flurry tracks a large set of dating apps with more than 2 million total users.
Let’s start with total time spent on eDating in mobile apps versus on the web. Note that for this report, we use the term “eDating” to encompass online and mobile app dating.
As you can see, mobile dating apps now command more time compared to online dating sites: 8.4 minutes vs. 8.3 minutes. A year ago, people spent more than twice as much time on the Internet for dating as they now do in mobile apps. However, mobile app usage has increased dramatically over the last year, from 3.7 minutes in June 2010 to 8.4 minutes in June 2011, overtaking online dating time spent. These findings parallel Flurry’s recent report that showed, in total, mobile app usage has overtaken Internet usage.
In terms of engagement, frequency of use is driving growth in time spent per day in mobile dating apps. Last year, the average user opened his dating app 2 times per day, a little under 2 minutes each time. Now he opens his app over 5 times a day, but for shorter periods of time, about 1.5 minutes per session.
Next, let’s look at the proportion of people who use the Internet vs. mobile apps for eDating.
The chart above shows that dating apps are more popular on smartphones than online dating sites are on the Internet. We measured this by looking at the proportion of unique users of dating services versus the total, per platform. For the Internet, we compared unique visitors of online dating sites versus the total number of people using the Internet, which totaled 12% in June 2010 and 13% in June 2011. For mobile apps, we compared unique users of mobile dating apps versus all apps, which yielded 15% in June 2010 and 17% in June 2011.
We also found that the number of people using dating apps is growing faster than the number using all apps. In short, dating is a growth category. Overall, the number of unique users of all applications increased 125%, year-over-year, while the number of unique users using mobile dating apps increased by 150% over the same period. Comparing Internet dating to mobile app dating directly, unique users in mobile dating apps now account for about one third compared to the number of Internet dating users, which has doubled over the last year.
In an age where Facebook allows consumers to display their relationship status and easily connect to friends of friends, we speculate why mobile dating apps are gaining unprecedented traction on iOS and Android. The first reason, we believe, is that dating itself is inherently local and better served by mobile. Now, unplanned meetings of two nearby matches is more of a possibility. Secondly, it seems that mobile apps facilitate better engagement throughout the day. Today’s eDater need not be in front of her computer to view potential matches, or to receive or send messages. Her phone is always by her side. Our engagement numbers regarding frequency and session length, described above, support this trend.
iOS and Android devices are versatile multi-purpose machines that have already significantly impacted the business models of music, games and other Media & Entertainment industry categories. And now, within the nexus of mobile-social-local, mobile dating apps appear to be looking for love in all the right places.
Posted by Charles Newark-French on Thu, Jul 14, 2011
In this new age of mobile computing, the long-term success of Apple and Google depends largely on their ability to amass third-party developer support. Developer innovation improves the way consumers connect with others, entertain themselves, work, and more, all through apps. The more a platform provider can attract unique and superior content, the more appealing the hardware device appears to consumers prior to purchase and the more loyal they become afterwards.
Last week, Apple reported that it had sold a cumulative 200 million iOS devices. Currently the App Store contains more than 425,000 apps, with total downloads surpassing 15 billion. From the developer’s point of view, the most attractive aspect of the iOS consumer audience is that they all have credit cards on file with iTunes. This means 100% of them can seamlessly pay for apps and in-app purchases. All told, the App Store offers a powerful business opportunity to developers and has attracted leading mobile developer support.
At the same time, Google’s more open Android OS distribution strategy has garnered the support of numerous notable OEMs, spawning a rapidly growing installed base of Android devices that is gunning to overtake the iOS installed base. With broader distribution across more carriers, Android device activations surpassed 500,000 per day tweeted Andy Rubin last month. This growth is up from 300,000 activations per day reported just last December. In terms of apps, the Android Market has 200,000, and Google said it crossed the 4.5 billion downloaded application mark in May.
At Flurry, we regularly track developer support across the various platforms that compete for their allegiance. When companies create new projects in Flurry Analytics, they download platform-specific SDKs for their apps. Since resources are limited, the choices developers make in building for different platforms strongly signal their confidence in those platforms. They are literally investing their R&D budgets in the hopes of generating future revenue. In total, over 45,000 companies use Flurry Analytics across more than 90,000 applications. For this report, we compare Q1 to Q2 new project starts.
Studying the numbers, it’s readily apparent that Android has lost developer support to iOS. Specifically, Android new project starts have dropped from 36% in Q1 to 28% in Q2. Overall, total Flurry iOS and Android new project starts grew from 9,100 in Q1 to 10,200 in Q2. Of note, this drop in Android developer support represents the second quarter-over-quarter slide, which follows a year of significant, steady growth for the Google-built OS. Over the course of 2010, Android developer support had steadily climbed each quarter, peaking at 39% in Q4 2010.
Considering the events that could have precipitated this shift in developer support, Flurry has identified two probable causes:
1. iPhone Launch on Verizon: With iPhone’s arrival on Verizon in February 2011, three and half years after launching on AT&T, Apple closed the most significant vulnerability gap in its U.S. distribution, and likely worldwide. In fact, with its lengthy exclusive distribution agreement of iPhone on AT&T, it could be argued that Apple itself gave Android the opportunity to reach critical mass on other carriers, most notably Verizon. In that time, Google, Verizon and a host of OEMs worked hard and fast to push Android devices as an alternative to AT&T’s iPhone juggernaut. With Verizon’s launch of the iPhone, the pendulum appears to have swung back in favor of iPhone over Android development.
2. iPad 2 Launch: Establishing an installed base of more than 20 million tablet devices in less than one year, the iPad success story has been compared to taking a buzz-saw to the PC industry. Apple’s iPad shipments, from its last disclosed quarter, were higher than the initial first two quarters of iPad availability. Apple has additionally claimed that it is seeing the “mother of all backlogs.” Building efforts lag behind consumer demand for the device. We believe that wholesale consumer acceptance and adoption of tablets, which just a year ago was questionable within the industry, is further luring developers to build for iPad instead of Android.
While Android’s device installed base continues to surge, ongoing work to improve the Android Market layout and to push forward the adoption of Google Checkout are critical to its success. PayPal’s recent acquisition of mobile payment player, Zong, demonstrates that Google may not be enabling consumer payment quickly or well enough, which is inviting 3rd party competition and creating billing fragmentation. Furthermore, the development community is concerned about the rising cost of deploying across the Android installed base, due to the double whammy of OS and storefront fragmentation. With developers pinched on both sides of the revenue and cost equation, Google must tack aggressively at this stage of the race to ensure that Apple doesn’t continue to take its developer-support wind.
Posted by Peter Farago on Thu, Jun 09, 2011
In 2006, European mobile analysts dubbed mobile the “seventh mass media channel” following print, recordings (e.g., albums, cassettes, DVDs, etc.), cinema, radio, television and the web. However, mobile failed to fulfill its promise. For mobile to have reached its true potential as a mass media channel, it needed to overcome slow and expensive carrier data networks, poorly managed carrier decks, and a heavily fragmented handset base which featured a myriad of small screens, weak processors, confusing user interfaces and clumsy WAP browsers. With so much friction in the channel, content creators were stymied in their ability to deliver compelling experiences to consumers, making mobile look far more like a niche than mass media channel.
Then, in 2007, the iPhone changed everything. In addition to unleashing a prolific media device, Apple wrested control of the storefront from carriers, convinced carriers to offer flat-rate data plans to consumers, tapped into blazing Wi-Fi as a pipe and shipped a useful mobile browser. Most importantly, they built a low-friction, robust channel through which content creators could distribute smartphone apps to consumers: the App Store.
In a few short years, with Apple as a game-changing catalyst, applications have already been downloaded tens of billions of times. Research firm, In-Stat, forecasts there will be 48 billion app downloads in 2015. With their success, apps already challenge the television in terms of reach and the Internet in terms of engagement.
For this report, Flurry used data from over 45,000 companies across their more than 85,000 applications. Flurry Analytics tracks over 15B user sessions per month across iOS, Android, BlackBerry, Windows Phone and J2ME.
Unprecedented and Accelerating Reach
The chart above shows the number of people actively using apps on their smartphones in May 2011 across the top five European markets. Flurry calculates active smartphones by first measuring its own penetration across these devices via apps into which Flurry Analytics has been integrated. For example, Flurry detects roughly 85% of all iOS and Android devices worldwide. We then grossed this number up, by country, for our estimates.
Combined, the top five European markets – the UK, France, Germany, Italy and Spain – actively use apps on 46 million devices each month. With a combined population of just over 240 million, for ages 13 and over, the addressable market through smartphone apps averages approximately 20% of the largest, most affluent European countries. Additionally, with a month-over-month growth rate (Compounded Monthly Growth Rate, CMGR) of more than 10% over the last two years, we project the installed base of smartphones will more than double over the next 12 months alone.
In the chart below, we show the smartphone app audience as a percentage of each top European country’s population, again ages 13 and over. The UK leads in penetration with a whopping 33% of its population using apps on smartphones per month. France places second with a sizable 20%, next followed by Germany, Spain and Italy coming in with 14%, 9% and 10%, respectively.
After having established the percent of each country’s monthly population that can be reached through smartphone apps, we next look at the pace of smartphone adoption, by country.
The chart above shows just how quickly the base of devices running smartphone apps is growing by country. While the UK and France are the most penetrated to date, as a percentage of their countries' populations, the laggard countries are closing the gap in terms of growth. Spain leads in growth of its active smartphone user base with a monthly growth rate of 14%. Germany and Italy’s active smartphone bases are both growing at 11%. Additionally, France and the UK continue to grow, month-over-month, by 7% and 6.7%, respectively.
With growing adoption of iOS and Android-based smartphones, the imminent release of Nokia phones based on Windows Phone 7, and the fact that the majority of consumers actively use applications, we predict that the growth of this mass market media channel will continue to grow until near total smartphone market saturation. To underscore just how aggressively this channel is growing, if we assumed the growth of smartphone adoption continued at their current rates, all five countries would have full smartphone penetration in just over two years.
Games and Social Networking Rule
Flurry tracks the total number of application use sessions, from when consumers start app sessions to when they end them, and groups these sessions into categories such as games, news and travel. The top categories ranked by session usage worldwide are: Games, Social Networking, Sports & Entertainment and News.
The graph below shows how consumer usage varies by app category across the top five European markets.
With the exception of Italy, the games category is the most popular app category across all countries. In Italy, the one country where the games category does not lead, Social Networking is the top category, with 38% of Italians using Social Networking apps compared to other categories.
Comparing each country’s proportion of usage by category, more consumers play games in France than compared to other countries – a massive 45% of all French app sessions are Games. In Spain, a greater percentage of the Spanish population consumes news compared to other countries, and the UK leads in relative Sports & Entertainment app consumption. In all 5 countries, the 4 top categories make up 80% of all traffic.
Solid App Retention and Engagement
In May 2011, the average worldwide 6-month retention rate for all apps was 36%. In other words, of all consumers who downloaded an app over the last six months ago, 36% had used that same app within the last 7 days of May (Flurry looks at “last 7 days” for its retention metric).
Continuing to look at the top 5 European countries, all have posted 6-month retention rates of greater than 30%. The chart below breaks out each countries 6-month retention rate compared to the worldwide average.
Reviewing the chart, we note that the UK leads in retention with 38%, followed by France at 37%, Germany at 34% and then Spain and Italy at 32% and 31.5%, respectively. Generally, we see a correlation between the maturity of a given market and app retention. We observe that consumers typically try several apps before they settle into using a group of favorites, which they then use several times per week, even per day. In less developed countries, we often see much more app experimentation. The five countries we review for this report are clearly all highly developed economies.
As a mass market media channel, smartphone apps not only reach a sizable audience today, but also continue to grow at staggering rates. The channel is already formidable with no signs of slowing. Smartphone app consumers are highly engaged and consider their smartphone among their most important personal possessions; we believe the 8th mass market media channel has indeed arrived in Europe.
Posted by Peter Farago on Mon, Oct 11, 2010
On October 5, 2009, CBS canceled "Guiding Light," the longest running television drama in history, which began in 1952. Last month, CBS aired the last episode of "As the World Turns," the Proctor & Gamble production that has been running for more than 50 years. Ad dollars allocated to soaps fell nearly 30 percent from 2005 to 2009, and then fell another 20 percent in the first half of 2010.
Since the 90s, the television industry has been reeling from the disruptive forces of the Internet and DVRs. No longer could the industry depend on a captive audience to which it had grown so accustomed. While the industry has adapted its programming with a glut of cheaper, but profitable competition reality shows and edgier dramas to reclaim a loyal audience, a new entertainment force is once again driving disruption: the iPhone. The chart below illustrates how iOS social games, a popular form of gaming mixed with social networking, stack up against primetime TV viewership.
Social games on iPhone, iPad and iPod touch devices are competing for television viewers. In fact, these apps, tracked on the Flurry network alone, comprise of a daily audience of more than 19 million who spend over 22 minutes per day using these apps. Treated as a consumer audience, its size and reach rank somewhere between NBC’s Sunday Night Football and ABC’s Dancing with the Stars, and only 4 million viewers shy from beating the number one prime-time show on television, FOX’s American Idol.
However, Flurry is only seeing part of the picture. With Flurry integrated into more than 50,000 apps, out of Apple’s stated total of 250,000 apps, Flurry has about 20% penetration. Additionally, since this analysis focuses on only two categories of applications, social games and social networking apps, it’s clear that iOS devices are already ahead of prime time television’s hottest shows.
Given that the app store only launched in July 2008, these figures are staggering. Mass consumption of applications on mobile devices has exploded in record time. Also noteworthy is that the enormous audience these applications reach takes place every day, 365 days a year. Compared to a top television series, which airs 22 episodes a season, advertisers can reach a larger consumer audience through applications 15 times more frequently.
There are a lot of conclusions that can be drawn from this phenomenal shift in audience behavior. The most obvious is the impact on the advertisement industry, which has relied on the reach generated by its prime time television slot for years. This season, while Americon Idol is busy shuffling judges, the people have voted: iOS social games are as prime time as prime time television. Enjoy the show!
On October 5, 2009, CBS canceled “Guiding Light,” the longest running television drama in history, which began in 1952. Last month, CBS aired the last episode of “As the World Turns,” the Proctor & Gamble production that has been running for more than 50 years. Ad dollars allocated to soaps fell nearly 30 percent from 2005 to 2009, and then fell another 20 percent in the first half of 2010.
Since the 90s, the television industry has been reeling from the disruptive forces of the Internet and DVRs. No longer could the industry depend on a captive audience to which it had grown so accustomed. While the industry has adapted its programming with a glut of cheaper, but profitable competition reality shows and edgier dramas to reclaim a loyal audience, a new entertainment force is once again driving disruption: the iPhone. The chart below illustrates how iOS social games, a popular form of gaming mixed with social networking, stack up against primetime TV viewership.
Is iPhone the next American Idol?
Posted by Peter Farago on Thu, Apr 01, 2010
Flurry regularly monitors new project starts by developers within its system to gauge interest across mobile platforms. With over 20,000 apps started by developers within Flurry, we believe this provides meaningful insight on the platforms that most excite developers, and where current resources are being deployed.
Since Apple introduced the iPad in late January, Flurry noted a significant spike in developer support, indicating early excitement for the promise of the device. As April 3 draws near, developers continue to develop for the iPad at a fever pitch. Today Apple added a toggle switch to its online iTunes store that allows consumers to view apps available specifically developed for the iPad. About 2,000 iPad apps were listed upon our initial count.
Looking into our system, we break out iPad-specific developer support by new project. For reference, we compare this to pre-iPad ratios to demonstrate how much developer interest the Apple iPad is attracting. Specifically, we compare averages taken across 2009 vs. the last 60 days, pulled earlier this week.
Comparing the two pie charts, the first notable difference is that iPad made up 22% of new projects starts within Flurry over the last 60 days. In March, over 3,000 unique applications were created within Flurry. A second point of interest is that Android's share of new project starts has decreased from 18% to 10%. However, it should not be concluded that Android developer support is on the decline. In fact, the opposite is true, as we count approximately 300 new Android projects in March, which represents a 50% increase over February. Android's percent has declined because iPhone and iPad growth is increasing at a rate faster than that of Android. In short, more developers are building more apps. The total pie is growing significantly, month over month. A final note is that relative support for Blackberry continues to diminish. While not shown in the chart, we calculate 1% share for Blackberry over the last 60 days, down from 4% for the whole of 2009.
Posted by Peter Farago on Mon, Mar 22, 2010
More than 30,000 games have been released in the iPhone App Store since its launch in July 2008. With titles that consistently dominate the Top Paid and Top Grossing lists, there is no question that the games category is the most lucrative category in the App Store. This report focuses on how Apple has affected the market share of U.S. video game and portable game revenue since the introduction of games sold through the App Store for iPhone and iPod touch.
Using publicly available market data, provided by NPD (mostly through Gamasutra's Behind the Numbers series), Flurry calculated U.S. console and portable game software sales for 2008 and 2009. We also estimated Nintendo DS and Sony PlayStation Portable game software sales, which make up the significant majority of the portable category, in order to compare these to iPhone game sales. We estimate iPhone game sales using a combination of data made available by Apple and using ratios and calculations from an aggregated set of data that we track through our analytics service.
We begin with a look at the U.S. gaming market, which NPD defines primarily as console and handheld. PC gaming, which has been declining over the last decade, and is currently approximately 5% of the total U.S. market, is not included. Also, for this analysis, we ignore online gaming revenue (e.g., virtual goods and subscription fees from social networking games and massively multi-player online games).
Below is our estimation of market share by platform among console, portable and iPhone platforms for 2008 and 2009.
NPD Group shows that combined U.S. console and portable software revenue was approximately $11 billion and $9.9 billion in 2008 and 2009, respectively. After estimating portable sales, we were able to back into console revenues. We then added our own estimates for iPhone game revenue, which total $115 million and $500 million for 2008 and 2009, respectively.
With these figures, our main finding is that iPhone (and iPod touch) is a gaming platform to be reckoned with. Controlling 5% revenue of a $10 billion industry in just a year and a half is significant. From a market share perspective, console games lost ground to portable platforms and iPhone. While the downturn in the economy may have dampened sales of the more expensive console games category, there is no denying that iPhone has generated substantial revenue and entered strongly into a mature industry.
More interesting to us than iPhone's impact on U.S. gaming was its impact on the portable category, which we estimate totaled $2.25 billion and $2.55 billion in 2008 and 2009, respectively. Michael Pachter, managing director at Wedbush Morgan Securities and a prominent video game analyst, suggests "iPod touch is the most dangerous thing that ever happened" to game publishers. As prices come down for the iPod Touch, and games sold through the App Store continue to have lower price points, more of the young gaming generation may switch to Apple devices over Sony PSP and Nintendo DS for gaming. Further, Apple has squarely positioned the iPod Touch as a gaming machine. Check out a TV spot here to get an idea.
From what we calculate, consumers are downloading iPhone games in droves. Comparing iPhone against Sony and Nintendo games sales shows that Apple has taken nearly one fifth of the portable market in 2009, largely at the expense of Sony PSP. With Sony PSP Go, Sony's latest effort to revive its portable sales, having fallen short of expectations, Sony finds itself now challenged by two competitors in this segment.
Looking forward, with the iPad set for an April release, the traditional gaming giants may yet again be disrupted by Apple. With companies like Electronic Arts and Gameloft joining Apple on stage during its January unveiling of the iPad, the tablet device will enjoy elite game publisher support on day one. Further considering data that Flurry released in its latest Smartphone Industry Pulse report, where we determined that more than one third of iPhone game developers come from the traditional gaming industry, Apple has already established broad third-party game publisher support. With the iPad featuring a larger screen and more processing power, games on the tablet take a step closer to PC and console gaming. Unless the other major video game platform providers (i.e., Sony, Nintendo and Microsoft) respond accordingly, Apple could continue to roll up video game market share.
Posted by Peter Farago on Mon, Mar 15, 2010
Each month, Flurry leverages its data set collected from iPhone, Android, BlackBerry and J2ME applications to identify, study and share industry trends. Flurry tracks over 20,000 live applications and over 2 billion user sessions each month. Applications that include Flurry Analytics have been downloaded to more than 80% of all iPhone, iPod Touch and Android devices. Additionally, each day, approximately one of out every five downloaded applications from the App Store and Android Market include Flurry Analytics. The Pulse report is generated in the first half of each month, looking back at data up through the previous month. Different than other reports that provide updates to the same set of statistics each month, Flurry explores different business themes and topical issues relevant to mobile developers and other industry players.
I. Money Talks: App Store vs. Facebook Platform
Since the App Store launched in July 2008, 35,000 unique companies have released applications, which translates to 58 new companies launching apps each day. This appears to be the largest amassing of 3rd party developer support by any development platform in such a compressed timeframe. For example, comparing the number of applications created for the Facebook platform to the App Store over their respective first 9 months, Apple boasted 25,000 apps to Facebook's 14,000. Comparing respective growth in apps after 14 months, Apple had widened its gap to 85,000 apps over Facebook's 33,000. At the App Store's 18 month mark, reached this January, the number of iPhone apps was reported to have exceeded 140,000 compared to the 60,000 we estimate Facebook had reached over its first 18 months. We believe the difference in growth rates can be attributed to the App Store providing better monetization possibilities for application developers than Facebook did through its first 18 months. Developers, like all rational companies, pursue markets where the path to revenue generation is clear.
II. iPhone Developer DNA: O Brother, Where Art Thou (from)
Thinking about the sheer number of developers with applications in the App Store, we had the practical question: where'd they all come from? It's as if they've appeared over night. Has Apple created a magical new economy for application development start-ups, attracted existing content creators and brands from other platforms, or both? In this report, Flurry examines the genealogy of iPhone application content; that is, their platforms of origin. This sheds light on the mix of skills, motivations and frames of reference different content providers bring to the App Store economy, and which are winning.
To generate a sample that allowed us to compare across categories and pricing models (paid, ad supported, micro-transactions, etc.), Flurry created an index that took into account application rankings across both top 100 paid and top 100 free categories, additionally adjusting for frequency of use and user retention over time. Doing so enabled us to evaluate a free application's ability to retain a user base, important for generating advertising revenue past the download. Based on this index, we generated a list of 200 applications and identified six distinct "heritage" categories:
1. Native iPhone: Companies founded to create applications for iPhone (e.g., ngmoco, PageOnce)
2. Traditional Media: Companies established on Film, TV, Print and Radio (e.g., Disney, TBS, NYT)
3. Mobile: Companies having started on J2ME, BREW, BlackBerry, etc. (e.g., Digital Chocolate, eBuddy)
4. Retail & CPG: Brick-and-mortar companies or ones that manufacture goods (e.g., The Gap, DKNY, Kraft)
5. Online: Companies who began on the web including e-Commerce, social networks, online gaming, streaming music, etc. (e.g., Google, eBay, Facebook, Pandora, PopCap, Zynga)
6. Traditional Gaming: Video game companies from console, portable or PC (e.g., EA, Activision).
The pie chart below shows a breakdown of developers making top applications based on their heritage:
On any new media platform (or channel), entrepreneurial companies enter early in an attempt to establish themselves before a wave of large brands enters the space. At the same time, bigger companies typically take a wait-and-see approach when evaluating new channels and only invest after the ROI for the channel is proven. This combination of small and big company behavior, when evaluating new platforms/channels, creates the window for entrepreneurs to enter early and potentially disrupt big companies before they arrive. The iPhone platform is no exception.
Despite the fact that the App Store is now maturing, reaching its two year anniversary this summer, we are encouraged that native iPhone application developers are still relevant, representing 20% of the heritage pie, the second largest category. This means that the barrier to entry is still low enough for start-ups to enter and innovation to flourish. However, those days may be numbered as "discoverability" has become a significant issue, and now "marketing muscle" is starting to count more in the App Store. This favors brands and larger companies with resources to spend their way in. We are seeing signs that big brands are becoming more active, now perceiving that the iPhone has reached critical mass. With iPhone and iPod Touch now exceeding 70 million units world-wide, we expect 2010 to be the year of brands entering the iPhone. Going forward, we will especially see more movement by established brands from media, retail and CPG. In particular, traditional media (News, Books, TV, Film, Music, etc.) growth will accelerate aggressively with the introduction of the iPad.
The first and third largest heritage categories, Online and Traditional gaming, will likely see little change, or perhaps even a decline in "heritage share," since they were early iPhone entrants and their properties have largely already discovered.
Taking a deeper look at gaming, the iPhone's largest revenue generating category, shows the following distribution of developers based on heritage:
Given the specialized skill-set required to build a compelling game, it's no surprise that traditional game companies lead this category, including companies such as Electronic Arts and Activision. At the same time, native iPhone developers (i.e., brand new gaming start-ups) command the second largest category. The success of new iPhone game developers makes sense given the fact that the traditional gaming industry has long had pent up demand from garage and independent developers looking for new platforms where development and distribution costs allow them to compete. We've seen innovation from companies such as Tapulous, Backflip Studios, ngmoco and others. Online, the third largest segment, includes companies such as PopCap, Playfish and Zynga who have naturally expanded distribution to iPhone given its similar characteristics of being "casual gaming" friendly. Tied for third with Online, Traditional Media (e.g., licensed properties like SpongeBob and Disney Fairies) have long held a place in gaming since brands seek to use the gaming channel to promote their core properties (e.g., upcoming movies) and earn incremental revenue. The most surprising category is mobile gaming which only commands a 12% share. However, investigating more deeply reveals that most successful companies on mobile, prior to the iPhone, did not originally start on mobile. Rather they came from traditional gaming, online and traditional media platforms. Simply put, few pure-play mobile gaming start-ups exist. Some exceptions include Gameloft, Glu Mobile and Digital Chocolate.
Finally, we examine the News Category more closely:
Like gaming, the creation of compelling content in News is a specialized and costly operation. To source and report quality news, companies often have to span various media such as TV broadcast, radio and print, which further increases cost. It's therefore no surprise that Traditional Media dominates the News category, controlling nearly two thirds. For traditional media (e.g., New York Times, ABC News, NPR, etc.), the iPhone represents a large channel through which to distribute their existing content. The small incremental cost of expanding the distribution of Traditional Media's core content, and the attractiveness of reaching an educated, affluent and tech-savvy audience, makes iPhone the perfect platform through which to serve news. Looking forward, the iPad creates an even greater opportunity to increase reach because its larger screen size works better works for newspaper and magazine layouts, as well as TV broadcast.
Native applications represent the second largest category, due to innovation from native iPhone applications that allow personalized filtering, automatically work around gaps in connectivity to pull new content more seamlessly or aggregate and optimize new reading on the iPhone (e.g., Stitcher Radio, Byline, Conserva, etc.). Online, which represents a large share of news consumption in its own right, makes up the third largest category of news on the iPhone.
Finally, while Online is currently in 3rd, we believe the iPad's form factor will deliver a more familiar browsing experience. With ever-increasing wifi coverage, online media players will continue to increase their share just as the Internet cannibalized Print media in the 1990's and 2000's.
III. iPad Anticipation Continues to Stoke Developer Activity
After measuring that developers integrating Flurry analytics into iPhone OS applications in January increased by nearly three times over December, we were eager to follow up on this trend after February data rolled in. The January spike represented the single largest spike in Flurry history. Since iPad runs on a version of iPhone OS, Flurry automatically supports iPad applications (and we've done further testing on the SDK to verify this). This is also how Flurry was able to see application activity on the iPad since last October.
Now, over six weeks since Apple announced the iPad, Flurry continues to measure a significant increase in iPhone OS new application starts within its system. To measure, we took a "before vs. after" snapshot of monthly iPhone OS project starts in our system (iPad runs on iPhone OS 3.2). For the "before" we averaged August - December, 2009 monthly new iPhone app starts within Flurry, and for the "after" we did the same for January - February, 2010.
Historically, we've seen development spikes around new hardware announcements and releases including Motorola Droid for Android development and iPhone 3GS for iPhone OS development. iPad appears to be having a similar, albeit amplified effect, which we attribute to the excitement generated by the impending launch of of the device, now set for April 3 in the U.S. A large proportion of the applications we are seeing are custom ports of existing applications tailored for the iPad. With over 140,000 applications in the App Store, developers who modify, or build from the ground up, their applications early on for the iPad may have the opportunity to establish an early presence on this new device and drive more downloads. To wit, Apple announced today that it will include a dedicated "iPad" app category in the App Store.
Posted by Peter Farago on Fri, Feb 12, 2010
Each month, Flurry leverages its data set collected from iPhone, Android, BlackBerry and J2ME applications to identify, study and share industry trends. Flurry tracks over 20,000 live applications and over 2 billion user sessions each month. Applications that include Flurry Analytics have been downloaded to more than 80% of all iPhone, iPod Touch and Android devices. Additionally, each day, approximately one of out every five downloaded applications from the App Store and Android Market include Flurry Analytics. The Pulse report is generated in the first half of each month, looking back at data up through the previous month. Different than other reports that provide updates to the same set of statistics each month, Flurry explores different business themes and topical issues relevant to mobile developers and other industry players.
I. For iPhone and Android, Content is King
Applications are becoming the dominant delivery mechanism for content, entertainment and tools on smartphones. Last fall, Flurry released a study on user retention across all application categories, shedding light on application pricing and business models. In this report, Flurry takes a deeper look at consumer loyalty and engagement metrics across the largest application categories, comparing application user behavior on iPhone and Android platforms.
For this study, Flurry identified the top applications among a set of the largest categories across the App Store and Android Market: Games, Entertainment, Social Networking, News and Lifestyle. In total, approximately 100 applications were evaluated over a six month period, totaling more than 800 million user sessions.
Flurry studied (1) user retention (2) user session frequency and (3) user session lengths over a six month period. The chart below shows the average retention by month, over a six month period, for all sampled iPhone versus Android applications.
Retention curves between aggregated iPhone and Android applications were nearly identical. We believe underlying reasons include the fact that Android handsets are capturing a more mainstream audience similar to the iPhone and that Android handsets have improved relative to the iPhone handset (e.g., featuring advanced, large touch screen interfaces with ample processing power). Finally, we observe that more developers are creating both Android and iPhone versions for the same application. For this analysis, roughly 20% of the sample we pulled included versions of the same application on each platform.
The next two charts compare session lengths and frequency of use per category, and per platform:
Reviewing consumer engagement metrics of session frequency and session length across key categories on iPhone and Android, Flurry again found little variance. We conclude that mobile applications have reached a new stage of maturity, where apps perform similarly across platforms. Our ultimate conclusion is that the content trumps the platform. Just like the brand of flat screen T.V. doesn't affect how much one enjoys a movie she is watching, the new class of touch screen smartphones doesn't impact how well the user enjoys a game, social networking or other kind of application.
II. The iPad Effect: Developer Support Explodes
Developers integrating Flurry analytics into iPhone OS applications in January increased by nearly three times over December. This represents the single largest spike in Flurry history, with over 1,600 new iPhone OS application starts for January. Historically, Flurry has measured surges in new application starts within its system in anticipation of new device launches, including for the Motorola Droid and iPhone 3GS. As such, we hypothesize that excitement generated by Apple's iPad event in January is driving this growth. For developers who get a jump on customizing their applications for the iPad, there may be an opportunity to stand out early on, and earn more downloads.
Android new application starts are also growing, showing a steady ramp for the second half of 2009 and for January 2010. Over this time period, month-over-month growth has averaged approximately 25%.
Flurry measures the relative support developers dedicate to iPhone versus Android platforms by tracking new application starts within its system. While Android's steady new application growth over the second half of 2009 closed the gap against the iPhone, reaching as many as one out of every three new applications starts within Flurry for December, the recent spike in Apple iPad support has swung the pendulum back in Apple's favor to a level not seen at Flurry in six months. The unprecedented surge in support for iPad is a positive early indicator for its commercial potential.
