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iPad Developer Support Continues to Soar

  
  
  

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.

 Flurry_iPad_Developer_Support_Increases

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.  

Apple iPhone and iPod touch Capture U.S. Video Game Market Share

  
  
  

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.

iPhone_US_VideoGame_MarketShare_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.

Flurry_iPhone_USportableGames_MarketShare_2009Looking 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.

 

Flurry Smartphone Industry Pulse, February 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. 

 iPhone App Store vs. Facebook Platform

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:

App Developers Platform of Origin

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:

App Store Game Developer Platforms of Origin

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:

App Store News Developers Platforms of Origin

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. 

Flurry iPad Increase in Developer New Apps


Flurry Smartphone Industry Pulse, January 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.


iPhone vs Android App Retention

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:

iPhone vs Android App Frequency of Use

iPhone vs Android App Session Length

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.


Flurry iPhone App Starts
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 Android New App Starts

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.

Flurry iPhone vs Android New App Starts


Apple Tablet: The Second Stage Media Booster Rocket

  
  
  

Insights from Tracking 200 Apps Across 50 Apple Tablets in Testing

Using Flurry Analytics, the company identified approximately 50 devices that match the characteristics of Apple's rumored tablet device. Because Flurry could reliably "place" these devices geographically on Apple's Cupertino campus, we have a fair level of confidence that we are observing a group of pre-release tablets in testing. Testing of this device increased dramatically in January, with observed signs of life as early as October of last year. Apple appears to be going through its cycle of testing and polish, which is expected from any hardware or software company as it nears launch.

Apple is expected to announce the yet-to-be named hardware on Wednesday, January 27 in San Francisco. There has been broad speculation about the functionality of the tablet, and what kinds of content and media partners the new device will feature. Additionally, there has been speculation about the most likely use cases for this kind of device, as well as which operating system the device will support. The choice of operating systems is particularly important for application developers because if the tablet runs on the same or upgraded operating system as the iPhone, then current applications running on the iPhone will also run on the tablet.

On these devices, Flurry observed approximately 200 different applications in use by testers. Studying category trends provides insight into the kind of user Apple is targeting and how it expects the device to be used. Below is a chart that shows the number of applications in use by category across test devices.

Apple Tablet, iSlate, iPad App Usage


For Play not Work
Historically, tablet devices have been considered substitutes for anything where workers use clipboards, note pads or day runners. In more industrial settings, they could be used for inventory management, taking purchase orders or data entry. However, there was a surprising dearth of applications that support these use cases. Instead, the largest category was games. With a larger screen, more memory, multi-touch and multi-tasking expected, games will play better than ever on Apple handheld devices.

A Media Machine
The tablet device clearly targets consumers. The mix of applications observed comprises mainly of media and entertainment consumption as opposed to enterprise, productivity and computing. Specifically, popular tested apps include news, games, entertainment and lifestyle. In particular, there was a strong trend toward news, books and other kinds of daily media consumption, including streaming music and radio. In fact, the most widely downloaded of any single specific application was a new app. In its October Pulse report, Flurry studied iPhone as an e-reader and the threat this poses to Amazon Kindle. With rumors of large newspaper and book publisher deals, combined with its reading-friendly form factor, we speculate that the new Apple tablet will focus heavily on daily media consumption. Finally, across all applications detected, there was a strong theme of sharing and/or social interaction including social games, social networking, photo sharing and utilities like file transfer applications.

Not the Battle for Your Living Room
The device is positioned to appeal to the users who are out-and-about rather than compete directly against the TV, stereo and game console in the living room. With supply chain reports from Asia that light-weight 10.1" LCD and OLED screen components are in short supply due to large purchases presumably by Apple, we can surmise that the device will be thin and light, designed for portability. Further supporting this notion is the pattern of apps we detect for restaurant, movie show times and other apps that help users find points of interest around them, including travel guide applications.

A Rocket Booster for Developers
A noteworthy observation is that the Apple hardware we detected was running on OS 3.2, which has not yet been released. Currently the iPhone and iPod Touch are running on OS 3.1.2. Historically, Apple releases OS upgrades just before releasing new hardware. With significant expected changes (e.g., multi-touch, multi-tasking) for the tablet device operating system, there was concern among application developers that the tablet would not support existing iPhone applications. However, from the testing we observed, it appears that Apple wants to leverage the 130,000+ applications already available in the App Store on day one for the new device. For the developer, this is good news. Senior research analyst with Piper Jaffray, Gene Munster, is forecasting 2010 sales of iPhone and iPod Touch devices at 36 million, an increase over his estimate of 25.7 million for 2009. With tablet shipments for 2010 perhaps reaching 10M, according to AVI Securities, we see this as a major boost to application developers.


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Flurry is the leading mobile measurement and advertising platform that is optimizing mobile experiences for people everywhere. Flurry's industry-leading Analytics software sees activity in over 400,000 apps on more than 1.3 billion mobile devices worldwide, giving Flurry the deepest understanding of mobile consumer behavior. Flurry turns this insight into accelerated revenue and growth opportunities for app developers, and more effective mobile advertising solutions for brands and marketers. The company is venture backed and headquartered in San Francisco with offices in New York, London, Chicago and Mumbai. 

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