Flurry Blog

Current Articles | RSS Feed RSS Feed

Madison Avenue and the Land of Make Believe

  
  
  

Mass market consumer adoption of Apple iOS and Google Android mobile devices has attracted an unprecedented volume of content, delivered through applications.   Because the majority of these applications downloaded are also free, many ecosystem players have assumed that advertising revenue models will dominate how these apps are monetized.

However, new analysis by Flurry reveals that the sale of virtual goods is overtaking advertising in top categories on the iOS platform.  Note that because Google’s Android Market does not yet support in-app purchases (micro-transactions), this model is not yet viable for Android apps.  This study was conducted using data collected from a sample of leading iOS social networking and social gaming applications, with a combined reach of 2.2 million daily active users. 

Flurry AdvertisingRevenueShift VGs resized 600

Reviewing the chart above, the majority of revenue generated from advertising occurs during the 2009 holiday period.  During 2010, however, revenue increasingly shifts from advertising to virtual goods sales until reaching a proportion of more than 80% from virtual goods.  Admittedly, the idea that consumers acquiring virtual swords, gold coins and respect points can outperform advertising seems counter-intuitive; however, this phenomenon is neither new nor unique to the iOS platform.

In fact, virtual goods sales already represent the primary source of revenue for social gaming on Facebook.  Michael Pachter, Wedbush Morgan Securities video game analyst, reports that social gaming has grown from approximately $600 million in 2008 to $1 billion in 2009.   Further, he forecasts that social gaming will generate nearly $1.6 billion this year, and grow to more than $4 billion by 2013.

One factor responsible for low advertising levels may be advertising agencies’ slow acceptance of mobile as a media platform, with skepticism about the viability of social games and social mobile media as a channel for advertisement.  With these agencies representing and guiding the biggest brands, they appear to be missing a meaningful opportunity to reach a mass market of consumers who have adopted new platforms and forms of content.

As social games continue to expand their consumer reach, demonstrating their ability to attract an audience beyond teenagers using iPod touches, their relevance will increase.  In fact, with mobile social game critical mass now rivaling TV prime time viewership, Flurry anticipates a stronger ad revenue generation through mobile social networking and games in 2011.  Over the next 18 to 24 months, Flurry predicts strong revenue growth from both virtual goods and advertising revenue from social gaming.  We say play on!

Is iPhone the next American Idol?

  
  
  

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.


Flurry iOSsocialGames vs PrimeTimeTV resized 600
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?

All Posts

describe the image

Join Flurry at Source14

On April 22 2014, Flurry will host Source14, a one-day mobile summit in downtown San Francisco. Join 500 fellow attendees to hear what's next in mobile. Get more information and register today at www.flurrysource14.com. 

Subscribe by Email

Your email:

About Flurry

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. 

Browse by Tag