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The Rise of the Mobile Addict

  
  
  

In May of 2013, KPCB’s Partner and world-renowned analyst Mary Meeker shared her latest Internet Trends Report. In that report, Ms. Meeker shared an interesting stat: “The average mobile consumer checks their device 150 times a day”.  That number raised a few eyebrows and led many analysts to question the difference between existing smartphones and highly anticipated “Wearables”. In this report, we have used data from Flurry Analytics to analyze the behavior of consumers that heavily use their smartphones or tablets, a segment we refer to as the “Mobile Addict”.

We have defined a “Mobile Addict” as a consumer that launches apps more than 60 times per day. Looking at data Flurry sees from 500,000 apps across 1.3B devices as of March 2014, we know that on average, a consumer launches apps 10 times per day. So we have defined a “Mobile Addict” as someone who launches apps 6 times more per day than the average. 

Mobile Addicts Are Multiplying

The chart below shows the year-over-year growth in usage, across all segments of mobile app users. The Mobile Addict segment is growing the fastest, posting 123% growth between 2013 and 2014. In March of 2014, there were 176 million Mobile Addicts, up from 79 million in March of 2013. That is astonishing growth in a single year. This compares to 55% growth for a category we’re calling Super Users and 23% for Regular Users, who launch apps 16 times or less per day.

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Most Addicted? Teens, College Students and Middle-Age Parents

We dug deeper into the Mobile Addicts segment to better understand that audience. Mobile Addicts were 52% female and 48% male, compared to 48% female and 52% male for an average mobile users.  That means females over-index 8% compared to the average mobile user. The 8% number appears small, but it is significant: In the total Mobile Addict population of 176 million, it means that there are 15 million more female Mobile Addicts than male Mobile Addicts.  

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Now looking at age, the Mobile Addict segment over indexed on the 13-17 (Teens), 18-24 (College Students) and 35-54 (Middle Aged) age segments. In fact, Middle Aged consumers constituted 28% of Mobile Addicts, but only constituted 20% of the average mobile consumer.  The Addict segment under indexed on 25-34 (adults) and 55+ (seniors).

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The analysis gets even more interesting when you dive into the differences among Flurry Personas. On the female side, the following Personas over-indexed as Mobile Addicts: Moms, Parenting & Education, Gamers and Sports Fans, in that order. For Males, the following Personas over-indexed as Mobile Addicts: Auto Enthusiasts, Parenting and Education, Gamers and Catalogue Shoppers.

The “Over-Index” is shown in the chart below. It refers to the division of the percentage reach of that Persona in the Mobile Addict segment compared to the percentage reach of that Persona for the average mobile consumer. For example, in the male Mobile Addict segment, Auto Enthusiasts are 26% of the total, while for the average male mobile consumer Auto Enthusiasts are just 3% of total. In other words, male Mobile Addicts are much more likely to be Auto Enthusiasts than non-Addicts. 

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Looking at the three charts above, we are starting to form a relatively clear picture of a Mobile Addict. Teens, College Students (skewing females) and Middle Age Parents. We were not surprised by teens being part of the group. Their youth coincided with the mobile revolution – they are not just accustomed to mobile, they expect their mobile device to handle nearly every type of task and communication. The same is true for college students who are noticeably avid users of messaging and gaming apps. We were also comfortable with young adults under-indexing. They have just entered the workforce, are predominantly single and are likely out and about more often than older and younger segments.

What surprised us most was the over-indexing of the middle-age segment and by a margin that beats that of teens. But when we inspected the Personas of that segment and their app usage, we came to the conclusion that these middle-aged consumers are probably part of a family and their devices are likely shared among multiple family members, including their children. Males and females in the Middle Age segment both over-indexed on parenting and education. Males over indexed as Catalogue Shoppers and females over indexed on Sports. The picture we formed is a family of four, with two phones, one tablet, and all three devices shared by the family for education, entertainment and more utilitarian functions as well.

A Sneak-Peek into the Wearable Early-Adopter

Mobile Addicts launch apps over 60 times per day, making them consumers that are effectively wearing their devices.  This analysis of the Mobile Addict should give us a sneak preview into the make-up of early-adopters of Wearables, and what types of apps and experiences will resonate with them. To date, many applications for Wearables have focused on fitness and health, but thinking about what’s next, developers should think about the other experiences that will delight the people who need to be connected all the time. This includes Teens, College Students and Middle-Aged parents who are interested gaming, autos, sports and shopping, and who may have a constant need to entertain or educate their children. After all, the people who we consider “Mobile Addicts” are already essentially wearing their devices 24/7/365.  

Note: You can read more mobile trends and data from Simon Khalaf's "The Age of Living Mobile" presentation at Source14 here.

Apps Solidify Leadership Six Years into the Mobile Revolution

  
  
  

Last year, on the eve of the fifth anniversary of the mobile revolution, Flurry issued its five-year report on the mobile industry. In that report we analyzed time-spent on mobile devices by the average US consumer. We have run the same analysis, using data collected between January and March of 2014, and found some interesting shifts that we are sharing in this report.

Time spent on a mobile device by the average US consumer has risen to 2 hrs and 42 minutes per day from 2 hrs and 38 minutes per day in March of 2013. Apps continued to cement their lead, and commanded 86% of the average US mobile consumer’s time, or 2 hrs and 19 minutes per day. Time spent on the mobile web continued to decline and averaged just 14% of the US mobile consumer’s time, or 22 minutes per day. The data tells a clear story that apps, which were considered a mere fad a few years ago, are completely dominating mobile, and the browser has become a single application swimming in a sea of apps. 

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The chart below takes a closer look at app categories. Comparing  them to last year, gaming apps maintained their leadership position at 32% of time spent. Social and messaging applications, including Facebook, increased share from 24% to 28%. Entertainement (including YouTube) and Utility applications maintained their positions at 8% each, while productivity apps saw their share double from 2% to 4% of the overall time spent. 

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Coming back to the overall time-spent on mobile, the average US consumer spent an additional 4 minutes/day on a mobile device compared to last year. That is just a 2.5% year-over-year increase. Time spent in apps was 2 hours and 19 minutes this year compared to 2 hours and 7 minutes last year. That is an increase of 12 minutes per day or 9.5%. This is a modest increase in time spent, yet not as spectacular as the five previous years.

Google and Facebook: The First Franchises in Mobile…

While examining the chart above, it is hard to ignore the time-spent on Facebook. As in the previous year, we placed Facebook (including Instagram) in its own category, albeit in the social segment. In terms of time spent, Facebook still has the lion’s share of time spent in the US. While the social segment grew, driven mainly by messaging applications, Facebook was able to maintain its position with the help of Instagram. That position will be even more cemented, if not increased, by the reach and time-spent inside WhatsApp. This has given Facebook a great degree of confidence on mobile allowing it to start focusing on the next platform. The following statement from Mark Zuckerberg’s post on the Oculus acquisition was very revealing: “We have a lot more to do on mobile, but at this point we feel we're in a position where we can start focusing on what platforms will come next to enable even more useful, entertaining and personal experiences”.

In this year’s analysis, we have added YouTube as its own segment, albeit in the entertainment category. On its own, YouTube is a whopping 50% of the entertainment category. Google has many other widely adopted apps, such as maps, but we kept those in their respective categories.

Both Google and Facebook have very well established franchises on mobile, but the market is still very fragmented. In fact, Google and Facebook combined probably command less than 25% of the total time spent by the average US mobile consumer. In addition the top ten franchises, according to ComScore, account for less than 40% of the time-spent. So despite massive efforts by Google and Facebook, the market still hasn’t consolidated and over the past couple of years we have seen new franchises emerge in almost every sector of mobile. Apps like Pinterest, Snapchat, WhatsApp (acquired by Facebook), Waze (Acquired by Google), Spotify and many more received wide adoption and commanded a percent or two of the time spent. In short, six years into the mobile revolution, there are numerous opportunities for new franchises to emerge in almost every segment of the mobile economy. 

…and in Mobile Advertising

There is an old saying in the world of advertising: “time-spent is the timeless currency”. It means that advertising revenue distribution follows time-spent distributions. As an example, if an app commands 17% of time spent, it should command 17% of the ad revenues for that channel. This is exactly the position Facebook is in right now and this is reflected in the chart below. 

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According to eMarketer, at the end of 2013, Facebook earned 17.5% of the overall mobile advertising revenues. That is in-line with their share of the time-spent. On the flip side, Google, according to eMarketer, earned 49.3% of the overall mobile advertising revenues, much more than its fair share of time-spent. (For the time-spent analysis, we accounted for YouTube and all the time spent in browsers where Google monetizes search and display.)

There are other display networks and other search monetization players out there, but if we combined mobile search and display ads on the mobile web, Google probably has a high market share in terms of ad revenues. The rest of the apps, including gaming apps, are simply not getting their fair share of advertising spent. The “other” apps command 65.3% of time spent but only receive 32% of ad revenues. This represents a massive opportunity for applications, including gaming apps, to monetize through advertising. eMarketer also projects that the mobile ad market will grow 75% this year, making the opportunity even bigger. In fact, analysts predict that in-app ad revenues will surpass web display ads in 2017.

It is still too early to predict the trajectory apps will take in 2014. But one thing is clear - apps have won and the mobile browser is taking a back seat. Now every company in the world including Google is adjusting to that reality. 

 

Hear more Flurry insights at Source14, our one day mobile summit happening April 22 in San Francisco. Register today. 

 

 

 

Personal and Professional Productivity: The Next Frontier for Mobile Apps

  
  
  

While established mobile platforms like Facebook and Google are already thinking about the post-mobile world, with bets on fire alarms, robots and virtual reality, the whole world is still adjusting to the post-PC world, where mobile rules. The dominant PC platform, Microsoft is still playing catch-up on mobile and its newly appointed CEO is expected to announce the long rumored Office suite for the iPad tomorrow.

Mobile devices have quickly proliferated and their shipments have eclipsed those of PCs, but they haven’t made a big dent in the productivity market to date. Time-spent on these devices is still concentrated in games, social networking, messaging and entertainment. But, it appears that this about to change and Microsoft’s announcement of Office for iPad couldn’t be more timely. In fact, it can define Microsoft and its newly appointed CEO’s tenure in the post-PC world. In a new analysis we conducted between the months of January and March 2014 we found that the average US consumer spends 119% more time in productivity apps than they did over the same period a year ago. This includes time spent in apps on iOS and Android devices, both tablets and phones. This growth rate eclipsed all other categories including Messaging, Games and News. 

Productivity App Growth Rate

The actual numbers are still relatively low as the average US consumer spent 5½ minutes per day in productivity apps. This compares to 2½ minutes per day in March of 2013. This takes into consideration the relatively low penetration of productivity apps in general. In fact, an analysis of 7,800 productivity apps on the Flurry platform shows a total reach of 32 million US mobile users. But the year-over-year growth rate is still significant and indicates a shift in consumer behavior. Applications such as Evernote and Dropbox are gaining traction and new emerging apps such as Quip, Slack and Acompli are ushering a new era of mobile-first productivity applications. Continued innovation and growth in this category will accelerate the adoption of productivity apps on tablets and phones, and spell further doom for the PC industry.

Analysts are still divided on whether Office for iPad will fuel this industry and make Microsoft relevant in the post-PC world, or will simply be a product from another era, brought to mobile without much impact. The rumor of the announcement gave Microsoft a nice 4% boost in market cap, but the world is watching what Microsoft’s new CEO will say more than what the product will do. One thing we know is right: timing. Productivity apps are gaining tremendous traction on mobile devices and Microsoft’s products can simply be the second-stage booster for this industry. It will be fun (and productive) to see what happens the next few months.

Flurry’s Gaming Matrix Re-loaded on Android

  
  
  

In the past 18 months, Android has emerged as a major gaming platform. Yesterday at GDC in San Francisco, we unveiled that over 70% of all Android devices engage in at least one gaming app per month. On the Flurry platform alone we see over 525 million worldwide Android devices actively engaged in mobile gaming each month. But the perception is that iOS is the more mature ecosystem and that Android is still sorting itself out, especially around business models.  As we have done with the iOS platform, today we unveil the retention matrix for Android, which we hope is a helpful reference and guide for developers. 

IAP vs. Ads: It's all in the Game Mechanics

Let’s take a look at the retention matrix for 1,382 of the top gaming apps for Android. On the X-axis is 30-day Static Retention, as defined as the percentage of new users who opened the app 30 days after install (this is not to be confused with Flurry’s Rolling Retention, which looks at the percentage of new users who open the app 30 days or later after the install). On the Y-axis is the average sessions per week for that genre. The genres plotted on the chart have been manually curated by Flurry and reflect the game mechanic of the apps.

Android Frequency and Retention resized 600

Quadrant I houses those evergreen genres that are most likely to keep their users highly engaged for long periods of time, and are typically dominated by advertising. These easy-to-play, repeatable games have strong staying power, as evidenced by their high retention. According to Flurry data, good ol’ Solitaire is the game that never gets old, with the highest retention of any genre at 50%. Not surprisingly, Social Turn-Based games have the highest session frequency and high retention given their social nature. Successful apps in this genre have built in appointment mechanics, requirements that a player return to the game in a certain time period to gain a reward, which are critical to get those high frequency and return metrics. Genres in Quadrant I are particularly amenable to ads as they have the potential to generate a very high impression count over time given their high frequency and retention rates. It’s not uncommon to see advertising generate 90% of these games’ revenue. 

At these retention levels, re-engagement marketing becomes compelling, as there is opportunity to recapture users who are likely to stick around for another long spell. Since we know the peak usage for the average game only lasts two months, re-engagement is very important for these titles. Evergreen genres are also great games to use as a platform for promoting your other, higher ARPU (average revenue per user) titles.

Games in quadrant II have high frequency but lower retention rates. In other words, they’re used often but for limited time periods. This implies that those users who do stick around will be highly engaged. To maximize revenue in genres like management/simulation, slots, and strategy, tip the balance towards IAPs, as these players are willing to pay good money for content and capabilities. But don’t ignore the significant percentage of players who won’t pay. Use rewarded video ads to get the non-payers to engage more with the game by letting them earn the currency they value.

In these genres, take advantage of this intense play with offers and new content early and often (and at times of key emotional investment). Content releases need to be complete, submitted, and ready near initial push of the game, as players won’t stick around for improvements. 

Genres in Quadrant III have relatively low retention and frequency. These genres have the pickiest audiences, but those that stay…pay. Like Quadrant II, focus on IAP and use video ad opportunities to monetize those users who don’t pay but want to continue playing. Well-spaced interstitials that are not too disruptive are another good choice for these genres. Developers should look to maximize revenue early in the lifecycle of game.

For these low-retention genres, it can be difficult to find right kind of user. What are known to be the highest ARPDAU (average revenue per daily active user) categories (Card-Battle and Strategy) have low “loyalty” – this is in part due to heavy marketing despite only a niche audience being interested in the genre. It’s worth the broad marketing for some of these games because when they do find a good user it is highly valuable. That said, targeting by age, gender, and persona can improve efficiency.

Quadrant IV, like Quadrant I, houses genres with extremely high retention, but relatively lower frequency. Match 3/Bubble shooter and Endless Runner genres are on the border here. We say “relatively” lower frequency as these games are still played at least once a day on average. Monetization strategy tips slightly more towards advertising given the high number of impressions generated over time. Of course, if you’ve got a hit like Candy Crush, the game can monetize quite nicely through IAP. 

Targeting the Right Players

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The first step in monetizing any app is acquiring new users. To understand whom to target, we next looked at the age and gender distribution of our game genres. On the X-axis is the average percentage of MAU that is female and the Y-axis is average age of MAU in the genre.

Not surprisingly, Android skews male and younger. Most Android genres appeal to males under 35, suggesting there’s an opportunity for an Android game that appeals to older males. Solitaire and Slots are the only genres that have a firm middle-aged audience, with Solitaire skewing more female.

Games that monetize through IAP, such as Card/Battle, Strategy, and Action/RPG titles, are more appealing to men. Genres more appealing to women- Solitaire, Brain/Quiz- are those that are more amenable to monetizing through advertising. Of course, there are always exceptions and hit titles generally figure out how to make both men and women pay. 

Winning on the World's Largest Gaming Platform

There’s a player for every Android game. And for every game there’s the perfect mix of IAP and advertising to make it a successful business. If the game has the potential to generate high levels of impressions- either through high frequency, retention, or both- consider some form of advertising. If the game appeals to the few, the proud, the payers- focus on IAPs. Whatever the monetization strategy, target your acquisition efforts to find the right player. 

Android Personalization Apps: The Battle for App, Content and Service Discovery

  
  
  

In August of 2013 Google suffered a rare two minute outage. During that infamous two minutes 40% of the web went dark. Forty percent! This event was a clear reminder of the ultimate control Google has over the web and web traffic.

Since the early days of the web, control of discovery and web traffic has been the focus of many. In the mid- to late-nineties, such control was in the hands of ISPs such as AOL and Earthlink. In the late nineties, the control shifted to portals with Yahoo and its MyYahoo service in the lead position. (I recall a conversation in 2000 with a former colleague of mine asking for an introduction to the MyYahoo team: “If you are not on MyYahoo, you simply don’t exist. It costs too much to promote your site.”) In the early to mid 2000s, Google dis-intermediated Yahoo and stole that position with Search and AdWords. Google has since reigned supreme over web discovery, organic and paid traffic acquisition. An entire industry has been built around SEO and SEM and both of these acronyms have become synonymous with the name Google.

Then came mobile and its apps. In just over five years since the launch of the Apple AppStore, apps have taken the mobile industry by storm. Today, 86% of time spent on mobile devices is spent inside applications, with just 14% left for the mobile web. App discovery has been a major challenge over the past five years. That led to the fast rise of the paid App Install market. In fact, Marketers are expected to spend over $2.4 billion USD in the US alone to get their apps noticed.

Climbing into a Walled Garden

Discovering relevant content and services within apps has also been a big challenge. Consumers want such a service. As an example, if a consumer is searching for a flight to Las Vegas, in an ideal scenario the phone or discovery service would launch whatever flight booking app is installed on the phone and send the consumer directly to the reservations page. But apps (alongside the content and services in them) can’t be crawled. They are not just about index and links, and hence are hard to “page rank.” As a result it is difficult for a search engine to discover apps and offer consumers an entry point.

Consumer behavior on mobile is very different than the desktop web. The de-facto behavior on the web is to launch the browser to google.com, type a sentence and be re-directed to content. The de-facto behavior in mobile is to launch an app (previously installed on the device) and enjoy the comprehensive experience offered within it. You are rarely, if ever, linked out to a mobile webpage from an app or sent to another app. Each experience is essentially an island unto itself, completely reliant on the consumer to come ashore.

The industry and some major mobile players are looking to solve this problem and the battle is raging for the “gateway” for mobile apps, content and services. In short, the Google position for mobile is up for grabs and billions of dollars are at stake.

At Flurry, we are in the middle of that battle and have built solutions to help apps get discovered and acquire traffic. We watch the space very carefully. We have seen a lot of companies, large and small, try to solve this problem: Apple with Siri, Google with Search and Google Now, Facebook with App Install and App Conversion Ads, and myriad others. But recently we have been most intrigued by Android Personalization apps, also called Launchers, especially after the creation of Facebook’s Home and Yahoo’s acquisition of Aviate. So we have taken a closer look at this category and the chart below shows the very fast adoption and usage of these personalization apps on Android.

Growth in Peronalization Apps for Android resized 600

The majority of these apps offer a personalized homepage for Android, and do some form of app discovery and app launch.

There are over 4,500 apps in this category on the Flurry platform and the data shown represents the aggregate usage of these apps. It shows the number of app sessions recorded by Flurry in apps in the Android Personalization category, by quarter, since the beginning of 2012. The growth in that category is astonishing. In fact, Q1 2014 (and the quarter is not over yet) usage is higher than all of 2013. While the cumulative reach of these apps is still relatively small (30 million monthly users in the US), the usage growth is eye catching.

This data set is telling us something.  In fact, this data set is telling us something big. It is telling us that consumers are eagerly waiting for an innovative service that help them discover apps, content, and services around them in a personalized way. While the numbers are still small, the fast adoption of these apps can’t be ignored. The battle for the mobile homescreen has begun. The battle for the “Google position of mobile” has entered a new phase, and it is “must-win” battle for many.

 

Benchmarking the Half-Life and Decay of Mobile Apps

  
  
  

Developers devote a lot of attention to the time immediately after an app is launched. How quickly is it growing? Will it go viral? How is it ranking in app stores? While that launch period is critical, managing apps well throughout their entire lifecycle means also paying special attention to what happens after an app peaks. Does it decline precipitously or manage to hold much of its audience for a long time?

We explore the post peak phase of the lifecycle of mobile apps using the concept of a half-life, which for purposes of this analysis we define as the point at which an app’s monthly users (MAU) have declined to 50% of their lifetime peak.

Usage of Many Apps Decays Rapidly The First Few Months Post Peak And Then Levels Off

We start by looking at the overall rate of decay for 26,176 apps that peaked in the first half of 2011, 2012, and 2013. (That allows enough time for decay even for apps peaking in 2013 and also controls for the time of year in which the app peaked.) The chart below shows what proportion of apps were at what percentage of their peak MAU in each of the first ten months after they peaked. Apps in the gray band fell below 25% of their peak MAU by the month indicated, apps in the orange band had fallen below 50% but were still above 25%, apps in the green band were below 75% but above 50%, and apps in the blue band were above 75% of their peak MAU in the month shown in the horizontal axis.

Halflife of an app graph resized 600

As shown in the chart, decay is fairly rapid in the first few months post peak. A quarter of apps fall below half of their peak MAU the month after peaking (see the top of the orange band in the chart). That percentage grows to 43% in the second month post peak. In the third month post peak, just over half (52%) of apps fall below half of their peak MAU. The fourth month post peak is a critical benchmark: From this point on, MAU decay continues, but at a much slower rate (note the flattening of the color bands after the 4th month).

The overall pattern of app user decay has been remarkably stable over the past three years, but there is variation based on app category, size, and operating system. The table below shows median app half-life for apps within each grouping. This corresponds to the month in which the top of the orange band and the bottom of the green band intersect at the 50% line in the previous chart.

Median App Half Life table resized 600

The biggest influence on the rate of app decay is category. Apps in utilitarian categories such as news and health decay at a much slower rate than apps in the more trend-driven games and social categories.

On average, apps that peak at 10,000 MAU or more enjoy a half-life that is two months longer than apps that don’t reach that level.

iOS apps typically reach their half-life a month later than Android apps. 

Managing Decline Is As Important As Managing Growth

Many developers give a lot of thought to how to grow their apps, but we suspect fewer devote the same attention to managing their app’s decline. In some ways, this is analogous to people looking after their health as they age. The right habits can prolong longevity. In the case of apps, that means paying close attention to user retention and re-engagement – particularly as MAU growth begins to plateau and decline.

Those first few months post peak are key since the rate of decay levels off after about four months. More than half (56%) of apps that manage to hold more than half of their peak users for the first four months after they peak are still holding on to more than half of them ten months post peak. That could have a sizeable revenue impact. For example, consider an app that peaks at 100,000 monthly average users and has average revenue per user per month of $2.50. Holding at least half of those users through month four means the app has a 56% chance of holding them for another six months and that translates into revenue of $750,000 (100,000 users* half of them remaining *$2.50 per user per month * 6 months).

Just as actuarial tables help insurance companies anticipate costs, understanding typical app decay patterns can help developers and those who fund them anticipate app revenue streams. For example, assuming similar development costs and average revenue per user per month, a game app would need to peak with many more active users than a news app to have the same profit potential since its life can be expected to be a lot shorter. And it pays to invest in growing MAU for any app to the highest peak possible since that is also likely to mean the app will enjoy a longer half-life. 

Mobile Use Grows 115% in 2013, Propelled by Messaging Apps

  
  
  

In November 2013, Benedict Evans, a well-respected and widely followed analyst, shared an updated version of his famous slide deck called “Mobile is Eating the World”. This deck quickly made the rounds on social media and was highly referenced by industry and financial analysts who cover mobile. We can’t help but agree with Benedict’s conclusion. For the past five years, we have watched mobile disrupt every industry, in every country, and continue to break its own records year after year. 2013 did not disappoint.

According to Flurry Analytics, overall app use in 2013 posted 115% year-over-year growth. (In this context, we define app use as a consumer launching an app and recording what Flurry defines as a session.)

Every single app category has shown growth over the last twelve months. In the chart below, we have focused on the categories of interest to most. Utilities and Productivity apps posted 150% growth in use year-over year, as smartphones and tablets became personal computers and productivity apps, such as Evernote and Quip, gained sophistication and adoption. Even Gaming, which was feared to reach saturation levels in 2013, posted 66% year-over-year growth in use. 

App Use Growth 2013 resized 600 

However, the segment that showed the most dramatic growth in 2013 was Messaging (Social and Photo sharing included). The growth in that segment should not come as a surprise to many, given the attention that messaging apps such as WhatsApp, WeChat, KakaoTalk, LINE, Facebook Messenger and SnapChat have received in the press. What is surprising, however, is that the rate of growth (tripling usage year-over-year) dramatically outpaced other popular categories. This type of growth could explain the high valuation Facebook has allegedly put on SnapChat, or Facebook’s rush to add direct messaging in Instagram, an app frequented by teens.

Killer Apps or Killer Platform?

While some of these apps, such as Korea-owned and Japan-based LINE, are enjoying great revenue growth, there is still a debate about whether these apps are simply experiences or more of a platform.  2013 saw a few examples of these apps becoming more of the latter.

In March of 2013, and just three months after launching it game distribution platform, LINE announced that it had delivered over 100m downloads to its gaming partners.

Tencent’s WeChat has conducted an experiment with China’s emerging device manufacturer Xiaomi demonstrating WeChat’s potential as an m-commerce player.  In that experiment, Xiaomi launched a new smartphone to WeChat users. The result: 150,000 new smartphones sold in under 10 minutes through a messaging application.

Such examples, coupled with Facebook’s own successful entry into the paid mobile app install market, have demonstrated the potential messaging and social applications have to become a mobile storefront for digital and physical goods.

It is these simple yet very promising anecdotes, coupled with an over 200% year-over-year growth, driving the frenzied land grab in the Communications market. 2014 will be a crucial year for these applications and will determine whether they will remain independent, but highly frequented applications, or become killer mobile platforms and distribution channels. TIME magazine has already placed its bets on the latter. At Flurry, we are fascinated by the growth, the retention rate, the reach and the frequency for this category. We see the potential for what it might become, but before declaring that mobile is all about messaging apps, we would like to see more of these marketing/commerce experiments a la Xiaomi/WeChat happen at scale and in many countries.

Another explosive growth year in mobile has passed. On December 31st, 2013 at 11:59 pm, Flurry Analytics tracked a record 4.7 Billion app sessions in a single day, for a total of 1.126 Trillion sessions for the whole year. Those are some very, very big numbers. One minute later the counter went back to zero. A new year has begun, and if the first few days of January are any indication, the mobile world is looking at another major growth year and yes Benedict (and Fred Wilson too), mobile is continuing to eat the world.

 

Christmas Continues To Set App Download Records In Spite Of Slowing Growth and Globalization of App Market

  
  
  

As we said in previous posts, connected devices have become part of our Christmas and Thanksgiving traditions. This marks a change from just a few years ago when smartphones and tablets represented exciting new additions to our lives that we couldn’t wait to unwrap, activate, and start filling up with apps. 

Flurry’s data showed another record-breaking level of app downloads this Christmas, but it also provides further evidence that, in the early mobile markets at least, devices are evolving from being our new shiny toys to our everyday companions.

For this report, we looked across more than 400,000 apps that Flurry tracks globally to see what happened around the Christmas tree. We found that Christmas downloads were up by 91% compared to an average day in the first three weeks of December. That is a large increase, but as shown below, the size of the Christmas download spike is diminishing over time as the app market matures and globalizes. 

Christmas Charts Part 2 2.3 resized 600

More Signs the App Market is Maturing

2013 was the biggest Christmas yet for mobile app downloads. As the chart below shows, overall app downloads increased by 11% on Christmas 2013 compared to Christmas 2012.  Over the same one year time span, there was a 25% increase in app downloads on an average December day. As the data illustrates, both the overall rate of year-on-year growth and the year-on-year Christmas growth have slowed considerably in the past year (from 97% and 90% respectively between 2011 and 2012).

Christmas Charts Part 2 2.1 resized 600

The slowing growth rates and smaller Christmas Day app download spike signal market maturation. Many consumers in Western Europe and English-speaking countries -- large mobile markets where Christmas is a big holiday -- already have a smartphone and / or a tablet. Fewer people are coming online with mobile for the very first time. Consumers who are on second, third or fourth devices have apps that they like and trust, and while they still download new apps, there isn’t much more impetus to do so on Christmas than any other day when they have a little downtime. New device activations do still spike on Christmas, but that spike is waning compared to years past, and it comes on top of a much larger installed base. That means that when new devices are loaded with apps, the overall impact on app download volume is not as big.

The biggest growth in mobile now is coming in countries where Christmas is a less significant holiday or not celebrated at all, so new device activations and app downloads come at different times of the year in those places. And because those high-growth areas are joining an already large global market, overall growth rates are less striking than when the mobile market was new.

Leisure-Oriented Apps Experience the Biggest Christmas Lift

To look at the types of apps that see the greatest increase in downloads at Christmas, we indexed the numbers by comparing Christmas to an average day in the first three weeks of December to eliminate inflation due to the continued growth of the overall connected device installed base.

After doing that, we see a similar phenomenon to what happened on Thanksgiving. Because our devices have become so intertwined with our lives, on a day like Christmas when most of us are relaxing, the apps we download reflect that. Games and social apps were downloaded on Christmas at twice the rate they were on a typical December day. The other categories that experienced the largest surge in Christmas downloads were media (photo, video, music) and lifestyle (sports, books, magazines, entertainment).

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Are Prospects Changing For App Developers?

Maturation of the app market means that changes are in store for app developers. The gold rush days of huge jumps in the overall size of the connected device installed base on Christmas, followed by a dizzying rush of app downloads are fading. Of course, there will still be apps that tap into some vein of consumer interest or amusement and developers who strike it rich as a consequence. But overall, the successful developers in 2014 and beyond will be those who put in the hard work of identifying a target group of users, creating apps that work well for them, and continually refining and reinventing mobile experiences to profitably retain those users. We’ll talk more about that in early 2014. 

Amazon Delivers A Great Christmas For Its Kindle

  
  
  

In less than a decade, connected devices have become an integral part of Christmas. They are commonly wished for and given as gifts, and Christmas is the biggest day of the year for new device activations. That tradition continued this Christmas, with device activations up by 63% compared to an average day in the first three weeks of December.

To identify what types of devices are most gifted, we compared new device activations on Christmas to the average for the first three weeks of December. This approach adjusts for the fact that the smartphone and tablet installed base is growing all the time, and therefore a large part of the difference between one Christmas and the next is a result of growth in the installed base rather than increased Christmas giving.

Who Needs Drones When You Have Reindeer?

The chart below shows the smartphone and tablet manufacturers that experience the greatest increase in activations on Christmas compared to a typical December day. For the past three years, Amazon has been the brand of device that has experienced the largest bump in Christmas activations compared to its normal level of activations.

Christmas Charts 12.26.2013 1.2 resized 600

We believe price, business model, target market, and form factor all contribute to the big boost in Kindle activations at Christmas relative to other times of the year. Amazon sells Kindle tablets at cost, putting them within the Christmas budgets of more people than some other devices. The reason Amazon sells tablets at cost is that for them tablets are a channel for promoting physical goods and promoting and delivering digital content. That same retail business model means that Amazon is top of mind for many consumers during the holiday season, giving it lots of opportunity to promote its tablets as Christmas gifts. As we discussed prior to Christmas, Kindle’s new Mayday button makes it a particularly good gift for mobile newbies, and Amazon’s mass-market reach makes it available to those people. Last but not least, as we show subsequently, tablets in general, and WiFi tablets in particular, are the form factor that does best at Christmas, and many Kindles tick both of those boxes.

The combination of form factor and relatively low price probably also helps explain why Acer experiences a greater lift in Christmas activations than many other manufacturers, though the size of that bump is still only a fraction of what Amazon experiences.

In each of the past three years, Apple has experienced a larger Christmas lift than Samsung; however the gap between them narrowed this year compared to previous years. While the magnitude of the Christmas increase is smaller for these manufacturers than for Amazon, their baseline level of activations is so large that even a doubling of daily activations on Christmas (1.9x for Samsung and 2.3x for Apple this year, according to our data) represents a large number of devices.

Overall, while still significant, we can see that the size of the Christmas activation bump has declined over time for most manufacturers who ever had one. Even Amazon has dropped from forty-one times its baseline activations on Christmas 2011 to twenty-four on Christmas 2013. This is likely to be due to the increased overall penetration of smartphones and tablets, and is expected in a maturing industry. With more people having smartphones and tablets there are fewer new users to give them to, and giving to existing users is more challenging since existing users are already tied into carrier contract renewal cycles, app ecosystems, etc.

Wifi Tablets Are The Most Gifted Devices

As shown below, in each of the past three years WiFi tablets have been the most gifted devices, with activations this year more than six times greater on Christmas Day than on an average day in the first three weeks of December. Smartphones are the least gifted connected device form factor with cellular-enabled tablets in between. We believe WiFi tablets are the preferred connected device gift since they work out of the box. Cellular-enabled tablets and smartphones require a data plan, creating an adult gift recipient version of children receiving toys with “batteries not included”. WiFi tablets also tend to be among the least expensive connected devices, making them more accessible gifts for more people.

Christmas Charts 12.26.2013 1.1 resized 600

Will There Be An Amazon Smartphone In Time for Christmas 2014?

Yesterday CNET predicted that Amazon will come out with a smartphone in 2014. We agree. Three of the four factors that help boost Kindle sales at Christmas -- price, business model, and target market – also imply that it would make sense for Amazon to have a smartphone in its connected device portfolio. Whether it arrives by reindeer or drone, you may find one in your stocking next year. 

Apps: The New Thanksgiving Tradition (and Shopping is Just Part of the Story)

  
  
  

According to IBM, two out of five online retail visits in the U.S. on Black Friday were made from mobile devices, directly generating more than 20% of online retail sales. On Thanksgiving Day, smartphones and tablets accounted for an even greater share of online retail visits and sales (43% of visits and 26% of sales). These results show the extent to which connected devices now influence retail sales, but Flurry’s own Thanksgiving weekend data demonstrates that our relationships with our smartphones and tablets go well beyond picking up a Black Friday deal while picking at Thanksgiving leftovers.

App usage overall in the U.S. spiked by 25% on Thanksgiving compared to the previous Thursday, and not just as a result of shopping app use. The overall pattern of app usage over the Thanksgiving weekend demonstrates that smartphones and tablets have become the first truly personal computers, changing their function as we change our routines. To illustrate that point in this post, we take an in-depth look at U.S. app session starts from the day before Thanksgiving through to Cyber Monday. We compare Thanksgiving week to the week prior, and also compare those time periods for the two previous years. (By including the weekends prior to Thanksgiving for each year we can distinguish between overall growth in app usage and use that is unique to Thanksgiving weekend.)

App Use Spikes on Thanksgiving

The chart below provides a high-level view of how overall app usage has changed from year to year, and changes between the week prior to Thanksgiving and the week of Thanksgiving. The gaps between the green, blue, and gray pairs of lines illustrate the extent to which app usage in the United States has grown year over year, with baseline usage the week before Thanksgiving up by about two-thirds compared to the same time last year, and about triple what it was during November of 2011.

FLR131201 1 Thanksgiving blog chart1 300dpi FA resized 600

The darker line in each color pair shows Thanksgiving weekend for a particular year while the lighter version shows the prior weekend for that year. The gap between the lighter and the darker lines in a color pair shows the difference in app usage by day between Thanksgiving weekend and the prior weekend. For the past three years, that difference has been greatest on Thanksgiving Day, diminishing to return to normal by Cyber Monday. In 2011 and 2012, U.S. app usage spiked by 20% on Thanksgiving Day compared to the previous Thursday. This year the Thanksgiving spike grew to 25%.

Given mobile devices are so personal, it’s no surprise that they tag along as we enjoy Thanksgiving weekend, but we wanted to understand the drivers behind the Thanksgiving spike in app usage. Is it just mobile shopping? Recipe apps aiding Thanksgiving cooks? Football fans checking stats from the couch? Social networking apps used to stay in touch with family far away? What accounts for the extra app sessions on Thanksgiving?

To find out, we compared app sessions by category for Thanksgiving weekend to the weekend before, focusing on the three days for which there is the biggest difference in overall app use.

The results are shown in the table below. The rows are app categories aggregated across operating systems. The columns show changes in app usage between Thanksgiving week and the same day the previous week for each category. Each cell shows that same comparison between Thanksgiving week and the previous week for the past three years.

FLR131201 1 Thanksgiving blog chart2 300dpi FA resized 600

Use of Shopping Apps Is Up Overall – Not Just On Black Friday

For obvious reasons, shopping apps consistently spike over the Thanksgiving period. Interestingly the bump this year wasn’t as large as the one last year; however that should not be interpreted to mean that enthusiasm for shopping apps is waning. On the contrary, between 2012 and 2013, overall use of shopping apps in the week before Thanksgiving grew by about 70%, so the 2013 Thanksgiving spike comes on top of a higher baseline usage level.

Media and Gaming Are Even More Popular On Thanksgiving 

App categories beyond shopping that saw spikes in app usage during Thanksgiving week are fairly predictable. Media spiked on Thanksgiving Day in particular – most likely in part because it includes photo and video apps used to record family gatherings. It was also somewhat higher on Wednesday and Friday compared to the previous week.

More time for relaxation probably explains why game apps, which are always popular, enjoyed even more use over the Thanksgiving period than the week before.

Even Workaholics And Dedicated Calorie Counters Take Thanksgiving Off

What types of apps experience less use on Thanksgiving and the days immediately before and after than during the previous week? Mainly apps associated with things people take a break from over the Thanksgiving holiday: business and education, health, and news.

Travel apps also experience a decline in use Thanksgiving Day and the day after. That may seem counter-intuitive since Thanksgiving weekend is one of the busiest travel periods of the year; however it’s important to remember that people tend to be traveling to familiar places and often staying with relatives or friends so are less likely to need apps for booking hotels and rental cars or finding their way around an unfamiliar city.

Smartphones and Tablets Have Become Our Constant Companions

So shopping does contribute to the spike in app activity on Thanksgiving, but it’s only part of the explanation. This data shows the extent to which smartphones and tablets have become our constant companions, morphing their function to our whims and circumstances in ways even laptops never really did. They are truly our most personal computers. Sure, you can use them to shop without getting out of bed, let alone braving crowds at the mall, but your device can also entertain you with games, music, and movies. It can even tell you how far you need to walk to make up for that second helping of mashed potatoes – if you choose to look.

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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 from more than 500,000 apps on over 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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