Game Makers Dominate Mobile App Market

The rise of the mobile phone applications industry has resulted in a range of applications for nearly every purpose in life, but a new report from Canalys indicates just a small number of developers, almost entirely game companies, continue to generate the majority of revenue at the leading app stores, namely Apple’s App Store (iPhone only) and Google Play.

Canalys estimates that just 25 developers accounted for half the application revenue in the United States in those two online stores during the first 20 days of November 2012. Between them, they made $60 million (£37m) from paid-for downloads and in-app purchases over this period, the report said.

Games win

During the same period, games accounted for 145, on average, of the top 300 paid apps in the Apple App Store and 116 of Google Play’s top 300 paid apps. Games also accounted for 94 of the top 300 listed free apps for Apple and 110 for Google Play, the study found.

“Part of the story here is that successful game developers almost invariably have multiple titles generating revenue,” Chris Jones, vice president and principal analyst at Canalys, said in a statement. “Zynga, for example, had 15 titles in the list of top 300 grossing iPhone apps on average in Apple’s App Store every day, and nine titles in the equivalent list in the Google Play store. Even with its singular focus on its Angry Birds franchise, Rovio has multiple game variants in the list.

“With the holiday season now under way, we expect to see many of these top game developers employing discounts and special offers, taking advantage of their ability to cross-promote within their app portfolios. This is expected to ensure that over the Christmas period in the US, the dominance of key game developers will only increase,” Jones said.

Discoverability and marketability

Despite the financial potential for developers of mobile games, visibility and marketability remain significant hurdles. The report also noted developers of other types of apps, especially those with poor brand awareness, face significant challenges in getting their apps noticed and then generating revenue from them.

“Discoverability is a particular issue in the Apple App Store and in Google Play, given the huge inventories they boast,” Canalys senior analyst Tim Shepherd said in a statement. “With top game developers’ content so prevalent in the stores, it can be hard for other good quality apps to get the attention they deserve. Developers of other kinds of apps need to consider how to promote them. Depending on the type of app, they should consider how best they can exploit social media and social recommendations, tactical sales promotions and discounts, branding tie-ups and targeted in-app advertising.”

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Originally published on eWeek.