As more and more developers shift their attention over to the mobile market, there seems to be a lot of unrealistic expectations on creating successful apps. Part of this comes from the nature of the market. Part of this comes from the people jumping into the market. In the end, even companies staffed by experienced veterans who try to transition over directly to mobile development have a hard time divorcing the lofty expectations of the platforms and their underlying realities. In deciding to go from Lackey to Leader with Bonozo, I did what anyone who’s spent years studying law and history would do, I did a lot of research.
What I found revealed a dark side to app development that many, myself included, turn a blind eye to in our excitement and passion for making games. I put this together, originally, as part of a business plan, but around the water cooler, we figured this would be a good thing to just get out there. This first post discusses some of the general challenges, or bad, aspects of the App Market. The next post will discuss some of the general strengths, or good, aspects of the App Market.
Guess what? Apple’s App Store best selling games tend to be just as hit-driven as normal video game sales. According to a recent survey by Appolicious and published by TechCrunch, "Approximately 10% of all games sold on the App store sell more than 100,000 units". This tends to skew the sales data for all games, making the market seem more lucrative than it really is. Additionally, also via the survey, "90% of all apps sell less than 100,000 units, and 56% of those sell less than 10,000 units."
I call this the Nintendo Wii effect. The Wii sold like hotcakes in terms of hardware. Everyone, or at least, it seemed like everyone, either had a Wii or was waiting to pick it up. In its lifetime, to date, the Wii has moved approx. 90 Million units.
As the console life matured, the Wii software catalogue became more and more stratified. The Nintendo first party products had a solid hold on the top sellers - of the top 14 sellers on the Wii, 12 are developed directly by Nintendo and are Nintendo Properties (the 13th was developed by Sega, but uses Nintendo IP). One title, ONE, sold more than 5 million units for the Nintendo Wii that was a 3rd Party IP and Developer - Just Dance 2. The sheer volume of Wii hardware sold made the platform enticing, but the reality was that the only titles to really take advantage of the massive hardware sell through was Nintendo with 3rd Party developers - in their most successful title - capturing a little over 5% of all hardware sales.
Tremendous potential, and huge hardware installation base, does not guarantee success. Yet, a great many developers look at the mobile market with the same naive excitement with the tremendous install base of iOS based devices that are available worldwide.
So, back to the App Store. Over half of games released on the App Store sell less than 10,000 units. This means that games come and go quickly on the App store, with the vast majority of Apps selling for $0.99 to get as many sales as possible in the hopes of making it onto the top sales lists. In reviewing blogs of other developers disillusioned by their first forays into Mobile Development, many developers who stick a price on the App and be done with it find that they have a hard time recouping their initial investments, particularly when the cost to develop soars past the $5000 to $7500 price range. Because Apple takes 1/3rd of the sales cost for every game sold on the App store, a $0.99 game actually makes the developer $0.66. If a game costs $5000 to make, it's going to need to sell 10,000 units to ensure a marginal profit and rate of return on the investment to the title. With the vast majority of games selling less than 10,000 units, even creating a game for $5,000 can be a marginal investment. Is it possible, absolutely, but it isn't probable that a game that costs more than, say, $10,000 to make will recoup its investment.
Game developers and Indies who are coming over from the traditional game development industry and trying to break into the App Store and Mobile Markets tend to view the massive hits as their goals - attempting to catch lightning in a bottle, and emulating the worst aspects of the mainstream game development industry.
Further, there is a tendency to see that the gold rush days of the AppStore and mobile development may be over. Since its launch and establishing the popularity of the mobile app market, the bigger developers and publishers have dominated the premium, paid-app market. The web is rife with former mainstream developers sinking a lot of money and time into a traditional, well-developed and designed game and seeing marginal returns due to poor marketing and excessive development time. The paradigm of creating and marketing mobile games, given the tremendous influx of new apps that are released daily, is very different than the standard development and release model.