Sailing the App Store

30,000 apps as of today entered the App Store since its launch, up from the 25,000 counted on March 6th.  The weekly average of new app releases per month continues to grow and now more than doubles those of Fall 2008.

Of the new apps released since the 25,000 app milestone (March 6), nearly 40 broke into either the Top 100 Paid or Free for the first time, indicating a sub 1% “hit” rate.  Of the apps in the Top 100 Free/Paid at that time, over 85 dropped out.

Competition like this convinces some to believe that the App Store is a market where players have come to accept existing structural conditions as permanent and compete on the basis of price in pursuit of temporary monopolies. 

Not to be contrarian, but that view may be short-sighted.  So how can developers set sail for bluer waters?

1.    Abandon the notion that the market’s median price is a resistance level. 
2.    Focus on value innovation in ideation, game design and live tuning.
3.    Articulate the value intrinsic to an app through strategic marketing.

Pricing Rethought

The average and median prices of the Top 100 Paid are ~$2.60 and $1.99, respectively.  The $0.99 price is most prevalent across the App Store, but in the Top 100 appears to have given ground to higher price points since the introduction of iTunes 8.1. 

Median prices may continue to hover at current levels so long as no structural change is made to the App Store, and yet even if, there remains an economic rationale to release apps differentiated by their content and priced above these levels. 

Having a $100 caviar delicacy on a menu, David Edery explained at GDC, is important.  It may be the seldom-picked item, but can help facilitate sales of relatively more inexpensive items.  Hence, price disparity on a menu matters. 

One application of this on the App Store is a title’s release of multiple SKUs at different price points.  Let’s look at SGN’s Agency Wars.  What’s noteworthy is that the popularity of Agency Wars 20 more than doubles that of Agency Wars Lite. What’s also interesting is that $9.99 is the proper midpoint of an unequal distribution of prices. Both the $19.99 and $9.99 SKUs have made downloads for themselves, and more importantly debuted Agency Wars in the Top 100 Paid (vs. Free).

Relative pricing, as this example suggests, has a potential to expand the Top 100 mix beyond the micro-priced majority. Liberated from the mentality that the market’s median price is a ceiling by which to make cost/value tradeoffs, developers can create more meaningful value for their customers and themselves.

Game Design Innovation

Today’s 30,000 app milestone suggests that the App Store offers a plethora of variety in concept and quality.

If ~25% of the Top 100 Paid apps has a 4.0 rating or higher, and ratings trend toward a 3.0 in a relatively short span of time (days, possibly weeks), is there room for quality improvement across the App Store?  Are gamers truly getting the experience they care for most… Fun?  Identifying their needs and likes/dislikes is where value innovation in ideation, game design and live tuning begins.

Chris Swain and Dan Arey shared insights at GDC about the science behind the art of game design.  Aside from outlining common metrics (e.g. speed of level progression, ease of gesture-based controls), they encouraged seeing data patterns as fugues à la Gödel, Escher, Bach and applying the psychology of daily well-being to game design. Game design should be examined for the needs it strives to address: Autonomy, Competence and Relatedness (which supports the former two).

Relatedness represents a particularly exciting opportunity for iPhone gaming.  Location-aware games with push notification and microtransactions have a potential to make connections with others uniquely meaningful.

Strategic Marketing

Ahead of the release of iPhone OS 3.0, it is worth revisiting the history of the Top 100 to glean how apps made their mark.

Smule’s Ocarina and Bolt Creative’s Pocket God serve as excellent examples of how value can be created in new ways and marketed effectively.  Ocarina clocked in a consecutive 20 days and Pocket God a total 10 days at the Top 100 Paid’s No. 1… Nice.

Smule introduced an interactive sonic app and created a new form of Relatedness with Ocarina, where players’ creative expressions could be shared across the world.  Its screenshots made use of the app look easy (no musical training required), and its music video captured the harmony of an ensemble.  The YouTube video contest, “This Contest Blows”, created viral marketing well aligned with the app’s theme and helped extend its life in the Top 25 over the winter holiday.

Bolt Creative marketed Pocket God with an open commitment: “We aim to update every week for the next few updates”.  This episodic microgame offers its audience a feeling of Competence and an ongoing reason to build on that and have something to look forward to, like a return on time invested.  Marketing the precise dates of these content updates is one strategy that sets Pocket God apart from iFitness (mind you, iFitness caters to a specific market).  iFitness also has a pattern of software updates, but Bolt Creative’s marketing makes its commitment to value more explicit. 

Ready for iPhone OS 3.0?

In sum, these takeaways can help retune our compasses before sailing into the iPhone OS 3.0 era.  As developers and publishers, shifting our focus away from today’s common pricing tactics and toward value innovation supported by strategic marketing has the potential to unlock new demand and provide greater value to App Store customers. 

It’s time to use game design metrics like true number ninjas and get ready to embrace iPhone OS 3.0. With social gaming and microtransactions in the form of level packs and virtual items, games will become more than the first impression and need to upsell their services.  That in itself represents a new market opportunity for content differentiation.

This new wave of innovation will in turn give more importance to the strategic value of marketing.  For the same reason the App Store’s review system was updated with iTunes 8.1, information has value.  Price tags, game descriptions, media assets and other product information are intended to make the market more efficient. 

There is room for more creativity in game design and marketing.  Our community has an interest to take the longer term perspective, where benefits can accrue to both buyers and sellers.  Jibe ho.


Many thanks to the aforementioned GDC speakers for their insights and time:

David Edery (http://www.edery.org/), Chris Swain (http://cinema.usc.edu/faculty/swain-christopher.htm) and Dan Arey (http://cinema.usc.edu/faculty/dan-arey.htm).

-Marie