Our presentation from VDC Conference, September 13 2011, Las Vegas.

2. Pricing for Success:
App Industry Trends and Best Practices
Hendrik Koekkoek, Analyst, Distimo

3. Mobile App Stores
Great for Consumers, but There Are Many…

4. We Know App Stores
1. Distimo collects factual and timely market data,
worldwide
2. Dedicated to markets where app stores are leading
distribution channel
3. Independent and cross-store analysis, applying
same metrics to every store

5. Distimo Monitor Free App Store Monitoring
1. Free cross-platform app store monitoring tool for developers
2. Support for all major app stores
3. Transactional data allows us to benchmark applications with
the market

6. Distimo Report Data Examples
Worldwide Consumer iPad’s Road to 75k applications
Activity iPhone

7. MAJOR TRENDS IN APP PRICING
WHAT DOES THIS MEAN FOR YOU?

8. 1. App Pricing

9. Average Listing Prices Whole Store
$5.26
$4.81*
$4.17 $3.84
$3.30 $3.29
V CAST HAS HIGHEST AVERAGE LISTING PRICE
AMONG MOBILE PHONES APP STORES
* April 2011 data, others July 2011

10. Average Listing Prices Whole Store vs. Most Popular
Whole Store Most Popular
+3%
+15%*
+16% -18%
+118%
+1%
THE AVERAGE V CAST APP IS SLIGHTLY OVERPRICED
BUT FINDING THE RIGHT PRICE FOR YOUR APP IS NOT EASY
* April 2011 data, others July 2011

11. Average Listing Prices Whole Store vs. Most Popular
+160% Whole Store Most Popular
+237%
+283%
+33%
+330%
No Data
Medical Healthcare Medical Medical Lifestyle
HEALTH RELATED APPLICATIONS TEND TO BE OVERPRICED ACROSS
STORES, SO ARE ENTERTAINMENT APPLICATIONS
July 2011 Data

12. Average Listing Prices Per Category Most Popular Apps
Store AVG
$1.76
July 2011 Data

13. Average Selling Price Most Popular Apps
$3.94 $3.79 * $1.47
Weighted Average Price, * April 2011 data, others July 2011

14. Average Selling Price Most Popular Apps
$3.94 $3.79* $1.47
Since July 2010: -21% No Data -27%
INCREASING COMPETITION LOWERS PRICES
Weighted Average Price, * April 2011 data, others July 2011

15. Recap: App Pricing
• AVERAGE LISTING PRICE AND AVERAGE SELLING PRICE OF APPS DECLINING:
DON’T OVERPRICE YOUR APP
• APPLICATION PRICES CAN DIFFER A LOT ACROSS CATEGORIES:
KEEP IN MIND THE CATEGORY IN WHICH YOUR APP IS PUBLISHED

16. 2. New Monetization Strategies Become
Key Revenue Driver

17. Proportion of Available Free vs. Paid Apps
81% 19%
76% 24%
66% 34%
60% 40%
54% 46%
38% 62%
Paid Apps Free Apps
MOST STORES HAVE A MAJORITY OF PAID APPS
* April 2011 data, others July 2011

18. Volume Growth Since July 2010 (iPhone)
July 2011 data

19. Volume Growth Since July 2010 (iPhone)
INCREASE IN DOWNLOAD VOLUMES HIGHER FOR FREE APPS THAN FOR PAID
APPS IN THE APPLE APP STORE FOR IPHONE
July 2011 data

20. Proportion of Free Volume vs. Paid Volume
8.7 11.8 13.7
100 100 100
IN V CAST APPS, FOR EVERY 100 DOWNLOADED FREE APPLICATIONS 11.8 PAID
APPLICATIONS ARE DOWNLOADED ON AVERAGE.
THIS IS HIGHER THAN THE IPHONE’S AVERAGE

21. IPHONE
OF ALL APPLICATIONS
FEATURE IN-APP
PURCHASES
Based on United States – July 2011

22. OF REVENUE
COMES FROM APPS
FEATURING IN-APP
PURCHASES
Based on 200 most grossing applications in United States – July 2011

23. THAT’S UP FROM
28% LAST YEAR!
REVENUE FROM APPLICATIONS THAT FEATURE IN-APP PURCHASES
Based on 200 most grossing applications in United States – July 2010 & July 2011

24. IN-APP PURCHASES
INTRODUCED
TO ANDROID MARKET
IN MARCH 2011.
68%
OF 25 MOST GROSSING
APPLICATIONS USE
IN-APP PURCHASES NOW
Based on 25 most grossing applications in United States – August 2011

25. Possibilities in V CAST
NO IN-APPS YET, BUT:
44% OF REVENUE OF 200 MOST
GROSSING APPLICATIONS
GENERATED BY SUBSCRIPTIONS

26. Recap: New Monetization Strategies
• DOWNLOAD VOLUMES OF FREE APPLICATIONS MUCH HIGHER THAN DOWNLOAD
VOLUMES OF PAID APPLICATIONS
• IN-APP PURCHASES HAVE BECOME AN IMPORTANT MEANS OF INCOME IN
COMPETING STORES
• SUBSCRIPTIONS ALREADY A LARGE DRIVER OF INCOME IN V CAST APPS
SEEK FOR OTHER WAYS OF MONETIZATION THAN A ONE OFF FEE
EXPLORE THE POSSIBILITIES OF A SUBSCRIPTION MODEL OR IN-APP PURCHASES
FOR YOUR APP

27. 3. Channel Fragmentation:
Going Beyond Mobile

28. Download Volume Top 300 Free – United States
100 : 12.9
JANUARY 2011
Based on transactional data from Distimo Monitor top 300 free applications US – January 2011 & July 2011

29. Download Volume Top 300 Free – United States
100 : 12.9 100 : 18.5
JANUARY 2011 JULY 2011
Based on transactional data from Distimo Monitor top 300 free applications US – January 2011 & July 2011

30. Download Volume Top 300 Paid – United States
100 : 25.8
JANUARY 2011
Based on transactional data from Distimo Monitor top 300 paid applications US – January 2011 & July 2011

31. Download Volume Top 300 Paid – United States
100 : 25.8 100 : 29.2
JANUARY 2011 JULY 2011
Based on transactional data from Distimo Monitor top 300 paid applications US – January 2011 & July 2011

32. Revenue Top 300 Paid – United States
100 : 68.9
JANUARY 2011
Based on transactional data from Distimo Monitor top 300 paid applications US – January 2011 & July 2011

33. Revenue Top 300 Paid – United States
100 : 68.9 100 : 78.1
JANUARY 2011 JULY 2011
Based on transactional data from Distimo Monitor top 300 paid applications US – January 2011 & July 2011

34. Recap: Channel Fragmentation
• COMPARING THE IPHONE TO THE IPAD, DOWNLOAD VOLUMES OF THE IPAD ARE
CONVERGING TOWARDS THOSE OF THE IPHONE.
• IN TERMS OF REVENUE, TOP IPAD APPLICATIONS GENERATE ALMOST FOUR FIFTH OF
THE REVENUE OF TOP IPHONE APPLICATIONS
OPTIMIZE YOUR APPS FOR TABLETS!

35. Recap

36. Recap
• AVERAGE LISTING PRICE AND AVERAGE SELLING PRICE OF APPS DECLINING
• APPLICATION PRICES CAN DIFFER A LOT ACROSS CATEGORIES
• DOWNLOAD VOLUMES OF FREE APPLICATIONS MUCH HIGHER THAN DOWNLOAD
VOLUMES OF PAID APPLICATIONS
• IN-APP PURCHASES HAVE BECOME AN IMPORTANT MEANS OF INCOME IN
COMPETING STORES
• SUBSCRIPTIONS ALREADY A LARGE DRIVER OF INCOME IN V CAST APPS
• COMPARING THE IPHONE TO THE IPAD, DOWNLOAD VOLUMES AND REVENUES
OF THE IPAD ARE CONVERGING TOWARDS THOSE OF THE IPHONE

37. What Does This Mean?

38. What Does This Mean for You?
DON’T OVERPRICE YOUR APP
LOOK AT THE PRICES OF POPULAR APPS IN YOUR CATEGORY
SEEK FOR OTHER WAYS OF MONETIZATION THAN A ONE OFF FEE
EXPLORE THE POSSIBILITIES OF A SUBSCRIPTION MODEL OR IN-APP PURCHASES
FOR YOUR APP
OPTIMIZE YOUR APPS FOR TABLETS

39. Analyze Your Performance.
Look at the Neighbors.
Don’t Sit Back.

40. Analyze Your Performance.
Look at the Neighbors.
Don’t Sit Back.
Go to monitor.distimo.com

41. Distimo Monitor
DISTIMO MONITOR BENCHMARKS HELPS YOU DETERMINING THE RIGHT PRICE
FOR YOUR APPS
MONITOR.DISTIMO.COM

42. Hendrik Koekkoek
hendrik@distimo.com
Custom in-depth The free
app store market cross-platform app
reports for carriers store monitoring
& manufacturers tool for developers
For more info, visit report.distimo.com For more info, visit monitor.distimo.com

43. Thank you.