Gartner Predicts App Monetization Will Only get More Difficult as Time Goes On
Thinking of charging an up-front fee for that shiny new app you just developed? You might want to think again, as tech research firm Gartner has predicted that trying to get by with paid apps will only get tougher over the next few years. Of course, one only has to look at the marketplaces for any mobile operation system to see that free apps usually get the lion’s share of the downloads, but Gartner predicts that a whopping 94.5% of apps will be free by the time we ring in 2017. That’s a mere three years away, but if that isn’t enough to get you to realize just how cutthroat app development can be, you might want to try this: by 2018, Gartner says only 0.01% of apps will be considered financially successful by the people who made them.
That’s an incredibly slim margin, and we can’t really blame any app developers who begin to reconsider their career choice based on these predictions. As Gartner vice president Ken Dulaney points out in a statement (via TechCrunch), one of the big problems here is that consumers are faced with a seemingly endless sea of apps on the most popular platforms. The result is that they’re unlikely to hunt down the quality apps themselves, but rather base their downloading decisions on advertising or their friends’ recommendations. While that sounds great for the people who have the money to invest in marketing campaigns and generating word of mouth for their apps, it isn’t exactly the best news for small-time app developers who don’t have the cash to stick ads up across the Internet.
However, let’s say that you create a paid app that’s undoubtedly worth every penny of the asking price. That’s all well and good, but the sheer number of apps available on platforms like iOS and Android means that you’d be going up against any number of free apps that do largely the same thing. This is a pretty major roadblock for anyone looking to charge a fee for their apps, and that challenge makes it clear why we see so many apps that follow a freemium model. In-app purchases are quickly gaining steam as a monetization option, accounting for 17% of all app revenue in 2013. According to Gartner, that percentage will jump to 48% by 2017. Needless to say, if you aren’t a fan of the freemium model, it doesn’t look like things will be getting much better moving forward.
Dulaney also mentioned that many mobile apps aren’t making money, and points to the fact that many apps are developed as a way of promoting a brand or creating an image. Essentially, they’re being developed as one part of a larger marketing scheme and usually aren’t intended to be moneymakers. However, it’s possible that we’ll see a shift in the way apps are delivered in the future. Citing the almost overwhelming selection of development tools that “involve technical or commercial compromises,” Dulaney thinks we’ll see a push to make HTML5 “somewhat-standardized,” leading to developers using mobile browsers for app delivery.
While all of this sounds rather bleak, it’s important to keep in mind that these are only predictions. The market can shift in the blink of an eye, and all it takes is for someone to figure out a better way to monetize apps. We could very well see a far different app environment than the one Gartner predicts for 2017, but given the current state of things, it certainly seems like we’re on a path that could lead to these predictions coming true. What do you think?