Academics: If an app doesn't go viral, there's no point in making it

Academics: If an app doesn't go viral, there's no point in making it

Summary: In written evidence to a UK Parliamentary committee, the UK's top computer scientists and academics claim mobile applications are not strong sources for money-making.

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That's the message from an expert panel of the UK Computing Research Committee.

In written evidence to a UK Parliamentary committee, the academics, computer scientists, and engineers told members of Parliament (MPs) that only a fraction of applications go on to become successful and cover the costs of development.

Formed in late 2000, the panel makes up members from the British Computer Society, the Institution of Engineering and Technology, and the Council of Professors and Heads of Computing.

With enough collective brain-power to melt the minds of the ordinary British people, it's fair to say they probably have some idea of what they are talking about.

When questioned on difficulties posed in commercialising research --- or making money out of the findings from university boffins --- the experts said:

"Software 'apps' can be marketed through App Stores, such as Apple Inc’s iTunes store, but competition is intense, individual apps sell typically for 99p, and almost no-one recovers the realistic costs of development."

In other words: even if you have a killer idea, the chances are it will be drowned out in the noise of the wider marketplace.

The experts went on to tell MPs that the likes of Google and Facebook were 'one-offs' and only pay for themselves over long periods of time. Offering products and services for free may generate popularity and fame, but won't pay for additional research:

"Some innovative software-based services have been commercialised extremely successfully --- Facebook and Google being the leading examples --- but the commercial model is extremely unusual, as it requires huge investment to provide free services so that a vast population of users is developed and monetised through advertising revenue and added-value services.

The panel went on to remind the committee that the UK "patented the floppy disk, virtual memory, several important programming languages, software development methods, electronic design tools, and several computer architectures."

But unlike chipmaker ARM, or enterprise software maker Autonomy, they said the "UK does not have the share of world markets in computing that our history of innovations would suggest could have been achieved."

The "Valley of Death" inquiry is the UK government's attempt in understanding how academics can reap the rewards from the research developed in its publicly funded universities. One of the major headaches for academics is attracting investment funding for projects that could ultimately lead to commercial, money-making ventures. One might think it's a no-brainer, but many enterprises fail to lift off the ground.

While many academics could turn their research into 'freemium' applications for Android and iPhone platforms, many simply can't. But even if they wanted to, from the evidence given it's unlikely they would do anyway.

Image credit: James Martin/CNET.

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Topics: Mobility, Hardware, iPhone, Smartphones

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23 comments
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  • Yep

    There is actual evidence that if your App isn't in like the top 20 or so, it isn't going to be a big revenue stream for you. Funny thing, it doesn't matter what platform you are on, they all seem to have this issue in any given category.

    Basically, if you build a platfrom with the top 200 apps from another platform, you're going to be able to meet the needs of 90% of the people, at least short term.
    slickjim
    • Or be the first to regurgitate the given trope to the new platform

      and then hope the platform takes off.

      Either way, especially given the complexity OF coding, all Apple has done is to devalue the programming field and claim 30% of it as profit (on top of the mandatory requirements to get in the door, which means having to buy a Mac and download xcode, or get a PC with Adobe Creative Suite w/Flash and the Flash->iPhone converter, ala "Canabalt"... which reminds me, Canabalt can be played for free anywhere with a web browser, but costs $4 on the app store... maybe that's the real reason Jobs hated Flash. He hated competition... that makes a good web search too, "Steve Jobs hated competition"...)
      HypnoToad72
      • oh heck yeah

        He absolutely hated competition and wanted every one to kiss his butt. A lot of my animosity towards Apple has disipated since he moved on and I will honestly feel a lot better about the company if they stop all the legal junk.
        slickjim
  • long term investment is the key

    this is due the intense competition.i think on the long term , apps with long term investment will win.
    docesam
  • Hard to imagine

    It is hard to imagine how the best fart app can fail in a sea of fart apps. It really does not matter how many apps are in an app store. Past a certain point, there is declining marginal utility.
    Your Non Advocate
    • You act as if those particular apps had any utility to begin with

      :eek:

      :)
      HypnoToad72
  • Interesting hypothesis, Zack. I can't believe it's conclusions, however.

    Oh, BTW, you increased my vocabulary of arcane word meanings with your use of "boffins". It's definition was not what I originally surmised it to be.

    Perhaps a sole, independent mobile software app developer embarks on a "long shot goal" of making a profit but a software corporation (and it's employees) certainly seem to demonstrate an ability to make a profit or a nice income from their efforts on a regular basis.

    For example, any successful mobile game company can recoup their investments if their software app is published and marketed successfully in an App store environment.

    I will just cite one mobile game example: Angry Birds. That company's employees - and if that company has gone public their stock holders as well - have certainly received a monetary return of investment value far beyond what that UK study's conclusions would imply.

    Also, I would say that any software engineer employed by Apple, Google and Microsoft in their mobile app sections earn a nice salary. (And the number of those individuals belonging to those departments certainly is a significant sum.)

    Now, if I understand the UK study's conclusions correctly, those UK Mensa candidates that authored this study suggest a pyramid or Ponzi scheme type metaphor for mobile app developers in that only a very insignificant few at the top of the pyramid actually earn a decent wage or a nice return on their investments. Everyone else simply looses money or time.

    I'm sorry. I don't accept that conclusion. Especially when Apple touts an App Store earnings return figure in the billions of dollars for members of it's iTunes App store development community alone.
    kenosha77a
    • You cited an example of what these researchers are saying

      Angry Birds went viral. Even Conan O'Brien did a few skits on it. For every Roxio, there are dozens if not hundreds of failed software houses.
      Your Non Advocate
      • Angry Birds got where it is because ....

        ... it was a NEW time killing fun game that wasn't just another version of Solitaire. It was selling very well for MONTHS before it became viral.

        But nobody can deny that to really succeed, you must go viral. But going viral only works for a few weeks. There must be a long term goal that the users can see as value. You can't survive with the 15 days of viral fame alone.
        wackoae
      • Maybe wackoe is not so wackoe!

        @wackoae
        Patanjali
      • In the real world

        I produced an educational game for WP7. It'll probably sell maybe a few hundred over a few years - if anyone can find it. I didn't expect anything more as I'm well aware that only viral stuff gets a large number of purchasers. I simply did it to gain experience in the WP7 development systems which was very useful.

        Viral also has nothing to do with usefulness (young people could look up pet rocks) as Instagram shows. Essentially it degrades your pictures and aspect ratio for no apparent reason, but it went viral and the producers apparently gained a billion dollars. Apparently that lame Artillery clone called Angry Birds made a fortune as well ;-)

        The real problem with any app store is the difficulty of finding anything once the apps get above 1,000 or so - unless you go viral and get a lot of free publicity.
        tonymcs@...
    • It is entirely accurate

      "I'm sorry. I don't accept that conclusion. Especially when Apple touts an App Store earnings return figure in the billions of dollars for members of it's iTunes App store development community alone."

      Every detailed analysis of iOS data to date shows this to be the case. The median earnings for an app on the app store is basically zero and the developers of such would generally have been much better financially served flipping burgers.

      The structure of the app store promotes this behavior by encouracing a long-tail effect. If you aren't in the top 200 minimum of at least one category then the app essentially does not exist as far as the users are aware.
      SlithyTove
      • Sad, isn't it?

        http://articles.cnn.com/2011-03-04/tech/nintendo.apple.games_1_app-developers-nintendo-executives-game-developers-conference?_s=PM:TECH

        http://wmpoweruser.com/average-iphone-app-only-earns-2-per-day-or-why-the-app-store-is-a-fools-errand/
        HypnoToad72
      • SlithyTove, did you read HypnoToad72's links to prove your points?

        HypnoToad72 cited a CNN article detailing a game developer's negative opinions regarding Nintendo's and Apple's business models.

        Specifically, it quotes Trip Hawkins (founder of Electronic Arts) as stating Apple has "...over-encouraged supply". He supports this statement by noting that Apple had, in March of 2011, over 350,000 apps available in their App Store. And that Apple had payed $2 Billion out to app developers.

        Using those facts, Trip arrives at the following ridiculously simplistic deduction that both you and HypnoToad72 support.

        Specially, Trip calculated that each app earns, ON AVERAGE, about $4,000 dollars!? Trip then is reported to have said, "Four thousand per application: Do you see a problem with that? That doesn't even pay for a really good foosball table." (As Mark Millian, the CNN reporter comments, doing the math, the average payout per app is closer to $5,700 dollars)

        After reading those comments in the CNN article cited by HypnoToad72, I almost burst out laughing. Trip is using a simplistic average payout per app value - that is a meaningless statistic, IMO - as the sole reason to support his hypothesis that app software developers can't make a decent profit doing business in Apple's App Store ecosystem - let alone buy a "foosball table".

        Hey guys, really, you have to start citing better sources than this one to support your opinions. Or, at least read them with a more critical eye.
        kenosha77a
      • Or saving time and betting on the lottery instead

        Talk about the glamours and delusions that many people have.

        I think the right attitude as a lone programmer, not part of a business enhancing an existing line, is to do it for the experience, not expecting an outcome, do the best you can, and it it pays, that's a bonus.
        Patanjali
      • Nope

        You provide no link to support your own minority position. If you are out to prove that the world+dog+all_top_google_searches are wrong about the average app doing poorly then the burden of proof is to you to provide links supporting the outlier position.

        Citing Angry Birds as proof that the median app does well is like citing the Powerball lottery winner to prove that lottery tickets are a good investment. The existence of Angry Birds is exactly the point the article makes: Profit in the app store is top-heavy towards a comparative few big winners.

        The average app makes $5700, the median app is making far less than that with the big blockbusters pulling up the average number.
        SlithyTove
      • I didn't expect you would spend the time to read those links

        And yet you would adopt those "majority" points of view.

        This study (used by the UK committee) uses a very misleading metric to gage success by. You use that same metric as well. That is, using the average earnings per app to generate a conclusion applicable to every app developer.

        BTW, how does one calculate this simplistic average app profit anyway. I assume you take the total profit amount given back to the developer and divide that by the total amount of apps in an App store. (I checked and that is how the values cited in HypnoToad72's linked cites are generated.)

        Hmm. I suppose you don't see anything wrong with that metric? Well, I thought that every singe app that is free of cost in the app store is also included in that simplistic calculation.

        With means, just to cite "two" apps (instead of one) to appease your critique of my first comment, that the free apps for 60 minutes and the National Geographic should never, EVER have been created because CBS and National Geographic should only expect an average return of investment of about 6,000 dollars. Even you can see the absurdity of that premise.

        This study also does not take into account "In App Purchases" to generate income for the company or developer. It just uses that simplistic metric that they and you are so fond of using.

        I'm not going to cite more examples for you. (I could, but IMO, it would be a waste of time.)

        You position fails to take into account "free apps" that generate advertising or "in app purchasing" profits.

        It doesn't take into account establised software houses (or the profits they make from their apps) Your position assumes "the average app" only generates a low profit (irregardless on how that "average app profit" is calculated).

        So even though you state my position is in the minority, it just happens to be the correct one. That is, my position is the opposite of what this study suggests in that the vast majority of developers are wasting their time and resources because the best they could hope for would be your "average profit per app" return on their investment.

        My position is that many firms that post "free apps" generate enough profit (value that is not taken into account using "your" simplistic average profit per app formula) to justify the developer's time and resources put into the creation of that app.

        I've already discredited your formula that you have used to justify your position. That is enough to debunk your "majority" opinions.

        Besides .. common sense would indicate that after three years, if what this UK study suggests and their conclusions that you blindly follow were true, the amount of apps in any app store ecosystem would stop increasing or even come to a halt. This hasn't happened. It will never happen.

        Another point that parallels the flawed logic behind this study is the Internet itself. Just how many internet web pages generate revenue by themselves. Why do stores or firms publish web sites? Why do governments publish web sites or even individuals? The internet continues to grow, so much so that there has been some concern about running out of domain space. I imagine that the average profit from a web site is some absurdly low value. Why on earth do we humans continue to create web sites and to support them?

        The UK study (and by extension your logic) would suggest - just based on the average profit return per web site - that humans would be better off not creating any more web cites. (Unless the web site goes "viral". Grin!)
        kenosha77a
  • Angry Birds

    Angry Birds went viral, it's the 1 in 100 that succeeded, so it's not proof that 90% of apps fail to pay their way.
    JeffMcClintock
    • Not sure how

      Plenty of games offer more innovation, real innovation, and a more solid look. In appearance, "Angry Birds" is dilettante compared to "Cut the Rope". Gameplay is "crush the castle" only more restrictive... I've never understood how it caught on. It must be the music, since the music is actually top-notch... but anyone can come up with a goofy plot...
      HypnoToad72
  • Well, that's the downside to competition,

    And everyone says competition is good...

    Well, everyone says that until they realize they can no longer afford food, education, et cetera, but those are wants and not needs, you see... ;)
    HypnoToad72