​Apple, Google take different paths toward reinventing app model, boosting engagement

With WWDC 2016 on deck, Apple is plotting its next App Store moves. Google is trying to blend web and apps. The only certainty is that peak app usage may have passed. Welcome to the engagement crisis.
Written by Larry Dignan, Contributor

Is there a looming app engagement crisis ahead? Perhaps. At the very least, app models, economics and techniques are going to have to change as the category matures and potentially hits the wall.

The thinking in recent years was that apps would take over the Internet. Mobile web was supposed to be clearly dead. It's about the apps we were told.

However, connect the dots and it's not so clear that the app juggernaut is losing its mojo.

Consider a few recent items:

  • The Verge is reporting that Apple's WWDC 2016 will focus on the next iteration of the App Store. The big themes are that Apple will revamp its 70/30 revenue split with developers who are able to maintain a subscription with a customer for more than a year. Should an app publisher sell a subscription for more than a year developers will get 85 percent of the revenue and Apple's cut falls to 15 percent. Apple is also introducing iAds to the App Store. The bottom line is that Apple feels the need to prod developers to think subscriptions and long-term customer engagement.
  • Google's Instant App approach, outlined at Google I/O, seems to indicate that the company sees mobile web and apps blending together to some degree. By blending the web and Android apps, Google is addressing two themes: Apps have better experiences for some things and it's damn hard to get folks to download an app in the first place. Google is also reportedly testing an 85/15 revenue split for all apps, according to Recode.
  • Facebook dominates app downloads on Apple's iOS and Google Play, according to Sensor Tower. This news is great for Facebook and sucks for every other player. Games also dominate. And NetFlix and Spotify stand out as subscription options among apps.
  • Sensor Tower also reported that 1 percent of App Store publishers who monetize their apps account for 94 percent of store revenue. Given that stat it's not so surprising that Apple is looking to broaden the income distribution among developers.
  • Localytics found that businesses are in a mobile engagement crisis. Twenty three percent abandon an app after one use. The good news? That abandon rate is an improvement on 2015's 25 percent.
  • Nomura noted that installs from the top 15 app publishers fell 20 percent year over year in May.
  • And then there's the anecdotal evidence. Your smartphone is crowded with apps that aren't use. If you cleaned the app garage out you'd probably keep maybe 10.

Something needs to change. It's hard to discover new apps. It's also hard to keep customers. Meanwhile, the mobile web offers much of the functionality that an app can provide. For instance, there's a reason that Facebook has decentralized its app approach: Facebook on mobile web is just as good as the app in many cases.

In the end, it's going to be interesting to see how Apple and Google react to the engagement issue for apps. Apple is defending the fort and reinventing a bit. Google is melding mobile web and apps with Instant Apps. Rest assured that both tech giants see the app data and are reacting.

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