The App Bubble Burst The Coming App Economy Correction

The 20,000 Foot View

In May 2014 we warned about potential risks of the Superstar App Economy. Too few apps were taking most of the revenue. Investors funded huge marketing and development budgets in a bid to create mega hits, but in the process raised the barriers to entry. The pursuit of the standout success by a handful of app developers created bubble economics. Many of those pacesetters struggled to come up with follow up hits that met, let alone surpassed, their previous successes. It is now clear that the sustainability of the current mobile app games market, and by implication the broader app economy, cannot be taken for granted. In fact, the app bubble may be about to burst. 

Key Findings

• Games still            the Top Grossing charts with            all Top            placings, just            down            March 2014, though most other            gained share
• The five            Top Grossing apps are Games
• But Games’            of the Top            Free charts            by            percentage points, down from            March to just            in October
• None of            five Top Grossing apps appear            the Top            Free apps anymore,            that the dominant grossing apps            not acquiring new audiences
• This slowdown            new audience acquisition will impact            app monetisation
• The app            dynamics are more pronounced in            than in Android due in            to the fact that Android            spend less than Apple users

Companies mentioned in this report: Apple, Google, Zoosk, Tinder, Deezer, Spotify, Pandora, EA Games, Supercell, KING, Rovio, Disney