Steve Wadsworth: There are two reasons why some of the other apps may not get the same level of traction. One is user interest. Games are universal. You get much more user engagement there. Secondly, I think a number of app publishers are leaving money on the table because of the model they’ve chosen. Let us look at the magazine business. Historically, their offline model has been advertising and subscriptions. They’ve moved online and to mobile with the same model. While subscriptions is a form of freemium model for monetization, it’s a highly limited model because you’re asking the user to make a very large decision. Do I want to commit to $5 or $6 a month or whatever it might be to have access to this content when I may only want to read a specific article? What we’ll continue to see is a shift in the model to a micro-transaction freemium model, more like the game category, where things are broken up into more consumable chunks that a user is going to find more appealing.
As I said earlier, every user is different. If you don’t have the capability to treat users differently, then you’re almost, by definition, leaving money on the table. A trend that I would expect to see and I think we’re seeing to some degree is a freemium model for sure. That’s undisuptable. If you look at all the top grossing apps in either one of the iOS or Google Play Store, 95% are freemium apps. They’re attracting the most value because of that model. I think we’ll see a trend towards micro-transactions around other media types of apps in order to maximize the opportunity.
Sramana Mitra: Based on your tracking of the freemium app industry, what are some of the top independent startups companies? It doesn’t need to be startup, it may have matured, but they’re not the large ones like Electronic Arts or Zynga. What are the top performers that are still private companies?
Steve Wadsworth: In the app publishing space?
Sramana Mitra: Yes. The people who would generally would be your clients.
Steve Wadsworth: There’s plenty of them. Companies like Kiwi, Big Blue Bubble, which has an app called My Singing Monster, and Ludia, which is a very successful mobile app game publisher. IGG is also a successful one. They’re a Chinese-based game publisher.
Sramana Mitra: Just to close out the discussion on mobile mind share and to go up one level, mobile commerce is doing exceptionally well. I’m hearing it from all sorts of e-commerce vendors that there is tremendous amount of action coming from the mobile devices. Just to round out that discussion that there are the freemium apps that are dominated by games, the other place where there’s a lot of user interest is in mobile commerce.
Steve Wadsworth: I totally agree. Certainly, all of the industry data shows that. Specific e-commerce companies will certainly talk about how much of their business is moving to mobile. Today, our focus is the freemium mobile app. Of all the categories that I can think of, e-commerce is one where you’d say, “Whoah!” What I’d say to that is while I do believe there’s opportunity for new e-commerce providers to emerge because of the migration of users to mobile, there may not be as much opportunity for brand new businesses there. Probably most of what we’re going to see is a migration of web-based. It’s a channel. You’ll see a migration. The user that was coming through the web or through the retail channel is simply going to shift to mobile.