What Really Makes Free Mobile Apps So Profitable?

Nearly ever top grossing app in the Apple App Store is a game. Few of them are services or "remotes." Among the games, only about 1/6 are sequels (e.g., Angry Birds Space) or based on other intellectual property (e.g., Iron Man games).

That means nearly all the money in the Apple App Store is earned by social games you've never heard of.

Barry is right that at least part of the charting comes from how payments are recorded. Many services don't sell subscriptions through App Store IAP, both because subscriptions are newly permitted[0] and because a 30% revenue share is a lot to ask from a low-margin business like Pandora.

But he is very wrong about the trend of software and services sales in general. Games have and always will dominate consumer software and service sales. He seems to describe himself as a remote-control app "whale," or someone who makes an extraordinary number of purchases.

There are very many more gaming whales with smartphones than there are "remote control" whales with smartphones.

But generally, "remote control" apps—which again, seem to just be non-gaming services apps, by Barry's definition—don't have very many profitable things to sell. How can you compete with the margins of virtual coins? Even music and movie services pay margin-eating licenses on their content, especially when, like Pandora, it is distributed for free. And all those other services—travel or whatever—need to pay a lot of physical people for a lot of physical things.

Non-gaming services are hardly profitable. A trend of adoption of "remote control" apps should not be conflated with a trend of profit. The composition of the top grossing charts of any software platform are unlikely to change away from games.

[0] https://developer.apple.com/appstore/in-app-purchase/subscri...

As a smaller game developer I have to say that the whole free model of games worries me frankly.

At minimum it has made me more cautious with my decision to bring a title to iOS due to the overwhelming expectation now that the game be free. If you want an example of this check out the youtube comments of the official tiny thief trailer. A game that debuted at $2.99. When I last looked there were an overwhelming amount complaining about how "the game needs to be free"...

As a larger issue I'm a little more worried about how this might end in a deterioration of the quality of experience on the iOS platform? Looking at that image of top paid vs top grossing, one might ask the question in 5-10 years will we be talking about candy crush? hay day? conversely how about Minecraft? Plants vs. Zombies?

It's interesting how people are willing to shell out so much on in-app purchases for games in particular.

Not judging at all, of course. I play D&D, League of Legends, and Magic the Gathering, all three of which have (to varying extents) an illusion of being free. I've spent large amounts of money on each game and I don't even regret it!

Valve has it down with TF2 and hats. From my understanding it was somewhat of an accident (If I recall correctly, a Valve employee at a talk I attended said that they weren't expect hats to be so huge), yet it's another great example of how much potential free games have to rake in loads of cash. This is certainly the direction I'll go in if I ever plan on making games (unless I want to do a legitimately 100% free game for fun)