Blog 53

Andrew Daniels

Apple ipad app store 

Apple is creating media attention around its annual developers conference, WWDC, which starts next week. Today, the tech giant announced its plans to introduce subscription services and ads to the App Store.1 This will change the way we monetise and consume mobile apps once again. Apple is shaking things up for developers to gain more revenue from their products and also gives them an opportunity to make them stand out from the competition.

What will subscriptions mean to developers?

Apple is offering mobile app developers to start charging subscription fees to bring in a consistent stream of revenue. If developers can maintain this for a year, they will be able to increase their profits by halving the commission Apple currently takes (30%).

The subscription model has already worked for larger entertainment and media companies, such as Netflix and Spotify, gaining millions of subscribers. It will enable developers to provide continuous services and offer additional or premium features. This can potentially change in-app purchases, offering access to certain elements according to the price bracket. For example, users looking to upgrade their cards in Clash Royale can subscribe to a higher level and use weapons and characters available there instead of buying single cards. If this approach fully goes ahead, developers will need to reconsider their app business models and how they monetise them. Those thinking about developing an app might need to consider whether it will survive with a subscription or whether it should be free.

Paid search options

Currently, App Store has around 1.5 million apps.2 This is a huge number and makes this marketplace very saturated. To help developers bring their apps forward and make them stand out, Apple is also introducing ads to the store. This will mean that developers will be able to pay for their apps to be promoted under certain search keywords or categories.

This can certainly be beneficial to independent businesses struggling to gain market share next to bigger and more known names out there. For example, if users aren’t specific about what apps they’re looking for, they’re more likely to install whichever one is at the top. This reduces the chance of other apps located lower-down being seen. We don’t know yet how much Apple will charge for advertising, but this feature might make or break some developers. We can hope that this won’t lean towards the more wealthy ones, although we can’t see that happening.

Google isn’t far behind

Hot on the heels of Apple, Google has announced a subscription option too.3 But instead of maintaining a subscription/user for a year, Android developers will be able to benefit from a reduced revenue split straight away, making it 85/15. It’s a fair move for Google, as it’s been trying to follow Apple’s footsteps and invest in its platform just as much to drive it forward.

We still need to see what happens next as these plans unfold. Having a subscription can encourage creating more apps with good quality content. However, if your app is free, advertising may be the way to increasing visibility. Both options can influence users in terms of which apps they trust and want to spend money on every month, but it can improve the financial situation for some of the app developers struggling to stay afloat with the current model.

We can’t wait to hear what else Apple has in store for us at WWDC. Watch this space for our take on it!

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