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Developers question long-term viability of App Store

Tue 21 Feb 2012 3:56pm GMT / 10:56am EST / 7:56am PST
Development

David Braben, Jason Kingsley, Mark Gerhard and Jo Twist debate the rising cost of iOS development

Apple

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The continuing value of the App Store to developers was under scrutiny at the BAFTA-hosted Games Question Time event last night.

An expert panel composed of UKIE head Jo Twist, Jagex CEO Mark Gerhard, Frontier Developments' David Braben and Rebellion CEO Jason Kingsley debated the likely effects of the increasing demand for high production values on iOS devices.

Jason Kingsley agreed that the emphasis for a product to be "as polished as possible" was greater than ever, but that the investment necessary for that standard of execution can still be offset in a way that's impossible on consoles.

"Instead of making 20 hours worth of gameplay, you can make an hour's worth of gameplay, see how people react," he said. "The acid test is what people do with it... That's brilliant feedback for us; actually what people do when they play the game."

However, Mark Gerhard stated that the problem Kingsley desrcibed - of producing what is, "effectively a gold master" - already exists on the iOS platform, and that the "next wave of iterations" of Apple hardware could unbalance the economics of development and "kill the App Store."

"Everything's moving online," Gerhard said. "This is controversial, but the mobile bubble will burst this year and the social bubble will burst, too."

I think that, bar a handful of winners, nobody makes money on Apple's platform. It's great for consumers, not good for developers, and that's going to be the death of it

Mark Gerhard, CEO, Jagex

"There just isn't the money there. The only people that are winning right now are Apple and consumers. Everyone's rushing to make games for the new iPhone, and in that Apple makes a lot of money, but it's a race to zero."

Gerhard noted that Jagex has had four number one games on the App Store, but none made more than 3,000 to 4,000 a month profit. The amount of revenue versus the necessary resources is "a problem" for independent developers, and Gerhard believes that the same is true of all "walled-garden" services.

"I think any closed platform, be it Microsoft, be it PlayStation Vita, XBLA, PSN, the App Store, ultimately are taking such a big chunk that people just aren't making money. Facebook, too."

"I think that fundamentally, bar a handful of winners that Apple is keeping, nobody makes money on their platform. It's great for consumers, not good for developers, and that's going to be the death of it."

Gerhard addressed the widely held belief that the App Store is "the next frontier" for game developers. Like all closed platforms, he argued, the App Store is subject to "lethargy" in the form of approval processes and the need to adhere to guidelines.

Jagex has found a huge amount of success on the open web, and Gerhard believes that improvements in browser technology over the next 12 to 24 months will make it possible to create immersive 3D games.

As a result, the browser will emerge as a "new platform" that offers developers a greater share of revenue and greater control over their products.

"I would say as a survival strategy you want to leapfrog that," he said. "You want to go purely straight to browser."

"Online we can launch and we can iterate hourly. We can use data to kind of tone and shape the content experience. We can be that agile. We don't have to release, see what happens, make some changes, and re-release weeks later."

However, David Braben argued that the biggest problem facing developers is the "route to market," or actually getting the product into the hands of the audience. The App Store may not be ideal in this regard, but it has clear advantages over the open web.

Gerhard had already stated his belief that "new channels" would emerge to aid discovery of browser games on the open web, but Braben countered that any such entities would also be closed systems.

"The advantage of The App Store is that it's a place that focuses you; you're seeing what's coming out," Braben said.

"With the internet it's a lot, lot harder. I think you're right that there will be routes to the internet that will essentially do what you're talking about, but they will again be closed."

"There will be a gatekeeper otherwise there isn't value to it, in a bizarre way."

17 Comments

Robin Clarke Producer, AppyNation Ltd

321 748 2.3
Estimated numbers on Jagex's iOS games: (from online sources, may be wildly inaccurate)

Bouncedown (2009) = 9,000,000 downloads, all free, no IAP
Undercroft (2010) = 750,000 downloads, all free, no IAP
Star Cannon (2010) = 150,000 downloads, all between $0-$2 (so probably mostly free)
Miner Disturbance (2010) = 60,000 downloads, all between $1-$2

It is probably especially hard to make money on the App Store if you don't ever ask any of your first 10m customers for a penny. :) Plus the landscape has changed a lot in the last year.

The App Store model is far from perfect, and native apps probably do have a limited shelf life (at least as the dominant paradigm), but there's still a market to be served here and now.

Posted:2 years ago

#1

Andrew Benton

11 0 0.0
I agree with Robin, there is a market 'to be served here and now.' However, the future prospects of the App Store as a publishing platform are not looking promising unless Apple makes significant revisions to that marketplace.

Posted:2 years ago

#2

Bruce Everiss Marketing Consultant

1,692 594 0.4
The problem here is that we are talking about moving targets. The App Store has evolved enormously and will continue to do so as Apple adapt to fairly and efficiently delivering over a million pieces of software.
Then the apps themselves are also evolving at an enormous pace. Just look at how the freemium business model has blossomed over the last few months.

Mark is obviously keen on the browser business model that works so well for Jagex and compares this with games that haven't been monetised well.
However browser games require a continuous internet connection, which is fine for the desktop, but gaming has made a paradigm shift to mobile and currently browser applications don't work very well on these platforms.

Also the App Store isn't just about iPhone, it is also about iPad and soon it will be about Apple TV.

Then there are the very many non Apple app stores. It has become the new standard content distribution system accross an enormous range of devices.

Obviously smart TVs may well play straight into Mark's hand, depending on how much local storage they evolve to have. This will be fascinating to see.

But overall the Apple App Store looks amazingly healthy with no threats on the horizon.

Posted:2 years ago

#3

Tim Ceesay Game Manager, Smashmouth Games Ltd

5 0 0.0
Personally I think a solution for the App Store could be simpler which is to upgrade the interface and search mechanisms of the iTunes store. Considering how Apple boast the tens of thousands of Apps on its marketplace, I haven't seen any significant change to the iTunes interface that has made it easier to navigate, or effective enough for unknown or much less marketed apps to get noticed. Currently the only way I've seen to make money on the app store without marketing is to get on the front page and stay there as long as possible.

How about if they made it more personal with the user like a 'preferred games' section so iTunes can recommend apps based on simple star rankings on current owned apps (similar to how Netflix recommends films to their users).

A 'wish list' button for all those apps you see, but don't want to forget so you can 'mark' it to buy later. Perhaps even add on this with notifications sent to your device if the app you want has gone down in price.

For all those that have lots of apps and small memory on their devices, have the Apple 'Genius' tool setup groups of apps and hot swap them on your device when you connect up.

I just think if Apple are branching applications to the Apple TV and potentially a new wave of apps for the iPad 3, there needs to be a better method of interaction to search through all those apps.

(that's enough saying the word 'apps' for today)

Posted:2 years ago

#4

Graham Simpson Tea boy, Collins Stewart

219 7 0.0
iTunes was created by the devil

Posted:2 years ago

#5
"There just isn't the money there. The only people that are winning right now are Apple and consumers. Everyone's rushing to make games for the new iPhone, and in that Apple makes a lot of money, but it's a race to zero."

Pretty close to what I have been saying for years now, with one exception: even Apple isn't making "much" (i.e. 1% of revenue) from the AppStore. They make their money from a $100+ profit margin on each hardware unit shipped, and ship 40m phones (just phones!) a qrt.

The AppStore is just bait: consumers buy Apple products to get access to virtually "free" software, and developers support it to get access to the consumers. Problem is, race to the bottom is well in effect now ... and Apple is loving it, and laughing all the way to having $100bn cash in the bank. (in a way, this is true free market at work - economics states that prices move towards zero, profits become increasingly hard to make, and consumers benefit ... except that the hardware side is a 100% monopoly for the Apple API).

Truthfully, Apple should be *paying* developers to make AppStore products - if all developers jumped ship (and took their products with them), Apple would be the ones suffering .. a lot more than devs would. Maybe people will wake up to this fact in a year or two...

Posted:2 years ago

#6

Tom Keresztes Programmer

683 335 0.5
I question the long term viability of arguments wich reinforces your business model. It works for some, and dont for others. Besides, the same can be said about PC and maybe DS.

Posted:2 years ago

#7

Peter Warman CEO & Co Founder, Newzoo

18 7 0.4
Hmm, I do not really know where those low revenue figures come from because in December 2011 the number 1 iPhone game in the UK made $310,000 revenues (incl. 30% for Apple) and nr 1 iPad game $130,000. I think that should be interesting to any developer. 74% of all iOS revenues in Europe were generated in-game that month. The opportunity is extending your existing IP to the mobile platform with the core functionality and business model that suits the platform best, e.g. managing your character or virtual items. I see to many developers put too much effort in redeveloping their complete game for mobile.

Posted:2 years ago

#8

Wojtek Kawczynski Managing Director, Studios, TransGaming Inc.

6 1 0.2
As long as *some* developers are making money on the app store, others will continue to try. The "shine" may come off the app store as more and more stories emerge showing how hard it is for an indie to survive but I don't see it going away any time soon.

If Apple's app store revenues start to go down, then they'll do something to try to spread the wealth more broadly to get more developers back on their platform (redesign, change of business model, better discovery etc...) but as long as there are consumers willing to pay, the app store will survive and developers will keep making games.

Posted:2 years ago

#9

Dave Herod Senior Programmer, Codemasters

527 786 1.5
@Wojtek - Does anyone ever report if a small mobile studio makes bugger all money and decides to call it quits though? When a triple A studio goes under, it's big news, but I wonder whether there's smaller studios giving up and we just don't hear about it.

Posted:2 years ago

#10

Jeffrey Bacon Director of Mobile Strategy, bitHeads Inc

10 0 0.0
It's not easy making money on the App Store and success stories are well publicized while the failures (and there are a TON of them) just kind of fade away. Most developers are seduced by the stories of the guys who happened to hit it big but don't realize that most successful iOS games are backed by a solid non-traditional marketing plan as well -- which is normally not a strength of most games developers.

Hearing that the web is the solution to the problem reminds me of the ~5 yr cycle that happens in various industries where "the web" and browser-based apps will win and solve all problems but that never comes to fruition so I'm not sure what's changed now that might make that happen.

Posted:2 years ago

#11

Jon Wetherall Managing Director, Onteca Ltd

4 0 0.0
We sold an app in Kurdistan the other day. One should not take for granted the amazing reach the digital portals have. Yes it is hard to get noticed but this is free (well cheap) distribution like no one has ever seen before in any business anywhere. The issue is one more for the large studios they can't make the kinds of margins they need, for small indies it is much easier to make a positive return assuming you can keep the costs sensible.

Posted:2 years ago

#12

Samuel Thomson Digital Artist

6 3 0.5
I think David Braben is totally right to place importance in the gatekeeping roles. Young audiences are being naturalized to big holistic portals like Moshi Monsters and Club Penguin and there's continual pressure from all sorts of industry sectors to channel-ize the internet and offer such portals for free alongside existing cable channel bundles.
Indie devs will be relegated/elevated to the kind of art-house status that independant films have. With any luck, the big-media producers will ensure their own survival by trading funds for talent with the indie sector... although most of the big guys will still ruin much of what they do by trying to retain control over everything.

Posted:2 years ago

#13
Em, it's obvious that the platform can't be a money maker for everyone. That's how all entertainment is. Seriously it's stating the obvious. Either in the future or now, the best games or the best marketed games will be on top, the crowd of developers that don't make it will either try again or move on.

LA is full of waiters, does that stop the film industry make money? Does every indie films start-up live beyond their first movie? Same for music and enterntaiment in general.

The difference is that you can really make a game with one Mac and ship a product with the potential of making big bucks. You don't have to sleep with an agent or a producer or know some guy high up to even get released in the same space the big guys are. You just make it and ship it. Then work on your marketing plan (prepared in advance of course).

Some people will make ends meet with small roles/small games that just get them by and some will hit the motherload. Just because Jagex is a huge company doesn't mean they made what is needed to make a hit. Making your app cost zero won't help you really understand if your game is actually a good game.

Actually the size of the company is not the leading factor in the iOS cosmos and that's what is so liberating.

The race to zero is on the developers, if you think your game is worth zero why do you complain? Not everyone has the ability to turn millions of downloads into millions in ad revenue (the game has to be addictive so people play it over and over again, until they click the damn ads), free to play is not for everyone. If you are make a one off experience or even an hour worth of gameplay when do you expect people to click ads? Downloads doesn't equal clicks, you may also download a free app and never run it again as I have done a lot of times.

If your game isn't addictive, but pretty, put a price tag on it and spend on marketing. I think this is obvious.

I simply don't understand why people expect something to last forever and why everyone thinks that following the trend is the best way to do things on their own project. There is no golden rule, there isn't one in movies, nor in music, why should there be one for games?

Rant over...

Posted:2 years ago

#14

Marc-Andre Parizeau programmer

1 0 0.0
Is there money to be made or not on the AppStore?

I don't know. It depends. But what I know is that developers should start making REAL and ORIGINAL* games.

Instead of rip-off of other games. (How many bejeweled games are out there?, etc.)
Half-polished (I'm generous here!) games. (Then why so many updates... when the content doesn't change? or graphics that even a 4 year old could pull off? Gameplay that reminds me of the early 8bit games that show no imagination?)

Yes, casual gamers are not as pointy on their games then the hardcore gamers... But they want to have fun!

So start by making a polished, ORIGINAL* game and you will make money... if it's any good.

*By Original, I mean an original, never before seen game OR a existing gameplay "pattern" or gendra but with additional stuff (gameplay, assets, etc.) never seen in any other game. Just be different...

My two cents on this subject.

Posted:2 years ago

#15

Tin Katavic Studying MSc-Games Technology, University of Abertay Dundee

44 3 0.1
"Truthfully, Apple should be *paying* developers to make AppStore products - if all developers jumped ship (and took their products with them), Apple would be the ones suffering .. a lot more than devs would. Maybe people will wake up to this fact in a year or two..."

@Michael Shamgar I dont think I agree with you on this. AppStore is very attractive to "young" programers as a place where you can publish your simple game and make some money of it (more so then Android apps as they have rep of being very cheap and Apple users have a rep of being spenders - not saying its true but thats the rep they have). If ALL the devs were to leave AppStore I think the vacume left behind would be filled out quickly by new blood.

Posted:2 years ago

#16

Rick Cody PBnGames-Board Member

144 14 0.1
Developers are doing what interests them. That's why they're not making money.

Temple Run isn't a high production value game but it's a smash hit. Angry Birds isn't a game with ridiculous production values but it excels.

You need a great idea and make it very functional. That's it.

Posted:2 years ago

#17

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