App marketing costs could price indies out of mobile market says new report

Report from W3i says indie developers are facing an 'innovate or die' moment

The average cost per user for mobile apps has risen sharply these past few months, according to a new report produced by W3i, an analytics firm specializing in mobile app monetization. The firm says that the average cost per user for Android has risen a sharp 70 percent, up from 30 cents to 51 cents. Costs for Apple's App Store users have also risen steeply, up from 59 cents to 92 cents, a bump of 56 percent.

"The entire user acquisition market is undergoing a sea change that will require mobile developers to re-think how they obtain and monetize their users," said Robert Weber, co-founder of W3i. "This could be the 'innovate or die' moment for a lot of developers as the competition for mobile users continues to heat up."

This 'innovate or die' moment could spell big trouble for smaller indie developers, who could very well be priced out of the competition thanks in part to the expansion of larger developers and publishers into the mobile space.

W3i attributes much of the rising costs to groups like DeNA, which is putting a sizeable chunk of change into the US market.

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Latest comments (5)

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.8 years ago
Blue oceans become red oceans over time.
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Bruce Everiss Marketing Consultant 8 years ago
Like all other IP markets the publisher will win out in the end. Indies lack the wherewithal.

People think that the barrier to entry of the app store is $99. For which they expect instant global marketing and distribution of everything they produce. Then they find that their work is just one of many hundreds of thousands of competing titles and that they have zero visibility.

This: "The entire user acquisition market is undergoing a sea change that will require mobile developers to re-think how they obtain and monetize their users," is incredibly true. Just now many marketeers seem to be very expensively buying players in the hope of making critical mass. The more people who try this method the less likely it is to work, which is where we are now.

This is ridiculous, we are in the sexiest, most dynamic market on planet earth. So it is necessary to catch the public imagination (and have great products). This is what the mega selling titles have done.

Edited 1 times. Last edit by Bruce Everiss on 1st August 2012 9:58am

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Keldon Alleyne Strategic Keyboard Basher, Avasopht Development8 years ago
An inordinate financial gain in a market of many players that is disproportionate to the growth of the market it self must be balanced by equivalent financial losses and failures. And a market place where the standard deviation nears or exceeds the mean average is a market place that sucks 90% of the time.

How can that type of climate be resolved at all? And the problem only increases along with the number of products and investment.

The economy needs to be sustainable, the last thing we want is to greatly exceed the demands of the market.

p.s. I quite like how messed up my avatar when they went international ... no really, I actually like the look of it, which is why I've never changed it :)

Edited 2 times. Last edit by Keldon Alleyne on 1st August 2012 8:56am

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Nicholas Pantazis Senior Editor, VGChartz Ltd8 years ago
I actually completely agree with Bruce... iOS has almost completely locked out indies from any sustainable profits at this point. When was the last time a small company became huge on iOS? Omgpop? And their App died off pretty fast... that was months ago too. Most of the dominant iOS apps are from massive publishers. It's not the golden goose indies hoped for.
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Robin Clarke Producer, AppyNation Ltd8 years ago
"When was the last time a small company became huge on iOS?"

New Star Soccer would be an obvious recent example. They are increasingly rare though.
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