To start off 2015 on the right foot, welcome to the 10th episode of our Industry Exposed series! For this first blog post of the year, we interviewed Patrick Kane, Founder and CEO of app store analytics company Priori Data. Read on as we dig into app store revenue and download distribution, the current state of category trends, and much more!
Patrick is the Founder and CEO of Priori Data, a leading App Store Analytics and Market Intelligence company based in Berlin. Prior to founding Priori, Patrick worked for a decade as a heavy consumer of market, financial, and private company data as both an analyst and an investor. He began his career in the investment banking division of Morgan Stanley in New York, before joining private equity fund Vestar Capital Partners in New York and Munich. Patrick holds a BA in Political Science from Middlebury College in the US and an MBA from INSEAD in France.
- You recently launched Priori Data PRO. Can you tell us a little bit about your product and its USPs?
Sure. Priori Data PRO is an app store analytics platform. Essentially, it provides performance data on any app in the store according to its key KPIs, including downloads, revenue, and MAUs. It also provides aggregated views of the same data at the publisher, category, and country levels, and enables you to build watchlists and custom analyses for competitive and market benchmarking. The information is based on estimates, which are developed in-house using proprietary algorithms.We launched a beta version of the product back in March, and have since spoken with hundreds of stakeholders from across the app economy to understand what they wanted to see in our product. Our core USPs are powerful data visualizations, a focus on market and publisher level data aggregations for trend detection, and custom watchlist building for keeping a laser focus on your area of interest in the market. We have also pioneered a new model of data exchange with mobile app publishers that offers access to critical market data while sharing information on their own apps. This initiative helps us improve the product’s overall data accuracy.
- What are the most important things for mobile developers, publishers and marketers to consider when choosing an app store analytics provider?
Let’s first take a step back. Historically, data analysis around apps has centered around two exercises. First – a very detailed look at the performance of my own apps, using a variety of analytics tools; and the second – reviewing my position in the published app store top charts. App store analytics is a third step, and serves as a bridge between the other two. App store analytics allows you to contextualize the performance of your apps against your competition and the broader market, and to quantify and compare the value of a top chart position across countries and categories.There are a number of factors to consider when choosing an app store analytics provider. Moreover, the use case for an investor is different from that of an app publisher or a marketer. But here are our top five factors to consider.
- Price: can I afford to use an app store analytics provider at all (developers get free access with a connected account at Priori)
- Data accuracy: can I trust the information as presented?
- Data coverage: can I access the stores, countries, and categories of interest to me?
- Data granularity: can I access the metrics, time periods, and filters relevant to my use? Can I export the data to other media?
- Data frequency: is the information updated frequently enough to allow me to act on it promptly?
There aren’t many providers in the market, so we encourage you to do your research, have a few conversations, and make the right decision for your organization.
- At the App Promotion Summit Berlin you presented a slide showing the evolution of the top free charts; between 2013 and 2014 games have almost completely disappeared. What are the reasons behind this trend?
That’s right, and the results surprised us as well (we compared the top 10 free apps on iOS, ranked by global downloads, in October 2013 vs. October 2014).
We think there are a couple of reasons for the shift.First, if you look at which geographies are driving the growth in the app stores today, it isn’t the established economies like the US, UK, or Germany, but rather emerging economies like China, Brazil, and India. The consumer preferences in these countries are different (or at least at a different stage) than those in western markets. So one trend in particular that we are noticing is that that iOS consumers in these new markets are not ‘gaming first’ smartphone and tablet users, but rather use their devices for apps in categories like social networking, finance, photo & video, and productivity.A second possible reason is that we’ve seen a huge push by ‘web’ technology companies to firmly establish their presence in the app stores. Apple, Google, Facebook, Yahoo – these names now frequently lead the top charts. They enter the app market with already known brands and embedded user bases, so they easily gain massive scale. So it’s not necessarily that games are doing worse, but they’ve simply been surpassed by a new set of players.
- Which app categories are on the rise? Which ones are becoming more competitive?
On iOS we are currently seeing the highest download volumes in the Entertainment, Social Networking, Lifestyle, and Photo & Video categories. Here’s a global iOS snapshot for December:
In terms of growth, interestingly 5 of the top 10 growers in December were gaming categories:
As for competitiveness, the Business, Lifestyle, Entertainment, and Education categories are most saturated with apps.However we also like to measure competition in terms of how concentrated a particular category is – in other words, how much of the market is commanded by the top players. Last month we saw the top categories by global market concentration are Entertainment, Social Networking, and Navigation, where the top three players command 33.2%, 30.4%, and 21.4% of global downloads respectively.
- What are the most exciting emerging and booming markets and how should mobile publishers prepare and execute their entry strategies?
Apart from traditional markets – North America, Europe and Japan – BRIC and other developing countries have been driving significant growth as I previously mentioned.For example, on iOS, Russia, Brazil, India, Mexico and Thailand are ranked among the 15 largest markets in terms of downloads last month. Furthermore, in general, top players in these markets command less of the market share than, say, in the U.S., UK or Germany, making them an attractive landscape for publishers.But entry strategies to these markets need to account for the prevailing local market dynamics, and a publisher must set the right performance expectations.Regarding market dynamics, clearly there must be an understanding of the local language, cultural, regulatory, demographic, and device requirements that need to be met by the product itself. This is the starting point for any market entry, and it can’t be glossed over.If you are confident on the first part, the next step is planning a thoughtful entry strategy, which should be based on data – How big is my addressable market? What can I reasonably expect to achieve (over what time period)? How much might I be willing to spend to achieve my targets based on my existing KPIs?
- How is the app store market share evolving? Will Android ever catch up on iOS in terms of both downloads and revenue?
Both stores have now likely surpassed 100 billion global downloads and each house more than a million apps. Google Play now claims approximately 2x the number of iOS downloads on monthly basis, and is also growing more quickly. As smartphone expansion continues to penetrate every corner of the globe, we expect Google’s lead in absolute downloads to grow more pronounced over time.When it comes to revenues, the picture is different. Apple has clearly strengthened its hold at the high end of the smartphone market, particularly in developed markets, and that manifests itself in revenues, where the App Store generates significantly more revenue than Google Play. This gap will likely close over time as the sheer scale of Android increases, but we think that is a longer-term occurrence.
- Apple has reportedly paid out over $15 billion to developers to date. How even is the distribution of revenue and installs among publishers?
To say unevenly would be a gross understatement. Earlier this year, market analysts Vision Mobile found that only about top 1.6% of app developers make more than $500,000 per app per month (with some developers in this group making tens of millions per month) and they generate most of the app store revenue. About half of iOS developers and 64% of Android developers are operating at as little as $500 per app per month; 35% of iOS and 49% of Android developers make less than $100 per app per month. This is a massive market distortion, which makes it impossible for most app businesses to be sustainable and competitive.This gap can be seen particularly well in the leaderboards. Take, for instance, U.S. top (by total revenue) 10 apps in the last seven days in a couple of the largest categories on iOS. We see that in the Entertainment category #1 app makes 4.8 times the amount of revenue as #10 app; in Social Networking – 6 times; in Lifestyle – 8.7 times. And these are the apps that are only 9 positions apart!Entertainment
Social Networking
Lifestyle
- What can we expect to see on the Priori Data platform in the coming months and years?
Priori Data PRO first launched on iOS, and we will be working to deliver the Android platform in the first quarter of 2015. We will also be building out additional capabilities on the platform itself, including more customization features, additional data metrics, as well as alert/notification functionality. Finally, we will continue to improve our underlying data quality and accuracy as our publisher partnerships continue to expand.