Apple's latest figures for iOS App Store downloads announced today — a total of 40 billion apps to date, with almost half of those in 2012 — are undeniably extraordinary. But digging a little deeper into the numbers reveals that the path to riches for iOS apps is still challenging.
Here are the key details from Apple's PR announcement (whether the timing of this is designed to coincide with the opening of CES, an event Apple doesn't participate in, I'll leave for the reader to decide):
- Since launching in mid-2008, there have been 40 billion iOS App Store apps downloaded (that number doesn't include re-downloads or updates). According to Apple, nearly 20 billion of these were in calendar year 2012.
- There are more than 775,000 iOS apps, including 300,000 native iPad apps.
- Apple has made total payments of more than $US7 billion to developers. (This figure presumably includes both in-app purchases as well as buying apps themselves.)
If $7 billion has been paid to developers, that means Apple has made a handy $3 billion from the 30 per cent cut it takes on apps and content sold. That's not pure profit (Apple has to pay to maintain the entire ecosystem and approve every app), but it still seems like a robustly healthy business to be in for Apple. The picture is less clear for individual developers.
Crucially, what Apple doesn't tell us is what proportion of those 40 billion downloaded apps were paid for as opposed to free. It also doesn't tell us whether that proportion is changing over time. 2012 may well have been the year that 20 billion apps were downloaded, but if more people than ever are opting for free apps, making money from developing apps would be harder, not easier, despite the increased activity.
Going just with the data we've been given, we can calculate that the average number of downloads per app is around 51,613. However, the average in this case is almost certainly misleading in terms of potential audience. The very first example Apple quotes in its announcement is Temple Run, which has been downloaded 75 million times. Just a handful of titles like that are going to severely alter the averages. A median figure would be more meaningful, but Apple hasn't provided that.
Without knowing the proportion of free apps versus paid-for apps (or how much of the $7 billion comes from in-app purchases), we can't accurately calculate how much developers will make on average from a sale. However, we can look at what the average figure would be assuming that a certain percentage of the market is made up of free apps. Here are the numbers, ranging from a highly unlikely assumption that just 10 per cent of apps downloaded are free through to the perhaps more likely scenario that 90 per cent of apps downloaded are free:
|Percentage of market that is free apps||Average developer payment per paid-for app|
That $1.75 per app average payment to developers (assuming 90 per cent of apps aren't paid for) might sound appealing, but remember that it's loaded with caveats. It's definitely an overstatement, since we've ignored in-app purchases and used an average number overall. It's also worth remembering that if 90 per cent of people are downloading free apps, persuading them to pay is much harder. If the market is evenly split, people are more willing to spend money, but clearly spending less of it.
If you assumed the 50 per cent free apps proportion and that your app sold the average figure, since mid-2008 you would have made $18064.55 from your app. Nice for a sideline hobby; terrible if you're employing multiple staff and relying on just a handful of titles.
None of this means that developing for iOS isn't fun, challenging and potentially profitable. Just remember that when 40 billion apps have already been downloaded, your brilliant idea doesn't have long to make an impression.