Is the App Store actually profitable for developers?

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5 mins read

The App Store has been seen as one of vast opportunities for indie developers, giving the likes of Halfbrick, Firemint and Rovio a platform to release games on they might not have had by sticking to “conventional” consoles.

But is it really a happy marketplace? If we have a look on Game Center, it would seem that all but the very highest profile games do, in fact, struggle to make any real money.
Consider a couple of games that Digitally Downloaded has reviewed in the past few weeks. Grove Keeper HD, just released, has just 18 people listed on its leaderboard. Boom Boom Gems, 46. Reiner Knizia’s ClusterMaster, 4,947, but that’s for the free game. For the game modes you unlock by paying for the game, 102 names is the most populated leaderboard.
Even the higher profile Bird Zapper! seems to have struggled to gain traction. Despite being really good fun and having the marketing might of Namco Bandai behind it, has only managed 30,472 leaderboard names. Galaxy on Fire 2 – one of the highest rated RPGs on the App Store, 48,566.

This game is awesome, but best seller?
Now consider that most of the games listed above are very cheap. At $0.99, Bird Zapper has made $30,198 according to Game Center. ClusterMaster, potentially as little as $100.98.
Galaxy on Fire is a little more expensive, at $6.99, but still only made the company around $339,476 – hardly enough to sustain a professional corporation long. Poor young Grove Keeper, despite a price of $2.99, has brought in $71.82 – that barely covers the Apple licensing fees for a year.
Now, Game Center is not definitive – according to it, for instance, there are 1,364,759 people who have downloaded Flight Control. The actual sales figures are around 4,000,000. But even assuming that 1/3rd of people who download these games play them on Game Center, Bird Zapper still comes in at less than $100,000 by assuming a triple sale/ Game Center user ratio.
It’s also worth noting that developers are now wisely adding in additional revenue streams for these games. Bird Zapper and ClusterMaster both feature in-game bonuses that can be paid for with a little extra money. But it’s not going to boost these games anywhere near the million mark.

This game deserves far more love
And indeed it’s possible to port these games to additional platforms – such as the Android market, for additional sales and revenues. I am not for an instant claiming that these rough and raw calculations are an indication of how much revenue these games bring in in reality.

But look at even Flight Control. It’s been around for a few years now, and assuming $4 million roughly translates into $5, $6 or even $7 million in revenue (given the higher prices for iPad, DSiWare or PSN versions of the game)… Firemint is a company with around 100 people now. Given the average wage in Australia is $64,641/ year, that’s $6.5 million per year to pay everyone, and that’s before tax, the cost of the office and other business expenses.

This is all quite vague (for instance, it’s unlikely that the average wage at Firemint is equal to the average Australian wage), but it highlights a point – even the most popular games on the Apple App store are quite possibly only just scraping through as profitable.

Spare a thought for the poor indie developer or start up company that lacks the marketing budget, then, or the capacity to release a steady stream of new games. It’s unfortunate, because it means so many good ideas are potentially unrewarded.

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  • I really enjoy seeing this type of stuff.
    I'm a numbers guy, and I always wonder how/if companies could make more money off their games…and HOW they could reach a larger audience.

    I think the issue you addressed here, is one that every console and gaming platform has seen…there are winners and there are losers. Now, how can the losers become winners? That's the million dollar question…

    I think one thing that's going to only get worse, before getting better, is the quality AND quantity of games.
    I remember the 90s, I would buy maybe 1-3 games a year…MAYBE; but I also don't recall the market having SO many choices as it does now of how to game.

    There are more developers now, with more platforms available, all competing for market share, while the video game market is just continuously flooded with games.

    I really don't think the current video game market, with all the developers, is sustainable…but perhaps it's because I'm only seeing it from my side of the ocean. After all, China and other countries are emerging now, and that's a very, very, VERY large market to go after.
    Anyway, good read!

    Reply

  • I really enjoy seeing this type of stuff.
    I'm a numbers guy, and I always wonder how/if companies could make more money off their games…and HOW they could reach a larger audience.

    I think the issue you addressed here, is one that every console and gaming platform has seen…there are winners and there are losers. Now, how can the losers become winners? That's the million dollar question…

    I think one thing that's going to only get worse, before getting better, is the quality AND quantity of games.
    I remember the 90s, I would buy maybe 1-3 games a year…MAYBE; but I also don't recall the market having SO many choices as it does now of how to game.

    There are more developers now, with more platforms available, all competing for market share, while the video game market is just continuously flooded with games.

    I really don't think the current video game market, with all the developers, is sustainable…but perhaps it's because I'm only seeing it from my side of the ocean. After all, China and other countries are emerging now, and that's a very, very, VERY large market to go after.
    Anyway, good read!

    Reply

  • hi Coffee – thanks for the insights, glad you enjoyed the read!

    I see two potential models emerging from the iOS stores – 1 is the very low profitability per game, but high quantity of games working. If you only make $1000 overall profit per game, it's not such a problem if you then make 10 games per year. This is where small publishers and developers can play, and potentially be successful.

    The second is in high profile publishers and developers (EA, for instance), using it as a "buffer" of sorts. Produce 10 iPad games per year, and perhaps the combined total doesn't approach what a single blockbuster would make. But if your blockbuster under performs in the market, then the small profits you make absorb some of that loss – for relatively little effort.

    What I don't see the App store as being good for is indie developers. They don't have a marketing budget, and so their games get completely lost on the App Store. If you don't have the capabilities to make a lot of games, then you're not going to be able to milk enough profit out of these to sustain yourself. It's unfortunate, but indies are still better off hoping a large publisher discovers them, I feel.

    Reply

  • hi Coffee – thanks for the insights, glad you enjoyed the read!

    I see two potential models emerging from the iOS stores – 1 is the very low profitability per game, but high quantity of games working. If you only make $1000 overall profit per game, it's not such a problem if you then make 10 games per year. This is where small publishers and developers can play, and potentially be successful.

    The second is in high profile publishers and developers (EA, for instance), using it as a "buffer" of sorts. Produce 10 iPad games per year, and perhaps the combined total doesn't approach what a single blockbuster would make. But if your blockbuster under performs in the market, then the small profits you make absorb some of that loss – for relatively little effort.

    What I don't see the App store as being good for is indie developers. They don't have a marketing budget, and so their games get completely lost on the App Store. If you don't have the capabilities to make a lot of games, then you're not going to be able to milk enough profit out of these to sustain yourself. It's unfortunate, but indies are still better off hoping a large publisher discovers them, I feel.

    Reply

  • Didn't see this until now..
    Working for Tribeflame, the developer of Reiner Knizia's ClusterMaster, I do agree with it. Using your 1-to-3 factor on top of the revenues, you are at least in the correct order of magnitude – without going into details of our sales.

    The problem with your suggestion to make many games is that each game still costs some tens of thousands to make, at the very minimum. If even a well polished game only makes single digit thousands in return, it's a money losing business no matter how many you make.

    We do have some cool thought on how to get around that, but you'll have to wait a few months for our next games before we'll talk about it.

    Reply

  • Didn't see this until now..
    Working for Tribeflame, the developer of Reiner Knizia's ClusterMaster, I do agree with it. Using your 1-to-3 factor on top of the revenues, you are at least in the correct order of magnitude – without going into details of our sales.

    The problem with your suggestion to make many games is that each game still costs some tens of thousands to make, at the very minimum. If even a well polished game only makes single digit thousands in return, it's a money losing business no matter how many you make.

    We do have some cool thought on how to get around that, but you'll have to wait a few months for our next games before we'll talk about it.

    Reply
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