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The App Bubble Burst The Coming App Economy Correction

Report by Karol Severin and Martyn Davies
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The 20,000 Foot View

In May 2014 we warned about potential risks of the Superstar App Economy. Too few apps were taking most of the revenue. Investors funded huge marketing and development budgets in a bid to create mega hits, but in the process raised the barriers to entry. The pursuit of the standout success by a handful of app developers created bubble economics. Many of those pacesetters struggled to come up with follow up hits that met, let alone surpassed, their previous successes. It is now clear that the sustainability of the current mobile app games market, and by implication the broader app economy, cannot be taken for granted. In fact, the app bubble may be about to burst. 

Key Findings

  • Games still dominate the Top Grossing charts with XXX of all Top XXX placings, just XXX down on March 2014, though most other categories gained share
  • XXX five highest Top Grossing apps are Games
  • XXX Games’ share of the Top XXX Free charts declined by XXX percentage points, down from XXX in March to just XXX in October
  • XXX of the five Top Grossing apps appear in the Top XXX Free apps anymore, meaning that the dominant grossing apps are not acquiring new audiences
  • XXX slowdown in new audience acquisition will impact in app monetisation
  • XXX app bubble dynamics are more pronounced in iOS than in Android due in part to the fact that Android users spend less than Apple users

Companies mentioned in this report: Apple, Google, Zoosk, Tinder, Deezer, Spotify, Pandora, EA Games, Supercell, KING, Rovio, Disney

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