Show me the money!

jerrymc.bmp

If weblogs have a patron saint, I guess the patron saint of this blog would be Jerry Maguire – with his trademark phrase – ‘Show me the money’

Having spent a lot of time trying to understand how to ‘sell’ mobile applications(wireless applications) – I keep being reminded of this phrase often

Selling a mobile application is not an easy task and requires an understanding of multiple disciplines – technology/sales/channels to market and so on.

Its often possible to ‘sell a mobile application’ but make little money!Here is an example -

Consider mobile gaming – a ‘hot topic’. How many game downloads would it need to attain a profit?

The Mobile game industry is similar to the PC or console game market. Traditionally sales are heavily skewed to the top ten titles, and in many cases the top five take a huge portion of the entire market. Most titles lose money. Net margins for Mobile operator and aggregator distribution models (for example using aggregators like Cellmania, Mforma etc) run from 60% to 75% in the USA. In other markets, it could be worse (for example India), or better (for example Japan and Korea).

In the USA, a game typically retails at $3.99 (for an ‘over the air/OTA’) delivery. Product development costs for a single player game title could range up to $40K including handset testing and porting (but that could get a lot cheaper if developed overseas). Assuming a net of $2 after all costs, we need sales of 20,000 units just to break even. This gets even worse because many successful titles depend on a brand – for example a ‘Harry Potter’ game. Brands have their own costs leaving even less for the developer.

Does that mean there is no money in this field?

Although mobile games themselves are saturated, there is money in variants ..

3D gaming(technology variant), multiplayer gaming(communities), games for women(subsector of the audience)

In a nutshell, the ‘obvious’ approach would be to create a game single player game (just because there are so many of them) .. but it may not be the most profitable (and our patron saint would frown on it!)

Example source: OpenGardens

Movie : Jerry Maguire : 1996

Comments

  1. yadu says:

    ajit,
    while i think gaming is a growth market, but also a crowded market, mobile gambling is something that will explode… particularly in light of the change of laws in gambling being proposed..
    i know of quite a few application providers who are already up and running with applications..
    in terms of ‘breakeven’, i dont think mobile applications are any different to conventional applications.. in conventional software applications too you need to work out cost of development and see how many units you need to amortize this over to recover your costs..
    and the same applies for ASP services too.

  2. Hi Ajit
    Nice Blog, I think it means there may be less money than some think and your right, there may be more in a niche.
    Show me the money and I’ll show you more!
    Regards
    Charles McGill
    Founder/Chairman
    http://www.netaid.co.uk
    cmcg@blueyonder.co.uk