App Store 2.0 — will it change things?

The “big” changes of the App Store are here. It’s great to see that Apple reacts to what happens and actually listens to the developers. Apple is willing to make bold moves and experiments with the App Store. This should lead to better ecosystem — “iterate and learn from it” approach works.

We, as a company, have been on the App Store since the very first day (YES) of its existence and have over 50 million downloads worldwide. Readdle managed to build a sustainable business creating great productivity apps that people were happy to pay for.

But 2.5 years ago we saw a big shift and decline on the App Store, that hit all premium priced apps with one time purchase model.

So here are some new things that we know and our reaction to them:

Search Ads

  • Cost Per Impression model implies that we might see dynamic similar to Ad Words, with big pocket advertisers dominating most high profile/high volume searches, while some guys might figure out “1-cent” strategy. Ability to control Keywords Targeting is a big question here.
  • Apps with higher LTV would be able to afford better keywords that essentially will drive more traffic for them. Not sure how indie developers can beat that.
  • The 2/3 of installs come from searches — it is good, but how many come from people. Many people installs just a few apps per month so the audience of Search Ads might be limited.
  • Where is the user benefit here? If Apple can figure out the most relevant search result — this should be #1 item on the results list, not a slot sold to 3rd parties. However, it fits the story of Apple becoming a services company, going for higher, almost recurring revenues from each Apple device user. This aligns with the Wall Street expectations.

Subscriptions

  • Subscription model is better aligned with long-term users interests. It stimulates developers to keep users happy and product useful (retain users). It’s a win-win model really.
  • Subscription works only if your app addresses recurring high value need for the end user. For example, apps like Scanner Pro that are used occasionally are bad fit for subscription.
  • There is a very clear bias against “renting software” among people, especially in consumer space.
  • If any of the competitive products will remain as a “one time fee purchase”, your “subscription” product won’t be able to compete.
  • In general, selling subscriptions and keeping its active is much harder than selling “one time fee”.

For example, photo editing app will have a hard time charging users $2/month once there are others at $0-$5 one time fee. Apps that do not have recurring usage patterns should not be subscription-based from user perspective too.

I’m still positive about the updates and willing to experiment with our products to see how they perform. Will keep you updated.

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