“It’s tempting to look at music and suggest that music downloads are suffering from streaming, just as it was tempting to suggest that CD buying was suffering from piracy (and later, downloads.) But this is falling into the trap of defining a product’s use by the metrics used to measure transactions,” Horace Dediu writes for Asymco. “These metrics are but a proxy for what consumers are actually doing with their time.”
“Consumers have a fixed time budget, a more rigid constraint than their spending budget. Competition for a slice of a consumer’s time budget is far tougher than competition for a slice of a consumer’s wallet,” Dediu writes. “So what’s amazing is that apps have successfully grabbed a share of this time budget. I believe that the reason they succeeded is that they initially fit into niche time slices that were previously unoccupied.”
“Downtime or ‘boredom’ was filled with app interaction. This includes some social media consumption. These are not immersive experiences. They are ‘casual,’ inconsequential and trivial. At first anyway. And that’s the rub,” Dediu writes. “As apps enter a consumer’s world they initially take on non-consumption, which is easy to beat. But as the experiences become increasingly compelling they ‘move upmarket’ and compete more aggressively with existing media consumption patterns. For instance, one might allow casual gaming to take root in non-consuming contexts such as commuting, waiting, and escaping time niches. But if the experience becomes addictive, the gaming takes over time previously spent watching TV or using console games. The same can be observed for app-based experiences of social media, shopping and chatting. This is the insidious march of a disruptor…”
Much more in the full article – highly recommended – here.
[Attribution: Fortune. Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]
The sad thing is the majority of payments made to developers go to the likes of candy crush and clash of clans.
Developers building useful apps are getting scraps in comparison cause this stupid freemium model is killing the paid app model. I’ve made 1 in app purchase in my life to buy the bowling feature of a cricket game. The game is no longer for sale and I have lost the bowling part. IAPs are now disabled in settings and will stay that way. The freemium model feels a bit like a burning fuse, the sooner it reaches the end the better as far as I’m concerned.
In the absence of a ‘freemium’ model, how do you induce people to download your app to give it a try? There’s no trial period allowed in the App Store so how will people know how good or bad your app is unless you give them an opportunity to try it out for free and then decide either to delete the app or pay for more functionality.
Yeah the lack of trials is a bit crap but Rovio have the free versions of angry birds and losing 99-1.99 buying a crap app is a lot better than finding your kids have spent $1000s buying coins ect. If it’s just paying for more functionality then Apple should be honouring this even after the developer is no longer selling in the App Store. I can download the cricket game but not restore the bowling
BLN, I agree that The App Store is flawed because it lacks a simple method for trying out an app prior to purchasing it. The workaround has been to release a free, “lite” version of the app with some key features limited or disabled. Apple should provide a cleaner solution for both developers and customers.
In contrast to your apparent position, I contend that the “freemium” model was not adopted to address this App Store shortcoming. The rapid adoption of the freemium model is due to the fact that it enables developers to generate much higher app revenues via outrageous in-app purchase prices. I have no inherent problem with the concept of the freemium model. But I have a great deal of disgust for the greedy manner in which it has been implemented across the board. In RR3 it costs $99.99 for 1000 gold of R$5M, and that will only get you a fraction of the way through the game. In contrast, RR2 cost less than $10. I don’t mind paying a reasonable price, but I absolutely abhor getting reamed. I will not support the current freemium approach. No in-app purchases for me. Keep your damn apps.
They’re doing even more damage than that. As John Gruber remarked after reading this sad piece from the NY Times, “in-app purchases are driving game design more towards addiction and less towards fun.”
http://www.nytimes.com/2013/12/22/technology/master-of-his-virtual-domain.html?pagewanted=all
Too true. These companies are profiting from that addiction as well as encouraging it via the freemium model. In addition, they are ruining the gameplay in the effort to monetize the games to the maximum extent.
In the short run, this may appear to be a smart financial move. In the long run, these companies may suffer the Zynga effect.
When did he figure this out?
If only I could get paid for writing such works of genius.
Another fantastic and interesting analysis by Horace Dediu. Gotta love this guy for digging beneath the surface.