Price and Popularity: The iPhone App Store’s Data Show Who’s Making The Most Money

Mobile Orchard’s Dan Grigsby recently found an interesting way to analyze the data given out by the iPhone App Store – particularly in the areas of popularity and price. With this information, we’re going to derive a few conclusions about the economy behind iPhone applications as well as come up with some speculations..

This is the first in a series of posts to analyze the data from late November 2008 and answer the following questions:

• Which type of company is making the most money from iPhone apps? (this post!)
• Given the rush to the bottom in terms of sacrificing pricing for popularity, are cheaper apps significantly more popular?
• What are the different price vs popularity profiles for various application categories?
• Which apps are making the most money overall?
• Is it better to sell more copies of an application cheaply or fewer at a higher rate?
• When comparing price and popularity, which apps are outliers and why?

(Note: As we publish posts covering each question, the questions above will link to the later posts.)

Who’s Making The Most Money In The Games Category?

As a taster, let’s focus on a single category – the Games category. It’s the most popular category on the store and the most money is at play there. Here’s a graph based on our data:

Each point represents an application. The x (bottom) axis represents price rounded to the nearest dollar. Free applications have been removed as due to their number they do not help with the correlation and increase the data density too much. The y (left) axis represents popularity. Popularity is typically between 0 and 1, but with free applications removed, the highest ranking game (iHunt – in this case) gets just 0.177.

Price * Popularity = Earning Potential

Despite iHunt being the most popular non-free application in the category, however, it ranks just tenth if you multiply the popularity by the price. By such a metric, the top performers in the category are:

What’s noteworthy from the data above is that the top games in terms of revenue (projected by multiplying popularity by price) are not the most popular games overall and nearly all of the top ten are by established players in the games market – Vivendi, SEGA, Apple, PopCap, Gameloft, Xen Games and Electronic Arts. Only Fieldrunners and iHunt are by independent developers (Subatomic Studios and John Moffett respectively).

So established players make the most money. Hardly a shock, but when there are over 2,000 games in the category, it’s amazing to see it hold true so consistently. It helps prove, however, that established brand values are important when it comes to making money, not a low price. Crash Bandicoot, Super Monkey Ball, Bejeweled, Spore, and Tetris are all well known and comfortably established outside of the iPhone world. Competing with these powerful brands requires something extremely compelling, such as Fieldrunners, which has been very successful primarily due to word of mouth (and that it’s a Tower Defense game, which have long been popular online in Flash form).

Still More to Come..

We have the same data (and more) for all of the App Store’s categories, and will continue to analyze it in a series of posts – so keep your eyes peeled. If you’re not already a subscriber to Mobile Orchard, head to our homepage and follow the links on the top right. You can subscribe via e-mail or RSS feed.