“Some might argue that this supports the idea that ‘content wants to be free.’ We don’t see it quite that way,” said Flurry Director of Industry Insights and Analysis Mary Ellen Gordon. “Instead, we simply see this as the outcome of consumer choice: People want free content more than they want to avoid ads or to have the absolute highest quality content possible. This is a collective choice that could have played out differently and could still in particular contexts (e.g., enterprise apps or highly specialized apps such as those tracking medical or financial information).”
HTML5 offers many exciting advantages that result in lower development costs. But Native apps also offer advantages, and a familiar business model for developers. Join FierceWireless as we take a look at the pros and cons of HTML5 vs. Native and what it means for developers, enterprises with custom app and more.
“This suggests that Android owners want app content to be free even more than iOS device users, implying that Android users are more tolerant of in-app advertising to subsidize the cost of developing apps,” Gordon said. “These results also support another belief derived from surveys and some transaction data: iPad users tend to be bigger spenders than owners of other devices, including iPhone. On average, the price of iPad apps in use in April of this year was more than 2.5 times that of iPhone apps and more than 8 times that of Android apps. This is likely to be at least partly attributable to the fact that on average iPad owners have higher incomes than owners of other devices.”
Flurry credits the rise of free apps to developer A/B testing (i.e., offering apps at competing price points over different periods of time) offering insight into users’ willingness to pay based on the number of downloads at each price. Flurry identifies an upward trend in the proportion of price-tested apps that transitioned from paid to free, indicating that many of the developers who ran pricing experiments concluded that charging even $0.99 dramatically limited consumer demand for their apps.
“Developers of some specialized apps may be able to monetize through paid downloads, and game apps sometimes generate significant revenue through in-app purchases, but since consumers are unwilling to pay for most apps, and most app developers need to make money somehow, it seems clear that ads in apps are a sure thing for the foreseeable future,” Gordon concludes. “Given that, we believe it’s time to shift the conversation away from whether there should be ads in apps at all, and instead determine how to make ads in apps as interesting and relevant as possible for consumers, and as efficient and effective as possible for advertisers and developers.”