Veteran tech news outlet Recode, reported that app downloads in the US has declined by a massive 20% since last year. The Global download numbers are still positive but is on a declining trajectory. This comes as the biggest app platforms like Facebook, WhatsApp, Snapchat and the likes reach maturity and users will only install an app if it is as popular and useful as Uber.
To tackle this slump, Apple and Google have entered into a self-imposed revenue war with each now offering the same split of the subscription share. From June 13, 2016 onwards, Apple will be offering a cut of 85% of the subscription price, where traditionally it went with the 70-30 split. As stated in the Apple Developers Blog, developers will receive the traditional 70% of the subscription fee at each billing cycle for one year, after which, if the developer manage to retain the subscription, they will receive 85% of the revenue generated.
As a way to improve app downloads, Apple also introduced territory-specific pricing for all its apps and up to 200 price points to choose from in all the supported currencies. With this in effect, users will see a parity in app pricing based on their location. For example, a consumer in India trying to download a paid app will have to pay a purchasing-parity adjusted fee, and not a literal conversion of the USD price.
Apple also gave developers the ability to advertise their apps right on the app store search results. This is something Google has been doing for quite a while. According to the Cupertino based giant, 65% of their app downloads come from direct searches on the app store. Developers can target their apps towards specific regions as well as demographics and the ads will only show up if it is relevant to the search query.
Hot on the heels, Google too announced a similar app subscription revenue model. Like Apple, the big G is also offering 85% of the revenue from app subscriptions to the developers, up from 70% previously. However, Google is doing it better by not imposing the one-year rule like Apple. Developers don’t have to wait for a year of paid service to receive more revenues. Instead, it will start immediately. Google however, has not announced from when the change in the revenue model will reflect. Google has been testing this new revenue model for a while with video services, as a way to push the Google Chromecast.
Google has already been standing apart from Apple by giving developers the option to handle payments themselves and keep all the revenue. On the other hand, Apple’s payment system has to route through its iTunes billing system which is considered irksome by many.
With the app market hitting maturity, getting an app to break through to the top five will be very, very difficult for the developers, unless the app is revolutionary or extremely lucky. The app stores owned by the two tech giants of the world, are doing everything they can, to keep the traffic flowing.
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