Opinion: How iOS 10 and App Store changes will impact developers

(Image Credit: iStockPhoto/German)

Nine years and over 2 million apps later, the App Store has become a spiralling behemoth. Whilst there are many great, innovative, immersive and useful apps - there is also a lot of dross. Unfortunately, even if you have a great app you may still end up with a failure on your hands.

One just needs to look at Storehouse, the visual storytelling app that won in Apple Design Awards 2014. Yesterday, the company sent out an email to announce they would be shutting down as they were 'unable to achieve the type of growth necessary to justify the continued operation of the service.' Likewise, Pixite’s epic article ‘Life and Death on the App Store’ makes sobering reading for any would-be app developer. As with any gold rush, for the few winners, there are many who end up with broken dreams and empty bank accounts.

The bottom has fallen out of the main App Store for new entrants. Rather than hyping it up, research is now suggesting that people are downloading zero new apps. Then, research also says that people only spend their time in 4-5 apps. How much of this is true, or how much of it is about all smartphone users as opposed to iPhone users remains to be seen.

As Apple said yesterday in its 2016 WWDC keynote, the App Store has generated over $50 billion for developers over the past 9 years. Given that Apple announced in January 2016 that it had paid $40 billion, are we to then believe that it has paid out $10 billion in the past six months alone? Given that $1.1 billion worth of apps and in-app purchases were made between 20th December 2015 and 3rd January 2016, it stands to reason that on iOS at least, the money is flowing into the top developers’ pockets.

Apple also revealed 30 billion apps have been downloaded in the past year alone - taking the total up to 130 billion apps downloaded since the launch of the App Store. Whilst it's never been harder to be a new entrant, without an established customer base, the maturity of the App Store is no bad thing. Indeed, Apple did its best during the WWDC keynote to follow in the same footsteps as Google and Facebook by making its apps more interoperable with third-party developers. Of course, by doing so, it’s trying to stop those companies becoming the main places users spend their time.

With the announcements made at WWDC this year, Apple has introduced more ways than ever for developers to reach end users. In many ways, Apple is continuing the trend of the 'post app experience' where interactions don't take users out of what they are already doing. With users spending the majority of their time in a small number of apps, Apple and others are working to make those apps as useful as possible by enabling other services to work.

At the same time as Apple is hoping to make third party apps into third party extensions, it is introducing new ways for developers to market and monetise their apps.

Improved revenue… after a year

Apple is making it possible for a wider number of apps to benefit from subscriptions. For apps that do use subscriptions, bought through the App Store, Apple will also change the amount the developer makes after one year. This means that rather than a subscription always being a 70/30 split, it will move to 85/15 after one year.

Yet, the danger for many developers with subscriptions is that they’ll only think about their app, as opposed to the wider experience. If you already pay £8.99 for Netflix, £79 per year for Amazon, £7.99 for Office, £7.99 for Audible, £9.99 for Spotify and any other existing subscriptions, how many more apps are you really going to pay for? The danger for smaller developers is that this will only really benefit larger services that people are likely to use on an ongoing basis.

In many ways, subscription billing won’t be the saving grace for smaller developers. This is largely because of the problem above. To benefit from the increased revenue, developers will need users to subscribe for over a year. When only 16% of people try an app more than twice, this possibly presents more problems than it solves.

Instead, smaller developers would benefit from the ability to charge for new features - which can be more of a one-time payment. Added to the challenges for smaller developers is the fact that Apple isn’t being overly clear about the exact type of subscription they will allow. Whilst saying ‘apps in all categories’, they then go on to say ‘will be eligible’ to offer in-app purchases for auto-renewable subscriptions. ‘Although all categories of apps will be eligible, this business model is not appropriate for every app.’ In other words, Apple will decide which apps are eligible.

The changes to subscription billing are all very well and good, and may well benefit a small subset of indie developers, but it’s not yet clear if it’ll be the big impact Apple is hoping for. Namely, this is because the increased revenue won’t be passed onto subscribers, in many cases - removing loyalty incentives.

App Store search advertising

Apple is introducing App Store search advertising, where a single ad will show when users are searching for a topic or app name. With search ads, Apple is going to need to make it as transparent as possible - akin to Google AdWords with the ability for companies to access a keyword planner and understand bid prices. This is potentially a great way for niche apps to rank for low value/long-tail keywords. But, on the flip side, the danger is that this will be another mechanism for the big players to drive up the prices and dominate the advertising as they invariably do in other places due to their massive budgets.

We also then have to hope that it’s only the ad that you see which is influenced by ad spend. It will be important for the App Store search algorithms to also bring forward good quality, innovative and interesting apps - regardless if the developer is pumping millions into marketing and advertising. We don’t want to return to the bad old days of terrible apps climbing the charts just because they have had big marketing and UA spend behind them.

All of this presents yet another challenge for small developers. They need to master yet another marketing skill in-house, on top of the ones they are already trying to grapple with. With the way that Apple is opening up the rest of the platform to developers and making iOS more open than it's ever been before, it is the bigger developers that stand to benefit the most.

iOS 10 will usher in a new way that developers on iOS need to think about their apps. Apps will be less about the in-app experience and more about the system-level experience. Apple has demoted the home screen of apps to be secondary to interactive notifications, widgets, Siri, and search. It's more about services within apps, as opposed to apps as portals.

By including the option to also remove Apple's core apps and use other apps instead for calling, messaging, notes and emailing, it's no longer a fight to be on the home screen but to replace Apple's apps. That's going to make the competition even more fierce than before - especially with subscriptions and app ad search thrown into the mix.

One thing is for sure, it's going to be an interesting year for developers.

You can download ‘The 2015 App Reviewer Survey’ by Big Ideas Machine here.

What are your thoughts on Apple’s changes? Let us know in the comments.

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