Why Instagram Won’t Be the Last Billion Dollar App
Ravi Mehta is vice president of product for Viximo. He drives product strategy for Social Zone, Viximo’s mobile app platform that helps developers expand their reach and increase monetization via compelling, app-specific social features. Follow him @ravi_mehta.
By now, it’s clear that mobile has arrived in a big, earth-shaking way. Last year smartphones outsold PCs for the first time in history. By 2015, mobile devices will account for almost 80% of Internet usage.
It’s also intuitively clear. There’s a whole new generation of mobile-first users who will regard PCs as bulky and antiquated. And it’s abundantly clear from successful examples like Draw Something, which hit a million users in just nine days, and Instagram, which accumulated a staggering $2 million in enterprise value per day from inception to its $1 billion acquisition by Facebook.SEE ALSO: Why the Future of Social Is in the Palm of Your Hand
But are dramatic mobile successes just anomalies that will die down as the industry takes shape? Or are we seeing a fundamental shift in the speed at which new ideas and new businesses can grow?
There’s a very good chance it’s a fundamental shift. The telephone heritage of mobile devices is inherently social. As a result, mobile devices play a very different role in people’s lives than PCs. Savvy app developers recognize this and are tapping into a set of consumer behaviors that are specific to mobile. When combined, these elements translate into explosive growth. Here’s why.
Ingredient 1: New Modes of Usage
Mobile devices provide developers with a new set of tools, but these tools take time to master. So while the first generation of mobile apps checked off the feature boxes for things like gestures and location services, the next generation of mobile apps are weaving together disruptive innovations that couldn’t exist before. There are four trends driving the next generation of mobile success stories.
Lightweight Media Creation: Media creation on the PC is dominated by heavyweight applications aimed at a prosumer demographic. Mobile is all about keeping it light. That’s not only changing the way we take pictures, but changing every creative endeavor, including writing (iA Writer), music generation (Figure), brainstorming (Paper), painting (SketchBook Pro), movie production (iMovie), podcasting (Audioboo), and coloring (My Coloring Book).
Instant Social Sharing: Smartphones are the ultimate medium for sharing with friends. Apps like Instagram leverage the potent formula of lightweight media creation and instant sharing on this device. We’re continuing to see this formula work with apps like Viddy and Socialcam.
Innovative Input Methods: Mobile phones offer a rich palette of input methods with their multi-touch interfaces, integrated cameras, and microphones. New modes of input have been a key element in a number of app success stories. For example, Outfit7 has used microphone input and tap gestures to create a fun pet interaction experience that has resulted in more than 300 million downloads for their Talking Friends apps franchise .
Geolocation 2.0: Check-ins are a good start, but the really innovative app developers are using location to mediate how people interact with the world around them. For example, Banjo is enabling social discovery by projecting a user’s social graph onto a real-world map, and GymPact is using location, plus cash incentives, to help people get fit by going to the gym.
Ingredient 2: Hypercharged Virality
When was the last time you ran out of a meeting with your laptop to take an email or Facebook message? Probably never, but I bet you’ve run out of a meeting to take a phone call, or pulled out your phone to return a SMS. Mobile devices command a premium on our attention. With push notifications, app developers can now tap into that attention-grabbing magic.
Draw Something uses push notifications brilliantly. With a few taps, a player can strike up a match with a friend or acquaintance. Once that match is going, push notifications fly back and forth as players trade turns. The result is a conversation that has the same rhythm and social richness as chatting with SMS. When compelling social interactions are combined with the ability of push notification, what we have is a formula for virality that can’t be matched on a PC.
Ingredient 3: Business Models That Really Work
On the web, the majority of consumers hate purchasing software. In fact, web app developers only monetize a handful out of every 100 users. In contrast, the majority of smartphone users have purchased content via their devices. This change in behavior has enabled mobile business models that really work.
Micro-Impulse: With low price points, like $0.99, it’s possible to sell software and reach millions of users at the same time.
Virtual Goods: Just 18 months ago, pay-to-play games accounted for 90% of iOS game revenue. Today, free-to-play games account for more than 50% of iOS game revenue. In-app payments have enabled game and app developers to combine frictionless distribution with a business model that enables game developers to win by providing long-term entertainment value.
Try Before You Buy: Although Apple doesn’t allow trial versions of apps, some developers, like the creators of Paper, have done a great job of providing a compelling core experience via a free app and then using in-app payments to allow users to upgrade to the full experience from the same app.