How to make millions from a smartphone app
The $1bn sale of Instagram this week is a rare deal that sees millionaires made of Smartphone app developers, and while rare, it certainly wont be the last. Billy Moat, digital creative for Spider Online considers the apps that have gone on to make a fortune for their makers.
It's the burning question that every smartphone app developer all over the world would like to know the answer to, 'How can I develop a smartphone app that will make me millions?'.
Sadly, there's no simple answer to that question, or I for one would be beavering away on my very own pot of gold app right now. Some companies do however seem to know how to strike it rich with apps – but whether it's through being privy to a winning formula or just doing it through blind luck – only they know the answer.
In March 2012, Omgpop's Draw Something app was bought by mega game company Zynga for $180 million (plus a £30 million earn-out). Then, just this week, Facebook splashed out a handsome $1bn on the photo based social networking app, Instagram. In both the cases mentioned above it should be made clear that it was the whole company that was acquired each time – not just a single app – although in the case of Instagram they really only produce one app.
So what was it that merited those two apps to be given such hefty price tags and for people to actually come along and pay those prices to buy them?
Instagram is a photo based app that lets users share photos with their friends. It also allows users to add 'filters' to their photos which gives them various different retro style looks. Facebook has made quite a shrewd move as it has managed to buy a potential social network rival with a rapidly growing user base and it provides Facebook with another channel to gain access to mobile device users - 100% of Instagram's 30 million active users are on mobile.
Facebook is still seen by many as a desktop computer based platform (although that is changing as Facebook's apps on the various mobile platforms continue to improve) so Instagram could be an important tool in allowing Facebook to interact with more mobile users. One potential drawback with Instagram is that it currently doesn't have a system in place to monetize its users. However Facebook won't be worried about this as it simply wants the users from Instagram plus its potential for future growth as its currently one of the apps on the market that has a real buzz about it.
Draw Something basically has users draw a picture on their phone which then gets sent to their friend for them to try and guess what the picture is. Simple. With Draw Something, Zynga has bought an app (and a company) that has shown remarkable success in a short space of time. Just five weeks after its launch, Draw Something had been downloaded 20 million times. Fifty days after its release that figure had jumped to a staggering 50 million downloads. Draw Something also provides a substantial income as it's a paid for app (although there is a free version with in-app advertising) plus users can make in-app purchases to gain more colours to draw with.
In Conclusion, deals like the ones made for Draw Something and Instagram are relatively few and far between. For every success story there are hundreds, probably thousands, of apps that just don't make it. Saying that though, even if your app isn't snapped up by a bigger fish in a multi-million pound/dollar deal, there is still plenty money to me made from having a moderately successful app.
I think that the moral of the story is that if you have what you feel is a good idea for an app then you should do all you can to make that idea a reality. If it works then great, hopefully you'll make some money and enrich some people's life' with your wonderful app. If it doesn't really take off then you can hold your head up high and say that you tried your best – and at the end of the day that's all that any of us can really hope for in life is it not?
Image provided courtesy of Shutterstock