Trickle Down Mobile Economy Is A Big Holiday Opportunity For App Developers

In many ways, the mobile industry is a trickle down economy. The market is set at the top by the operating system creators: Apple, Google, Microsoft and Research In Motion. Smartphones and tablets are then made from those operating systems by manufacturers like Samsung, Nokia, HTC, Motorola and LG  (plus Apple and RIM building their own devices) and sold to consumers. These manufacturers set up a calendar in to optimize device releases when consumers will be more likely to purchase them, mostly in the late spring to early summer and then in the fall for the holiday season. 

App developers are at the whim of the calendars of manufacturers and OS providers. Developer fortunes rise and fall through the year as new devices are released. But like the rest of the mobile industry, app developers need to tailor their efforts to take advantage of the holiday rush.

The best quarters for mobile manufacturers are always at the end of the year as consumers rush to buy smartphones and tablets for themselves and loved ones. For instance, Apple sold an astounding 37.04 million iPhones and 15.43 million iPads - to the tune of about $46 billion in revenue - during the holidays in 2011, still its biggest quarter ever. 

The trickle down effect eventually gets to app developers. App downloads and usage spikes around the holidays, particularly around Thanksgiving and Christmas. The reasons for this are two-fold. First, consumers have new devices in their hands and want to see what they can do. Think about it. What do you do when you first get a new smartphone or tablet? The likely answer is go download some apps and then play with them.

App Downloads & Traffic Spike During The Holidays

The holidays are also a time when people tend to relax and consume. In the United States, this means consuming copious amounts of food, beverages and… media. As consumer behavior shifts to adapt to the Mobile Revolution, mobile apps are as much part of people’s media consumption as are television, movies, music and video games. Mobile apps are made to encompass all of those media categories and more. 

“We do see an increase of application usage over the long holiday weekend in Thanksgiving,” said Peter Farago, vice president of marketing for mobile analytics company Flurry in an email to ReadWrite. “In particular, on Thanksgiving day, usage jumped by about 20% for that Thursday compared to the average Thursday in November. Friday was also up by 11% over the average November Friday. The increase in app usage across the long weekend, Thursday - Sunday, is 10%.”

Games are a particular beneficiary of holiday app traffic spikes. Chartboost, a distribution and monetization service for iOS and Android games, noted a 50% spike in traffic to games over the recent Thanksgiving holiday compared to an average Thursday. Chartboost derives its data from 8,000 Android and iOS games.

“Game traffic spikes because consumers have more down time to play games,” Farago wrote. “U.S. consumers typically relax during the day, watch TV, spend time with family and perhaps even nap. It's a day comprised of a lot of downtime, perfect for using games and apps on one's phone, which is exactly what American consumers do.”

Boston-based Localytics also saw an increase in app traffic during the Thanksgiving holiday this year. “Overall we saw a spike of 13% more app sessions than an average Thursday - that's on par with a normal Sunday, which is the day of the week we see the most app activity,” said Daniel Ruby, director of online marketing for Localytics in an email.

This very scenario played out in my own household on Thanksgiving. Not only did I download Where’s My Water for my 4.5-year-old nephew to play, I ended up buying a $1.99 expansion for him so he could try out some new levels he had not yet beaten. He also spent time playing Angry Birds Star Wars alongside other members of the family. 

The Benefits & Pitfalls Of Cost Per Install (CPI)

These factors all lead to a big opportunity for app publishers. But not one without difficulties. For instance, Apple freezes the iOS App Store during the week of Christmas (this year between Dec. 21 through Dec. 28) where app rankings and feature apps are locked into place. This leads to a rise in the cost per install (CPI) from the mobile ad networks during that period and a mad rush by developers to get their apps into the store before the lockdown starts. Chartboost notes that CPI rose 8% for the Thanksgiving. See the chart to the right.  

“All of the big publishers spend millions during this period which makes it very difficult for developers with smaller budgets to rise above the clutter. The tradeoff here is that during this period tons of folks get new devices and download new apps. This results in a significant boost in revenue for most developers during the holiday season,” said Dave Bisceglia, CEO of Boston-based TapLabs, an iOS game development studio. 

The bottom line for the entire mobile industry, from manufacturers all the way down to app developers: If you play your cards right, plan ahead (and maybe get a little lucky), there is a significant opportunity during the Holidays. In many aspects, the mobile industry mirrors traditional retail and service businesses that rely on the Holidays for key part of the year's revenue. As the Mobile Revolution continues to mature, expect those trends to grow both in volume and potential.

Lead image courtesy of Shutterstock.