iPhone games are selling like hotcakes. So are ALIF shares :)
iPhone apps are latest gold rush
Open the way to the U.S. market for Canadians
By David George-Cosh and Grant Surridge, Financial PostDecember 31, 2008
Since Apple launched its iPhone applications storefront via its iTunes software, more than 10,000 applications have been created.Photograph by: Canwest News Service, Canwest News ServiceThe iPhone has minted a gold rush. In just two years, the iPhone has become not just a gold mine for Apple Inc., but also for companies that create the software programs that run on the device.
Since Apple launched its iPhone applications storefront via its iTunes software, more than 10,000 applications have been created, with more than 300 million downloaded onto iPhones and iPod Touches.
IPhone applications are specially designed software programs that work exclusively on the iPhone. They vary from sports updates to video games to utilities that allow people to use their iPhones as flashlights or as locators of the nearest Tim Hortons.
For media companies especially, iPhone applications are about staying ahead of the curve. In industry parlance, it's called being where the audience is. Optimistic industry observers such as Dale Fallon, director of Score Media Inc.'s mobile division, expect that within two or three years the audience for sports-based mobile Web sites and software in Canada will be the same size as the current Web audience.
Meanwhile, the applications act as incremental revenue streams, double as effective marketing tools and allow smaller media companies to extend their brands outside Canada.
At Pelmorex Media Inc.'s Weather Network, the iPhone application WeatherEye is just part of the channel's expanding mobile arsenal. The network's offerings include a mobile Web site, desktop widgets and an application launched in March for use on the BlackBerry device.
The free WeatherEye has been downloaded almost 150,000 times since the end of October, with just under half of those by people outside of Canada. The French version of the application is the most popular weather application in France.
"From a [return on investment] perspective, it absolutely makes sense," said Mark Thompson, director of The Weather Network's mobile division.
Apple takes a 30% cut of any iPhone applications that are sold at its virtual store, but for applications offered for free, the companies do not have to share their advertising revenue with Apple.
The surge in iPhone applications has also benefited developers. With companies now scrambling to find anyone capable of making these programs, some developers command upwards of $200 per hour and applications cost between $15,000 to $50,000 to create.
Certain developers have found themselves in the spotlight after finding some of their applications -- which retail for less than $3 -- have yielded more than $250,000 in sales, convincing some to give up their day jobs in the process.
“It’s a market that has appeared out of nowhere, really,” said Mike Ferrier, a partner with Toronto-based software developer Unspace Interactive.
“All of a sudden, anyone who knows how to make an iPhone app … are making lots of money off it. It’s one of those things that doesn’t come around very often but when it does, the first people through the gate make a bundle,” he said.
Mr. Thompson said The Weather Network charges about $20 per CPM (or, $20 per thousand times the advert is viewed), which is comparable to what major website charge.
John Levy, chief executive of Score Media Inc., which owns the specialty cable channel The Score, said the best-case scenario would be revenue of $500,000 from the Score Mobile iPhone application alone within the first year. Score Media reported total sales of $36-million in fiscal 2008.
"You could make money a lot quicker and easier this way than you could by developing Web sites and wait for consumers to sign up," said Peter Cooper, founder of MobileOrchid, a Web site devoted to iPhone application news.
Score Media has already tapped a New York firm to sell advertising on the application in the United States, now that about 60% of the estimated five-million monthly page views generated by the iPhone application come from the United States.
"When we look at our ability to get into the States, iPhone is really leading the way for us now," Mr. Levy said.
The applications make particular sense for information like ticker news, weather and sports scores -- the kinds of information that people want to check quickly, often and while they are on the go. And media companies enjoy another advantage in the iPhone application world: brand recognition. They stick out immediately amid thousands of applications, Mr. Cooper said.
"This is going to be very important with iPhone-application marketing," Mr. Cooper said. "It's an easier sell for media companies that can advertise their applications on Web sites that get tens of-millions of hits than the independent ones."
The mobile advertising market is expected to hit US$12-billion by 2013, compared with about $1.7-billion this year, according to research company Informa Telecoms &Media.
Mr. Thompson said that WeatherEye is so far one of the few Canadian applications that generate enough traffic to offer a solid opportunity for advertisers. But media companies are eager to develop the technology now, not only to take advantage of future advertising revenue, but to stay in front of their audience.
"If you're not in the mobile space, you're missing a big opportunity to communicate with your consumers," Mr. Thompson said.
gsurridge@nationalpost.com---------
iPHONE APPLICATIONS - Categories: There are 20 categories of iPhone applications. The most popular are Games, Entertainment and Utilities -use your iPhone as a flashlight or to convert units of measurement. - Price: Over 3,000 applications are free, and about 4,400 cost less than $1. The most expensive application costs $899, a software tool that allows the user to remote control a video surveillance system. The average cost is $2.97. - Amount: Over 10,000 different applications have been downloaded since the iTunes App Store went live five months ago. - Downloads: Total downloads of iPhone and iPod Touch applications have hit 300 million. Total sales are at about US$300-million, of which Apple takes a 30% cut. - WN: The Weather Network's WeatherEye is the most popular free application for weather in Canada, but almost half of the total downloads have come from outside the country. - Score: The Score's iPhone application is the most popular free download in the Sports category. It lets users follow updates of live sporting events. - Popularity: The most paid popular application today is The Price is Right game, while a video game called Space Deadbeef is the most popular free application.
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