Olivia Moore, a consumer partner at A16Z with a keen eye on app market trends, shares insights into the staggering $320 billion Apple has paid developers. Discover the emerging social media apps like Be Real that are changing the game, and learn the secrets behind achieving and maintaining a top rank in app stores. Olivia discusses unexpected hits, including a viral talking dog app and a surprise contender from 2012. Plus, she explores the evolving monetization strategies and the rise of user-generated growth, providing invaluable takeaways for aspiring app founders.
The top three apps that dominated 2022 were Be Real, TikTok, and Gas App, indicating a shift towards new social experiences.
The introduction of widgets on iOS 14 and the integration of AI models into mobile apps contributed to app success and engagement.
While it may be easier to break into the top app rankings, staying at the top has become increasingly challenging due to competition and the need for consistent value and user retention.
The podcast discusses the monetization strategies of apps, including in-app purchases and evolving subscription pricing models.
Deep dives
Top Apps of 2022: Be Real, TikTok, and Gas App
The top three apps that dominated 2022 were Be Real, TikTok, and Gas App. These social media apps spent the most number of days at the top of the US app store. This indicates a shift towards new social experiences, different from the traditional feed-based platforms like Facebook, Twitter, and Instagram. The success of these apps suggests that users are looking for more authentic and interactive social experiences, moving away from the highly curated profiles and feeds. Be Real, for example, offers a unique front-back camera approach that allows for more genuine content. Gas App focuses on anonymous compliments among friends, targeting high schoolers with a candid and engaging experience. This trend signifies a desire for more delightful and personal interactions within smaller groups of close friends.
Tech Shifts Driving App Success: Widgets and AI
Two significant tech shifts in 2022 contributed to the success of certain apps. The introduction of widgets on iOS 14 enabled users to personalize their home screens and lock screens, creating a new opportunity for apps with widget features. Apps like Noted and Locket Widget took advantage of this shift, providing users with interactive and customizable experiences. Another tech trend was the increasing integration of AI models into mobile apps. Platforms like Snapchat and Lensa leveraged AI algorithms to offer users various creative and expressive features, such as AI-generated artwork and avatars. These tech shifts allowed for innovative and engaging experiences, captivating users and driving app success.
The Evolving Nature of App Success and Virality
The landscape of app success and virality has undergone significant changes. While it may be easier to break into the top rankings, staying at the top has become increasingly challenging. The number of new apps reaching number one has increased, and many apps quickly lose their top spot after only a day or even half a day. A crucial factor contributing to app rank is daily downloads, with approximately 100,000 downloads per day required to hit number one. However, acquiring downloads is only the first step. A successful app must also provide consistent value, retain users, and encourage word-of-mouth sharing. The viral nature of apps like TikTok presents opportunities for rapid growth, but the competition among startups for attention on such platforms remains intense. Moreover, app creators are increasingly conscious about managing virality by limiting sudden influxes of users that they may not be able to retain effectively.
Monetization Strategies: Charging Upfront vs. In-App Purchases
The podcast episode discusses the various ways app developers decide to monetize their apps. It explores the question of whether it is better to charge upfront for the app or rely on in-app purchases. The speaker highlights that gaming companies, both traditional and app-based, have paved the way in this area. They emphasize the concept of 'whales' in gaming, where a small percentage of users generate significant revenue by making large in-app purchases. The podcast suggests that most apps tend to opt for in-app purchases similar to games, providing users with the opportunity to pay for specific items or deliverables within the app.
Evolution of Subscription Pricing and Expanding Target Markets
The episode also delves into the evolution of subscription pricing in consumer apps. Initially, many subscription apps charged $60 per year, but the challenge of generating substantial revenue from such pricing led to new strategies. Some apps now employ tiered pricing or charge higher fees for additional features. The example of Tinder testing a $500 monthly subscription is discussed, with the recognition that while there may be skepticism, charging higher prices does not negatively impact those paying less. Additionally, the podcast touches on the shift of subscription apps towards business-to-business (B2B) models or partnering with insurers to access a new market and offer more sophisticated products.
A few weeks ago, Apple released a stunning statistic: they’ve paid developers over $320B — yes, billion! — since the launch of the App Store in 2008, highlighting the cast opportunity in the marketplace.
And around the same time, a16z Consumer Partner, Olivia Moore, compiled a list of the top apps across the US app store throughout 2022.
In this episode, you’ll get to hear which apps made it to the top and what they have in common. Hint: the big winners were in social, but perhaps a new wave of social apps!
We also get the scoop on what it really takes to not just hit #1, but stay there. This episode highlights numerous surprising examples ranging from a new-age Beanie Baby app, a viral talking dog, an app from 2012 that finally broke the top 10, and the Chinese app that’s been at #1 for a majority of 2023, and it’s not TIkTok!
There are endless learnings about how new founders can take advantage of these opportunities.
Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. For more details please see a16z.com/disclosures.
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