Said my friend as he described why his company stopped building native apps. It’s easier to build a business on the web. How could that be? The browser-based web app ecosystem has existed for more than 20 years while the app ecosystem has existed for only 6. One thing is for sure, it’s not because there are fewer websites than apps.
My mind then wandered through this ‘saturation’ concept. If anyone remembers high school chemistry, saturation is the state where a solution is no longer capable of absorbing a new compound. For example, you can continue to stir salt into water until the solution becomes saturated, at which point any new salt added will immediately sink to the bottom no matter how much stirring you do. At some point, the water has just had enough salt.
Why is it that the mobile app medium has become saturated with apps while the mobile web is still capable of absorbing more websites? Is there anything we can do at this point?
How Bad is the Mobile App Ecosystem?
At Branch, we’ve created the deep linking standard for app developers that helps companies drive growth and re-engagement to their business. Half a billion people per day access apps across the thousands of apps on the Branch network. We can see the problem first hand.
I took a look at the breakdown of relative traffic (measured in relative total rankings) to the top 1000 non-games in the iOS App Store and the results are frightening. Just look at this graph:
The punishing app adoption power law
As you can see, as you approach even the 10th most popular app (Skype), it’s a small fraction of the traffic seen by the top app (Facebook). As you approach the 1000th app (Pixable), you’re at just 0.2% of the total adoption of the first.
Now, take a step back. In the past four weeks, there were 45,000 new apps submitted to the iOS App Store alone. The chances that any of them will ever break into the top 1000 are effectively 0%, and even if they did, they’re still not seeing any amount of traffic to build a successful business.
Monetization is an even worse story since it’s how a majority of these apps plan to pay rent and keep running. According to a study done by Activate, the top 20 app publishers, representing less than %0.005 of all apps, earn 60% of all app store revenue. Ouch.
These types of mathematical relationships are called a power laws, and are often used to explain the phenomena behind the 80/20 rule (80 percent of the value is centralized in 20 percent of the distribution). More generally, a power law will explain why value is centralized to a small distribution of the ecosystem.
The app ecosystem has an extremely harsh power law where app adoption and monetization are heavily skewed towards the top few apps. It’s nowhere near 80/20. In fact, it appears to be more like 99% of the value is centralized to the top 0.01%. Let’s call it the app store 99/0.01 rule.
This would indicate that the App Store became saturated back in 2008 when we hit 1000 apps.
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