How to make money on mobile applications
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The number of mobile applications grows exponential fast with 1,000 new applications published each day, and 1 million already available. The competition among applications is fierce, but the applications that become popular generates large revenues. One example is WhatsApp, which was acquired by Facebook in 2014 for $19 billion. The application market is a winner-take-all market, that everyone can participate in by developing their own application. There is no cost in terms of money to develop an application, and thus developers only need to risk their own time. The aim of this thesis is to gain an understanding of the mobile application market, and to analyze it from a business perspective. It is especially one topic this thesis elaborates, and that is the analysis of the self-developed application in relation to the application market. There are three main subjects that are analyzed associated with this topic, and are as followed.1. The developing and marketing of mobile applications.2. A complete business model for mobile applications3. The impact of network externalities influencing mobile applications.1. In order to do an in-depth analysis of the main factors influencing applications, I developed and analyzed my own mobile application. During the development I obtained experiences of the vast amount of time and effort behind the development of applications, and the factors that need to be present in order to meet the users needs. When the application was finished, I conducted an extensive marketing through advertising on Facebook. During the marketing the application became ranked as the 26th most popular application on the Norwegian App Store, and the 2nd most popular word game. Due to the application s popularity, I was interviewed by the newspaper Byavisa, the TV channel TV2, and in the book Mobile App Growth Hacks. The the- sis presents an analysis of the effect from the marketing and the various interviews, along with the effect from other marketing channels utilized. The primary finding in relation to this topic, is the large effect marketing has on the application s popularity and the application s ability to acquire new users. This indicates the importance of marketing for applications that struggle to be noticed.2. The thesis presents a complete business model for the self-developed application by using Osterwalder s business model ontology. The business model examines how applications create value to their target customers, and provides an in-depth analysis of the self-developed application s cost structure and how it generates revenue. The main findings in relation to the business model, is the large impact the application s user activity has on the revenue generated, and that the revenue subsidizes the costs to a large extent.3. An extensive analysis of the networks externalities influencing the self-developed application is performed. The analysis presents the large influence network externalities have on applications ability to maintain existing users, and acquire new. Due to the network externalities, this may lead to an exponential increase or decrease in the application s popularity. By applying a modified epidemiological model on the self-developed application, the application s network externalities are modeled. The model is calculated based on the application s user activity and the effect from the network externalities, and thus provides mathematical equations that can be used by developers to gain more control over the effects.There are three other findings in this thesis worth noting. First, the psychology in applications are one of the key factors to increase applications user activity, and thus the revenue. The application s psychology increases users desire to continue using the app, by focusing on users emotions and behavior. Second, there are five key performance indicators that analyze the application s strengths and weaknesses in order to increase users engagement, and thus increase the application s revenue by focusing on its most profitable customers. Third, the application s popularity are primarily determined by the application s extent of the Word of Mouth concept. Word of Mouth is basically passing of information from person to person by oral or digital communication. In the application market, this occurs when people share their opinion about an application to others. The effect from the concept is large, and has to be present in order for an application to maintain its popularity.