"The field isn't level, but it's more level than other playing fields," said Erin Rackelman, CMO and cofounder of Portland-based Night & Day Studios, last week.
She was talking about the app marketplace, which offers more than 700,000 products in the Apple store alone and where previously unheard-of companies like Zynga and PopCap have bested more established brands with their sales volume.
Part of their success can be attributed to the newness of the mobile market, less than a decade old and forced to address constant technological change in that time.
We thought it only made sense to talk to a marketing executive in that field, someone who represented the so-called Little Guy.
After all, the David of today may be the Goliath of tomorrow, and Night & Day Studios' partnership with enterprise mobile software outfit ScrollMotion late last year suggests that it may be in the midst of just such a transition.
The partnership added 800 apps to Night & Day Studios' catalog of 100, making it one of the largest independent kids' app developers. They're planning to release thirty more apps in 2013, with Little Red Wagon making its debut today.
The company doesn't just make apps of its own, though. Notably, Night & Day Studios also handles licensing and takes on agency work because "we don't make enough money in the app store alone," said Rackelman.
Despite that admission, apps released by Night & Day Studios perform extremely well. Peekaboo Barn, part of the Peekaboo series for toddlers, has been played more than 50m times worldwide, and the company has increased revenues by more than 90% for two consecutive years. What's it doing right?
Tell us about your business approach.
Depending on who you talk to about the shelf life of an app, you'll get a different answer. I've heard colleagues say that they measure launch success much like the opening of a film: First-weekend sales are it. Similarly, when an app launches, you either get a feature placement or you don't, which has a huge effect on sales.
That lasts a week or two. The best scenario is that you make your initial investment back in that week. After that, you hope it stays afloat, but it so easily, and quickly, can sink like a stone.
This is not our approach. Our strategy is to make more money over a much longer tail. For us, that's been the most important lesson: striving to make a good product initially, launching it, and then getting as much feedback from users as we can. Then, as time passes, we find ways to market an existing product, by adding new and exciting features one, two, or even three years down the line.
That strategy appears to be paying off. Why do you think bigger brands are underperforming, as Bjorn Jeffrey, CEO of app developer Toca Boca, recently described?
I agree with him. People at the helm of a big brand think that you can just churn out an app and, because the brand has a huge following, it will do well. Sometimes this works, but many times it does not. Mobile is a brand new marketplace, and it is constantly, seemingly minute by minute, evolving.
Because the marketplace is so competitive, brands can't always rely on their reputation and following. They may need to consider hiring or collaborating with experts to adapt and translate their brand to mobile. New developers are coming out every day with incredibly clever concepts, and I've seen completely unknown developers outsell the biggest children's brands out there.
What Toca Boca is doing is a great example of creating new brands through the app store. Our studio really admires their work.
Does the consumer have similar misconceptions about the mobile app world?
The biggest misconception is about price point. Beautiful, high quality apps cost a lot more to make than people think. When you start to dig into it, the price point they retail for is simply unbelievable.
People are selling apps for 99 cents that, in the case of a big, multi-player game, could have taken a quarter of a million dollars to produce.
A lot of consumers never consider what it costs to make an app. We're making the same games with the same amount of complexity as console games that retail for $39.99.
Has your target audience become accustomed to a certain price point then?
Yes, and it's difficult, as apps offer a very wide depth and range of experiences, but they all seem to have a 99-cent ceiling. In some ways, it already feels too late. The market is so cutthroat and don't forget we're now more regularly competing with freemium models.
Would it help to improve communications with consumers?
Unlike almost any other industry I've worked in, with apps your customer is totally anonymous. You can only begin a dialogue if they reach out to you. This is definitely an ongoing challenge for us.
That's surprising, especially with all the Big Data buzz.
There are very limited metrics, which can be frustrating. We know things like how many times the app was opened, the average length of game play, but we don't know anything about the consumer or how they are using the app.
However, privacy is incredibly important to us, and the upside is that kids who buy our products are protected.
Fortunately, parents organically started posting videos of their kids playing with our apps on YouTube, and we've learned a ton from watching them. We also appreciate our fans giving us direct feedback through social media.
I hope we can continue to grow this dialogue, but for now we simply try to make a great app that we and our children love. We hope it delights kids and their parents, and they return to us to check out more of what we're working on.
That's discouraging that you can't get more data, but it could all change, given the advances in tech today. What developments excite your shop?
Our CTO and developers' obsession lately is what's going to happen next with TV. Apple's iOS already runs flawlessly on Apple TV. No one's connected the dots of what UI will look like when apps are being used on a TV screen. What is domestic life going to look like if companies can advertise to you on TV and you can buy and use those products immediately, right there on your TV?
You can now develop games for Xbox using the same language we've been using for iOS development. We've been thinking a lot about designing our product in a format that crosses the lines between mobile and living-room devices — and how that's going to be consumed.
We all need to be thinking that way because designing products will be very different if hand gestures in the air are controlling them rather than touchscreen or keyboards or remote controls. I think this is on the immediate horizon, and it's going to change family media consumption dramatically.
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