Thoughts on the “studio-ization” of the application business

2 years after its launch the Facebook platform can almost be considered mature and the new belle in application town is Twitter (with apparently already over 11K applications). Due to the very low barriers to entry both platforms have become very crowded in a short period of time so it is time to ask the question what type of application developers can be successful on these platforms going forward. Nobody certainly beats out the single developer that can build and launch an application at very low costs but we have seen a few really successful studio approaches to the application business in the past year. When you look at the list of the most successful of those, RockYou and Slide were leading the pack in the beginning with Zynga and Playfish dominating the rankings as of late. As the Facebook platform matured the business model of these application developers matured as well and I would propose 4 success factors for a studio approach:

  • Focus on one vertical that you understand really well: Zynga and Playfish only do games and they are extremely good at it. Studios like RockYou or Slide with their very diverse application will most likely struggle in the long time.
  • Find a success formula and stick to it: Digital Chocolate describes their secret sauce for iPhone games by Originality x Quality x Ubiquity / File Size x Dev. Cost
  • Leverage the inherent strength of the platform that you are developing for: it is social for Facebook and real-time communications for Twitter.
  • Have a revenue stream besides advertising (i.e. virtual goods): even app developers that run large scale networks like Slide struggle to make enough money by selling ads.

Let me know your thoughts on this topic – and stay tuned for more announcements in the app studio space next week.

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