While Robert Nay recently made headlines for developing a chart-topping iPhone app, the 14-year-old from Spanish Fork, Utah will need to create a paid or advertising-supported follow-up to his Bubble Ball puzzle game in order to make any money.
Since Apple opened the iTunes App Store in July 2008, independent developers have created tens of thousands of titles with the hopes of striking it rich through paid downloads (where they keep up to 70 percent of the sales) and more recently via advertising or premium upgrades.
With increased competition from major game developers and globally recognized brands, however, most independents lose money on their smartphone applications that are now also created for Google’s Android mobile operating system.
Yet it is still possible to get rich right away developing iPhone apps. Just look at how some of the top app makers to come out of nowhere did it.
New and noteworthy app all-stars
Ten days after this addictive puzzle-solving game debuted for 99 cents on the iTunes App Store last October, Cut the Rope was downloaded more than one million times. Ten days later, another million copies were sold. By year-end, this Moscow-based development company founded by two 28-year-old brothers had an absolute blockbuster with the sale of more than five million apps.
Co-founder Semyon Voinov, who previously worked as an artist with Helskini-based mobile development firm Digital Chocolate before joining forces with his brother full-time last spring, recently told us that independent developers can still thrive making iPhone apps because “there is no need to have a big team or business connections.”
That didn’t stop major game publishers from taking notice. Zeptolab’s first app, the 99-cent slingshot game Parachute Ninja, sold a respectable 300,000 copies with New York City publisher Freeverse. Last June, Zeptolab scored a publishing contract with Chillingo - the UK-based behemoth behind Angry Birds and other iconic titles. Chillingo, which markets games for an undisclosed cut of the action, was impressed with Zeptolab’s production values and chart-topping potential.
“We saw the great talent ZeptoLab had and the innovative gameplay design they had created,” said Chillingo co-founder Chris Byatte. “We realized that with even more polish, the game would have massive consumer appeal and we’re proud to see all the success we’ve helped them achieve.”
Venture capitalists are paying more attention to iPhone app developers, including this San Francisco-based startup that was founded in September 2009. Stanford University MBA student Daniel Terry, who briefly worked in the product department of large mobile app developer Tapjoy, saw the success of freemium games on Facebook.
Freemium games like Zynga’s FarmVille cost nothing to download but hit players up for premium gameplay along the way. Before Zynga launched the official FarmVille app for the iPhone, Pocket Gems earlier last year scored a nice success with the similar game Tap Farm. With five titles in the App Store, Pocket Gems last month raised $5 million from Sequoia Capital, a backer of Google, Yahoo! and other groundbreaking companies.
The poster child for overnight success developing iPhone apps, Steve Demeter boasted of making more than $250,000 in profit only two months after his color-matching game Trism debuted in the App Store in the summer of 2008.
“The key is to make an application that instantly proves its value,” Demeter explained when we interviewed him a year later.
The San Francisco-based Demeter, who was 30-years-old when Trism started selling for $4.99 a download, predicted early on that that the game would generate more than $2 million in profit. It’s estimated that Trism cleared $1 million, but increased competition in the App Store apparently killed its trajectory and there has been no major follow-up since. While he acknowledges that creating one of the first blockbuster hits for the iPhone changed his life, Demeter learned to keep his financials closer to the vest.
“Talking about numbers made me realize why people don’t talk about numbers,” he said. “You get people asking for loans, and (in meetings) that can become a stumbling block.”
Demeter said he expects to come out with Trism 2 in the coming months.
This former Sun Microsystems engineer literally quit his day job shortly after reportedly making more than $600,000 in only one month (including $37,000 in a single day) in late 2008. Legend has it that Nicholas, based in Wake Forest, North Carolina, programmed much of iShoot with his 1-year-old son on his lap during his off hours.
After a sluggish beginning trying to sell the shooter game out of the gate at $4.99 per download, Nicholas struck gold while giving away a “lite” version of the game for free. Thereafter, iShoot shot to number one on the free charts. Of the nearly 2.5 million consumers who downloaded the game in those opening weeks, more than 300,000 ended up shelling out a discounted three bucks for the complete game.
iShoot continued to gross hundreds of thousands of dollars thereafter. Naughty Bits, the iPhone app development company Nicholas formed, also enjoys modest success with the 99-cent Rhumb Line board game app.
Not every million dollar iPhone app is a game. To date, this 99-cent novelty app - which makes your iPhone look like a steamy mirror after a hot shower - has been downloaded more than three million times.
The London-based, twenty-something developers behind GreatApps - who modestly claim to be just “three Greek guys playing with a Mac” - came together in November 2008. The company is now marketing technology that detects how firmly users tap touchscreen devices so that different responses can be programmed based on the amount of force applied.
The husband and wife team behind Washington D.C.-based Imangi Studios understood how to expand their business by the time the iPad was released last April. In 2008, Keith Shepherd stopped developing software for the healthcare industry to start his own company in his Dupont Circle apartment.
While Shepherd paid some of his bills developing puzzle games like the $1.99 Little Red Sled, the company scored its first major hit with the 2009 Flight Control-like line-drawing game Harbor Master. Rather than selling the app for $1.99 - its iPhone price - Imangi offered the free Harbor Master HD to iPad owners on day one and it became a top downloaded iPad app right away. During Apple’s 2010 Worldwide Developer’s conference last June, Shepherd’s wife and business partner Natalia Luckynova estimated that Harbor Master was downloaded to approximately 10 percent of all iPads at that time.
Although it’s difficult to track how much money Imangi is making from Harbor Master HD, the company generates income from advertising and premium “In-App” purchases that range between 99 cents and $4.99.
When NBC cancelled its drama Heroes last year, actor Greg Grunberg had a flourishing app company to keep him busy. In 2009, Grunberg created Yowza, a free app that distributes mobile coupons on behalf of more than 300 retailers including Crate & Barrel and Gap. The company claims it has more than five million users that can redeem deals at 15,000 nationwide locations. Yowza, which Grunberg told the LA Times is profitable and currently raising money, charges participating merchants $59 per month, per store.
These household names were unknown three years ago
Wealth and fame from iPhone applications is not restricted to opportunistic individuals. A few small development companies that operated in relative obscurity before the App Store debuted are now among the most notable media and technology companies on the globe.
Rovio Mobile: Founded eight years ago, this Finnish developer enjoyed modest success until the 2009 release of Angry Birds. This game-changing title, which has generated more than 50 million downloads across multiple platforms including Android and iPad, is poised to become a multimedia crossover hit.
Tapulous: Before getting acquired by Disney last year, this company developed some of the top grossing iPhone apps of all time including Tap Tap Revenge 3. The Palo Alto-based company was founded in February 2008 by serial entrepreneur Bart Decrem with funding from several Silicon Valley investors.
Lima Sky: This New York-based developer created Doodle Jump, which at 99 cents is the top selling iPhone app of all time. Lima Sky president Igor Pusenjak told the Wall Street Journal that Doodle Jump had more than 200,000 downloads on Christmas Day alone.