App Monetization, Industry Forecasts

App Annie: View to Play is Here to Stay

Latest report from App Annie supports the claim that the market is choosing View to Play as the business model of the future for the mobile ecosystem

Last November, while most of us were already preparing for the holidays, AppAnnie released a very interesting report that might have gone unnoticed by some of you. One of the Key Learnings is that Free-to-Play is giving way to View-to-Play. In other words, the fastest growing business model in the next 5 years in mobile apps will be in-app advertising and not in-app purchases.

In app advertising is growing at 24% CAGR and expected to surpass $110B by 2020 while Freemium is trailing behind

About App Annie and the report

The App Market data company needs no introduction from us and has become the source of data for most of the industry with regards to app store data. The company has over 600 employees in over 13, many of which are focused on researching data. From time to time, App Annie generates industry reports and forecasts and shares those through it’s blog and other content channels.
Company website – https://www.appannie.com/
Report Download Page – http://go.appannie.com/report-app-annie-app-monetization-2016-dg

What is View to Play?

If you haven’t heard the term View to Play, it’s probably because it’s new. When the app store just emerged, apps were sold and not given away for free. With the introduction of In-App Purchases, developer quickly started offering free apps to attract more users and find different ways to monetize them. This led to a new breed of game companies that specializes in conversion optimization, analytics, segmentation and performance marketing – the term Games as a Services was coined to reflect these new practices as well as Free to Play gaming. View to Play is similar in approach but instead of pushing users towards in-app purchases, the optimizations are focused around ad based monetization models – hence, “View to Play”. Users who want to advance in the game are often offered rewards and incentives for watching ads and a new breed of companies emerges with a toolset that includes special analytics capabilities around ad revenue measurement.

What is Driving the Change

In a recent article we covered how CPI is increasing and companies needs to adapt quickly. Well, some have already started and the App Annie report hints that more companies will be adopting the view to play model in the future.

These companies are realizing something that others have not. The CPI increase is highly correlated with the expected increase in ads LTV. They are both been driven by the same forces – the total mobile advertising spend is increasing twice as fast as the user growth. IAP revenues are actually increasing slower than the user growth and are becoming more and more concentrated in top grossing apps.

The cost per install is increasing over time as well as the average ad based revenue per user while In-App Purchase models are declining

This means that companies who transition quickly to view to play will be far better prepared for the future increase in CPIs. That is, as long as they can also adapt their measurement and optimization practices with a platform such as SOOMLA Traceback.

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