Spot-on analysis by Drew Crawford of the mobile game market today:
The fundamental problem with selling games is that you have 150,000 games that you could play instead. If you think you have a unique game, you probably don’t. And even if you do, it doesn’t matter, because nobody will ever find out — they’ll just play whatever game is in the top list or that their friends saw in the top list, because nobody is playing any appreciable fraction of 150,000 games.
This is, basically, a problem that is unique to the games market. If you want to take notes on your iPad for example, there are maybe 25 apps that realistically will do what you want. And so you if you are really motivated you can try all those apps for yourself. Or you can look on the internet and find an article where somebody’s done that for you. But nobody’s playing 150,000 games. Not me, not you, not IGN. Nobody.
Crawford’s right that this is more of a problem in the game market, but it’s definitely a problem everywhere else, too. See John Roderick’s version about the music business and my previous posts on the deluge of competition and difficulty of sustaining paid sales in today’s App Store.
Many people have misinterpreted my position to be the blanket statement that “all paid apps are dead”, and plenty of articles argued against that straw man, but I’m not sure anyone credible has ever said that unconditionally. Some paid apps do well, but that number is getting smaller. The problem isn’t price, per se — it’s ever-increasing competition in every category, with much of it free. Downward pricing pressure is simply a side effect.
A secondary problem for paid-up-front apps, which I’d like to see writers like Dan Counsell address, is sustainability. You can get decent money briefly with a paid-up-front app, but how do you fund its maintenance and future improvements? Paid apps have no good, effective, generalized solution — they only have a handful of bad options that most customers hate. Freemium apps have more palatable options.