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Report: In-app purchases to overtake download revenues by 2013
Here's an interesting report from Juniper Research. According to their work, mobile app revenues will reportedly grow from the current US $6 billion to a whopping $11 billion by 2015. And the majority of that revenue will come not from the standard download fee, but instead from in-app purchases, according to Juniper. The firm claims that in-app purchase revenue will top one-off download fees by 2013. That seems hard to believe, given my current anecdotal usage, but there's no question that in-app purchases are growing by leaps and bounds as a form of sizable revenue for app developers. Jupiter's report also says that the biggest problem facing mobile app growth is just plain discovery -- with so many apps out there, it's hard for users to find new apps that they like, so what you tend to see is clumps of apps getting popular rather than users going out and finding their own favorites. Services like OpenFeint and Game Center have certainly helped to share information about new apps, and of course sites like ours try to spotlight as many apps as we can. But with a store full of hundreds of thousands of apps in it, it's tough to let more than a few hundred really shine. Maybe as we move forward, developers and Apple will come up with better solutions to help do that.
Microsoft also declares record revenue, but Apple still on top
Apple isn't the only technology company that's posting record revenue this year -- Microsoft has brought in $16.20 billion in the last quarter, which stands as a record with a 25 percent increase from the same time last year. The Seattle giant also increased net income to $5.41 billion, so it looks like Halo Reach (in September) and Office 2010 (in July) sent things in a good direction. Apple announced revenue of $20 billion last quarter, which puts the Cupertino company on top by $4 billion in terms of incoming money. But Microsoft still rules net income, with Apple pulling in $4.31 billion for the same quarter. That may change next reporting period, given Apple's steam in the industry so far, but no matter which way you slice it, both of these companies are rolling in the dough.
AT&T clocks up 2.6 million net new wireless subscribers, bigger profits in Q3
AT&T's balance sheet just keeps looking happier and happier every quarter. In spite of the company's somewhat questionable hardware choices -- such as picking the ugly option from both Samsung's and LG's Windows Phone 7 platters -- it now proudly boasts a total of 92.8 million active wireless service lines. This comes off the back of a 2.6 million net subscriber gain over the third quarter of 2010, a record for this period of the year. Churn, or the rate at which people left AT&T, was also at its best ever for the quarter, coming in at a lowly 1.32 percent, while postpaid integrated device (read: smartphone on a contract) activations reached above the eight million mark. Total net profit was $12.3 billion, thanks to the sale of Sterling Commerce and a one-off tax adjustment, but in cashflow terms the company made $4.0b in the quarter. That's a lot of dinero, no doubt aided by Q3 being the first full reporting period after the iPhone 4's launch, we just wish some of AT&T's other phones weren't quite so unappealing.
Nokia reports improved earnings for Q3 2010, will still 'streamline' up to 1,800 employees out of a job
Nokia's quarterly results have just been made public and the company's devices plus services sector has actually improved its income relative to last year: €7.2b of revenue was collected over the past three months versus €6.9b in the same period a year ago. Operating profit has also pepped up, going from the previous €785m to €807m. You'd think this would augur well for Stephen Elop's beginning at the helm, but the new man in charge is also presiding over a fundamental restructuring of operations at Nokia, which is expected to result in the redundancy of up to 1,800 employees globally. There are no specifics to tell us who'll be losing out, but the aims are the boilerplate tasks of increasing efficiency, simplifying operations, and reducing time to market. Anyway, we doubt the great people of Finland will be pleased.
Report: Android ad revenue beats iPhone, iOS and smartphone market still growing
Millenial Media has released its latest report on cross-platform mobile advertising, and the iPhone has lost another step on the Android platform. According to Millenial's reporting, revenue for advertising from the Android platform has exceeded iPhone-only revenue. That's not quite as bad as it sounds -- the Android platform, as we already know, has outstripped the iPhone in terms of user numbers, just because there are so many more available handsets and carriers for those devices. Android ad requests, according to the company, are up a crazy 1283% since January of this year, and have gone up 26% month over month. That's not to say that iOS is slouching -- its revenue growth increased 316% in the last quarter, and impression growth increased by 156%. Apple is still the leading device manufacturer on the network, with a 30% market share, and the company makes two of the top four "connected devices" in the iPad and the iPod touch, with the Sony PSP and PS3 rounding out that list. It's also interesting to note that smartphone impressions overall are still growing -- this isn't a down and dirty fight between the manufacturers yet, as there are still new customers to grab out there. Smartphone impression share went up 7% month-over-month, so this is still a growing market.
AMD sees a tablet chip in its future, and an end to the core-count wars
AMD told us that it wasn't terribly interested in the iPad market, and would wait and see if touchscreen slates took off, but CEO Dirk Meyer changed the company's tone on tablets slightly after reporting a $118 million net loss (on $1.62 billion in revenue) in a Q3 2010 earnings call this afternoon. First revealing his belief that tablets will indeed cannibalize the notebook and netbook markets, he later told investors that he actually expects AMD's netbook parts to start appearing in OEM slates in the next couple of years, and that AMD itself would "show up with a differentiated offering with great graphics and video technology" when the market becomes large enough to justify an R&D investment. Elsewhere, AMD CTO of servers Donald Newell prognosticated that the number of individual CPUs on a chip won't go up forever: "There will come an end to the core-count wars," he told IDG News. Just as the megahertz race was eventually defeated by thermal restrictions, so too will the number of cores on a chip cease to increase. " I won't put an exact date on it, but I don't myself expect to see 128 cores on a full-sized server die by the end of this decade," he said. So much for our Crysis-squashing terascale superchip dreams, we suppose.
Lord of the Rings Online doubles revenue since going free-to-play
Lord of the Rings Online Executive Producer Kate Paiz announced during a panel at GDC Online 2010 today that Turbine has done it again: Lord of the Rings Online has doubled its revenue and created over a million new accounts since going free-to-play early last month. That's the second MMO Turbine has taken from a paid subscription to a hybrid microtransactions-based business model, with Dungeons and Dragons Online doing the same thing last year (important to note: Paiz was in charge of both transitions, switching to LotRO in July). Paiz told us after the panel that LotRO wasn't in trouble, but rather that Turbine did the math and decided the switch would work. "We knew there was more out there for us," she said. Paiz also shared that 20% of LotRO's former players have returned to the game since the switchover, and that the game has seen a 300% increase in peak concurrency, with three times the number of players online simultaneously, and a 400% increase in active players total. 53% of players have used the in-game microtransaction store (which sells everything from mounts and outfits to XP boosts and character slots), and as you can see above, extra storage slots are extremely popular in the store. And even paid subscriptions have increased. Turbine's lesson seems to be that, as Paiz said during the panel, "when you tell people you no longer have to pay for it, they come in droves."
HTC grows profits in Q3 to $360 million, revenues rise to $2.45b
It's good to see that HTC's omnipresence in the smartphone market is paying off in nicely growing financial figures as well. Having reported $268 million in profit for Q2, the Taiwanese company is today touting a $360 million tally for the period between July and September 2010. Android is again fingered as the chief catalyst for this growth, which is best illustrated by comparing numbers to last year, when HTC managed to pull in $184 million during Q3, or almost exactly half of this year's haul. Total revenues were also appropriately inflated, up to $2.45 billion, and analysts seem in agreement that HTC's future is looking rosy. So long as the G2 hiccups remain an isolated incident, that should indeed be the case.
MMO industry sees increased market share, but less revenue per user
The online gaming industry analysts at Screen Digest recently shared some good news and bad news with Western MMO developers. The good? According to their report, the MMO market in Europe and the U.S. increased to $1.6 billion last year, up from $1.4 billion in 2008. However, the average revenue gained per MMO player declined 10 percent over the same time period, with recurring subscriptions pulling in around $13 million in 2009. (That's the bad news.) This decline, of course, is a result of new business models in the MMO space, such as microtransactions and free-to-play online titles. These new models appear to be shaking things up a bit -- but we suppose as long as that first number keeps going up, the second one can do whatever it likes.
The state of the subscription MMO: Revenues up, WoW's stranglehold slipping
While MMO subscription numbers are largely hidden from public eyes, GamesIndustry.biz found a report by Screen Digest that delivered solid figures for the rate of subscription growth and revenue from the Western market. It's a classic case of "good news, bad news" for the industry. The good news is that MMO subscriptions rose from $1.4 billion in 2008 to $1.6 billion in 2009, a respectable increase, especially when you consider the increase of free-to-play and microtransaction titles. This number is expected to hit the $2 billion mark by 2014. The bad news is that the average revenue per player is down 10% during the same time period due to "the popularity of cheaper premium subscription services." So more people are playing and paying, but they're spending less per person. The analysis noted that World of Warcraft's domination in the subscription MMO market is slipping, going from 60% to 54% during that time period. Screen Digest says not to count the subscription MMO out, however: "We maintain our view that subscriptions will continue to play an important role in the MMOG sector. Certain consumer groups and types of service are well suited to subscriptions but we also acknowledge the growing success and adoption of microtransaction-based MMOGs as an alternative business model for operators."
NimbleBit: Over half a million playing Pocket Frogs, "3-4%" buying in-app purchases
I've been playing NimbleBit's freemium Pocket Frogs game since it was released last week, and apparently I'm not the only one -- Ian Marsh tells TUAW that the game has been downloaded by half a million people so far. The company is also seeing 200K daily active users, and while Marsh couldn't share exact stats on how many people have taken advantage of the game's in-app purchases, he estimates that 3-4% of the active users have bought stamps or potions in the game. Over on Twitter, he says that the 99 cent charges are the most common, making up half of the total purchases. But the $29.99 optional charges make up 8% of the purchases, and actually contribute to 49% of total revenue. In other words, just a few people are responsible for half of the game's total revenue -- the freemium model hard at work. Marsh says that NimbleBit is working on updating the game, too. They don't plan to increase the size of the in-game frog "catalog," since the whole point of the game is to have the player make decisions about which frogs to keep and breed, but they are working on something tentatively called the "Frogodex," which would passively track every frog ever collected by players in the game. They're also considering integrating Game Center in terms of leaderboards and achievements in the future -- they originally decided to go with Ngmoco's Plus+ system because it "provides a number of services crucial to social game developers which Game Center does not," including backing up game data and doing things like browsing your friends' frog habitats. And finally, Marsh says the company has been overwhelmed by all of the positive feedback, and the feature request list "is growing faster every day." The next big update they're planning, he tells TUAW, will be "a rare new pattern color mutation" that he thinks people will like. And he also tells us to look out for "exclusive surprises in-store for upcoming holidays." Sounds like NimbleBit has a nice freemium hit on their hands, and we'll look forward to updates in the future.
APB has 130K registered players, high average playtime and revenue per user
Realtime Worlds as a company has been suffering from all kinds of problems lately, but how's the game doing? With a very short press release, the company (currently "in administration," which is the British version of bankruptcy) has announced that APB is hosting 130,000 registered players. That's actually not too bad for a brand new MMO -- while real population numbers are often hard to come by, the most recent estimates would have the game beating Star Trek Online's current active base. And STO has actually done pretty well, considering how tough it is to start up a new MMO. Realtime Worlds still isn't home and dry, though. At 130K players, APB is just barely doing better than Tabula Rasa at its peak, and we all know how well that turned out. And APB's model means player registrations isn't necessarily a sign of good health. While the press release claims that the average player is playing four hours a day and the average paying player is spending $28 a month, APB's unlimited free social hours and the ability to "spend" in-game points rather than real money could be twisting those figures upwards a bit. Our colleagues at Massively also point out that while Star Trek Online was created relatively cheaply, APB's creation was reportedly much messier and more costly. Still, with a dark cloud over the rest of Realtime Worlds' affairs, they might as well grab a silver lining where they can. If the company survives this launch, APB could have enough of a player base to make itself profitable.
Android developer anecdotally claims AdMob brings home the bacon
In February 2009, Arron La's $0.99 Advanced Task Manager was one of the first paid apps on Android, allowing T-Mobile G1 users to do what was then a novel thing -- close applications. (We immediately bought a copy.) Today, the app is all but obsolete, its functionality baked right into Android's core, but Arron's still making thousands of dollars a month. Why do we bring this up? Because nine months after Arron released the pay-first version, he unleashed an ad-supported variant as well... and since that day, each has contributed about the same amount ($30,000) of money. It's not exactly an object lesson in what's possible on the 70,000-application-strong Android Market, as this gentleman obviously had quite the head start, but it does show that when it comes time to monetize your best-thing-since-sliced-bread app, there's more than one option -- ads can be an equally good revenue source. Find rays of hope for indie development (and several stormy clouds for comparison) at the links below. Update: Did we say 50,000 apps? We meant more like 70K and counting as of July. Thanks to the astute commenters who pointed this out. [Thanks, Shannon G.]
MMO market predicted to swell to $8 billion
No matter how many different games you play, follow, or even care about, the fate of the bigger MMO industry affects them all. Every game, from World of Warcraft to Fantasy Earth Zero, is playing in the same sandbox. But for our favorite genre, it looks like the size of that sandbox is only trending upward. Gamasutra reported recently on a new study that predicts the global MMORPG market will reach a total of $8 billion in worth by the end of 2010, a significant increase from the $5 billion in 2009. So what's spurring the increase? According to the study, the growth in the Western market has been slow but steady, while the Eastern market has been making great strides, led by companies such as Nexon and NCsoft. The study also predicts that the traditional subscription-based revenue model is losing steam as an aggregate, citing it as one of the causes behind the slower growth in the Western side of the industry. Free-to-play isn't everyone's cup of tea, but considering what it seems to be doing to the economic side of our hobby, it's certainly not going anywhere soon.
Atari sales down in Q1, online is the glimmer of hope
Atari announced that revenues were down 65 percent to €19.3 million ($25M) in the first quarter of its fiscal year ending June 30, 2010. The company didn't reveal any profit or loss data, but given its loss during the previous fiscal year, it's pretty safe to guess that Atari isn't doing so hot. Last year's Q1 included Ghostbusters and The Chronicles of Riddick: Assault on Dark Athena, while this year had, according to the company, "only one major game" ... Sandlot Sluggers. A small piece of "good news" during the quarter, which also included another major executive shuffle at the publisher, was that online revenues were up 320 percent to €8.4 million ($10.9M). The much-needed money injection was thanks to digital distribution sales and subscriptions for Star Trek Online and Champions Online. Some of the hopes Atari has for the rest of the year include the reboot of Haunted House in September, The Witcher 2 next spring and "numerous casual and social online game releases based upon Atari's classic video game brands."
Microsoft reports $4.5b in profit, a record $16.04b in revenue
This time last year, almost to the day, Microsoft saw its first annual sales decline in history. Things are looking much better now, with the company reporting a record $16.04 billion in revenue, a 22 percent year-over-year increase for its Q4 revenue ending June 30th. In fact, revenue is up across all divisions, with Windows and Windows Live seeing the biggest uptick (43.5 percent to $4.55 billion) followed by Entertainment and Devices (27.3 percent to $1.6 billion). Operating income, on the other hand, paints a different picture of E&D, showing a $172 million loss for this quarter (compared to $141 loss in Q4 last year), but looking over the entire fiscal year, the home of Xbox and Zune this year did $679 million in operating income -- a sizable jump to the $108 million from 2009. The overall operating income for the company is $5.93 billion this quarter (net income $4.52 billion), a 49 percent increase over last Q4, and $20.36 billion for the year (18 percent compared with fiscal 2009). We know you're interested in comparisons, so we'll just go ahead and break it down for ya: the gang in Redmond is still beating Apple in both revenue ($16.04 billion vs. $15.7 billion) and profit ($4.52 billion vs. $3.25), but that margin feels smaller than it used to. Enough to keep the rumored pressure off Ballmer? Frankly, we don't even think biplanes could knock the man off the top of a tower, but Windows Phone 7 has a lot to prove, and fast. Microsoft is hosting a webcast of its report later today -- usually much ado about nothing, as far as we're concerned, but we'll listen in and let ya know if anything interesting pops up. Update: Some interesting Xbox 360 statistics. 1.5 million consoles were sold this last quarter. Xbox Live has 25 million members, and for the first time since its inception, the revenue from the Marketplace exceeded subscription revenue.
AT&T announces 26 percent earnings growth for Q2, $4b profit
There may be plenty of tales of intrigue behind the scenes, but it looks like AT&T is still doing alright when it comes to raking in the cash -- it's now announced a 26 percent increase in earnings for the quarter that's just ended. In terms of hard numbers, that translates to a profit of $4.02 billion (up from $3.2 billion a year ago), and $30.8 billion in revenue, which is actually up just 0.6 percent over the previous year, although that modest gain is partly attributed to AT&T's sale of Sterling Commerce to IBM for $1.4 billion (which is not included in its results). Other notable stats include 3.2 million iPhone activations for the quarter (a company record), 1.6 million "organic net adds" in wireless subscribers for a total of 90.1 million, and the company's first ever billion-dollar revenue quarter for its U-verse services -- all of which led AT&T CFO Rick Lindner to say that the company is "pleased, pleased across the board." Full press release is after the break.
Flurry: In-app purchases generating lots more revenue per user
Analytics firm Flurry has announced that in-app purchases are generating $14.66 per user per year in June of 2010, which is a few times larger than it has been in the past. Previously to 2010, the games tracked were generating only a few bucks per user per year, but in January the total jumped to around $9, and it's now in the double digits. Flurry says that money doesn't include ad revenue -- it's strictly profit from in-app purchases, either unlocking features or selling virtual goods. Whenever you talk about making money on free games, you have to talk about Ngmoco -- that company famously choose "freemium" as its business plan, and business appears to be good. Exec Simon Jeffery confirmed exactly that at a conference earlier this week -- while he can't discuss actual revenue, he says things are going well. And of course other companies who already know how to make money from free games (like Zynga, whose Farmville recently released on the iPhone) will see this as a big green light for joining Apple's platform. The revenue per user isn't the only important stat here -- Apple also has plenty of users to offer up. Disney's free Toy Story 3 app released recently, and has already picked up 1.7 million users, a good number of which probably bought the 99 cent in-app game offered up. Lots and lots of users spending a surprising amount of money inside their apps means lots and lots of revenue for both iPhone developers and Apple.
AMD has record $1.65B second quarter, still loses a little money
First, the good news: AMD pulled in $1.65 billion in revenue -- a record for the second quarter! Now, the bad news: the company still lost money. Just a (relatively) little bit, though, with a net loss of $43 million or $.06 per share. That's five percent more revenue than the first quarter of 2010, and a massive 40 percent boost over the second quarter of 2009, in which it lost $330 million net. What changed? Sales of graphics hardware in particular, up eight percent over last quarter and a huge 87 percent from last year, driven by success of the Radeon HD 5000 series graphics cards. Likewise, sales of mobile processors were up 18 percent over last quarter. Net profitability? Keep this up, AMD, and it's not far off.
Intel has its best quarter ever, brings in $2.9b profit
Sure, smartphone and tablets might be the Next Big Thing, but desktop computing ain't dead yet -- just ask Intel, which just reported its best-ever quarter with a $2.9b profit on $10.8b in revenue. That's an increase of $445m in profit from last quarter and a whopping $3.3b from last year, all driven by record laptop and server chip revenue, as well as a 16 percent increase in Atom revenue. What's more, the average sale price of all those chips went up, and selling more chips at a higher price is always good for business. Intel's got a call to discuss these numbers in depth at 5:30PM ET, we'll let you know if we hear anything good.
