With the rise of mobile phones, comes the rise of mobile apps. There are roughly three million apps in the Google Play and over two million apps in the Apple App Store, however, these apps tend to go unnoticed and are downloaded by a select few.
Those interested in investing in technology know that it’s uncommon for an app to become a blockbuster hit, especially overnight, but mobile games seem to be an exception. Generally speaking, mobile games have gained the most traction in this sector of the market.
With specific emphasis on iPhone and iPad apps and Google Play apps, keep reading for an overview on how to invest in mobile phone apps and what elements an investor should be looking for.
Popular Mobile Phone Apps
Are you looking to make a technology investment? Better yet, are you looking to invest in the mobile web industry? If so, it is recommended that prospective investors look at both the top-grossing and the top-downloaded gaming apps, as this will give some insight into what consumers value in an app.
Based on data administered by Statista, gaming apps account for almost 25% of app downloads in the Apple (NASDAQ:$AAPL) App Store. Though some apps in the Google Play store are free to download, the top earning Android apps are gaming apps as well, according to another Statista report.
With that in mind, according to 2015 data from App Annie – which collects data from July 2010 to July 2015 on the most popular iPhone and iPad apps – Candy Crush Saga was the most downloaded game worldwide. Originally launched in November of 2012, the app has since reached the daily top iPhone game ranking in more than 100 countries. Coming in second and third place on this list is Fruit Ninja, which was also launched in November of 2012 by Halfbrick Studios, and Angry Birds, launched in December of 2009 by Rovio.
It is important to note that the list of top games for revenue differs from the list of most downloads. In regards to all-time revenue, Clash of Clans, which was launched in June of 2012 by Supercell, tops the rankings. In fact, Supercell, which is a mobile game development company headquartered in Helsinki, dominates a majority of this list. For instance, Clash of Clans is first, their game Hay Day is sixth, and Boom Beach, another Supercell game, comes in at number 10. That said, Candy Crush Saga takes the number two spot, and is the only game that makes the list for both revenue and number of downloads. Additionally, launched in November of 2012, GungHo Online Entertainment’s (TYO:$3765) game Puzzle & Dragons slides in at number 3 on this list.
According to Tribune.com, in 2016, Apple’s top five downloaded apps of the year were social media apps – and only one gaming app. The most downloaded social media apps of 2016 include the following: Snapchat (NYSE:$SNAP), Facebook (NASDAQ:$FB) Messenger, Instagram, PokemonGo, and Facebook itself.
In terms of Google Play, Google (NASDAQ:$GOOGL) separates its top apps over the last five years into two lists: the top installed games and the top installed apps. The top installed games include Candy Crush Saga, Subway Surfers, Temple Run 2, Despicable Me and Clash of Clans, and the top installed games on the Google Play include the following: Facebook, Facebook Messenger, Pandora Radio, Instagram, and Snapchat.
How to Invest in an App
If you are thinking about investing in technology and you are leaning towards investing in a mobile phone app, it helps to decipher the similarities between apps so you can see what sort of characteristics make an app popular. Around 70% of the top-downloaded apps in the Apple Store, for instance, are based around a swipe mechanic. This clearly shows the defining role that Apple’s touch technology has played in shaping mobile gaming. In addition to the swipe mechanic, most of these games are directed at casual gamers. What this means is that these games have easy-to-follow rules and require little or no commitment, which allows those with a smartphone to enjoy a game without needing an advanced skillset.
With that in mind, according to US News, investing in apps comes down to building relationships and an understanding of the founders mindset. Founder of AG Asset Advisory, Anthony Glomski has said that “if an investor is approached with an opportunity, first and foremost I’d avoid it. When you are investing in an app it’s really speculative instead of making an investment.”
As always, before investing in technology, it is important that an individual keeps an eye on the market. Co-founder and chief creative officer for Detroit Labs, Dan Ward has given numerous suggestions to the US News and World Report which will help prospective investors to know what they should be looking for when investing in apps.
Ward suggests that investors watch for trends, such as Snapchat and iMessenger which allow friends to virtually communicate and shop on companies like Amazon’s Zappos. According to Ward, it is all about “being where users are spending their time.”
Andrew Chanin, CEO of PureFunds, has a similar suggestion to Ward. According to Chanin, those looking to invest in mobile phone apps should consider diversification when doing so. Chanin states, “by diversifying your exposure to multiple app companies, you may be able to reduce individual company risk.”
If you want to make a technology investment but you do not want to put all your eggs in one basket, keep in mind that app ETFs are always an attractive option. For instance, PureFunds offer the following ETFs:
- FactorShares Trust PureFunds Video Game Tech ETF (NYSEARCA:$GAMR)
- PureFunds ISE Big Data ETF (NYSEARCA:$BIGD)
- Purefunds Solactive FinTech ETF (NASDAQ:$FINQ)
- PureFunds ISE Mobile Payments ETF (NYSEARCA:$IPAY)
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