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Premium App Store Could Multiply App Store Revenue Opportunity

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One knock on the App Store for the iPhone and iPod Touch is that consumers’ price-demand elasticity has driven down prices to the point where most games and apps are $.99 or $1.99.  While volume is so high that there’s a big economic reward for a hit app, it’s a lot less than if games and apps were priced in the $10-20 range.  Some large gaming companies have said they won’t conduct large scale game development projects for the iPhone/iPod Touch as long as the pricing is so low.  This must be bothering Apple, which has to realize that attracting more development resources to its platform is the key to winning the smartphone platform land grab.

It’s not surprising that there have been rumors that Apple might release a Premium App Store with $19.99 games.  This would be a huge boon for the entire ecosystem–developers could make more money so would put more resources into the platform, consumers would have access to better quality games and apps, and Apple would sell more devices.

If Apple can create status around premium apps–in the same way the Mac, iPod, and, now, the iPhone, have high status brands–and get people to want the world to see how many premium apps they have, the App Store market could explode.

Written by sandykory

February 19, 2009 at 9:30 am

Posted in Uncategorized

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