Instagram success paves way for photo, video app growth


By Sandhya Raman

Facebook's $715 million acquisition of photo manipulation app Instagram in April caused a fury among app developers specializing in photo apps. A month later, Facebook scooped up the development team behind Lightbox, another photo editing app that allows Android devices users to take and share photos across multiple social media platforms. This week, Google, in an effort to differentiate itself in the fiercely competitive OS market, acquired Nik Software, which makes the iOS photo sharing application Snapseed.

Instagram boasts a hefty 80 million iOS and Android users, with another 9 million iOS device owners using Snapseed. These numbers aren't static either. Instagram regularly records more than 100,000 new installs every day.

Instagram's success, in part, comes from its ability to provide both photo editing technology and social networking. In August, mobile analytics firm Distimo published a report that measured relative downloads of social networking apps using Facebook as a benchmark.

Click the chart above to view a larger version.

The graph above shows that Instagram garnered more downloads than Facebook in several countries in July.

With Facebook and Google, two mobile powerhouses, investing in photo editing technology, and last week's announcement of the iPhone with its new 8-megapixel camera, the market for mobile photo apps doesn't seem to be slowing down anytime soon.

Growth in the photo and video app market

Instagram's success lies in its simple interface and its ability to marry two popular forms of mobile content: social networks and photo and video apps. Mobile analytics firm Flurry issued a report earlier this year examining the fastest growing app categories according to time per active reader. Flurry found that photo and video apps grew by 89 percent from October 2011 to March 2012, and social networking apps grew 54 percent over the same period.

Mobile photo and video app usage is on a steady upward trend.

To put this in perspective, mobile social networking was already a popular activity with the average user spending 24 minutes per day using these types of apps. Photo and video usage is still in its nascent stage, adding up to only 231 minutes a month in March, when Flurry last measured data by app category. However, that number has been on an upward trend since July 2011.

But what has made photo-editing and sharing apps so popular as of late, given that mobile versions of websites like Flickr have been around for years? The rising smartphone penetration rate and advancements in photo editing software for mobile have made these types of apps more popular. Handsets now come with faster processors and rely more heavily on cloud storage. They are some enabled with built in HD cameras and can handle taking higher resolution photos and video.

Further, developers can now more easily add photo-editing functions into their apps. For example, Aviary, a creator of Web tools, launched an API in May that allows mobile app developers to add aspects of photos editing to their apps. Photo editing is becoming an expected part of apps rather than a stand-alone app. This same pattern can be seen with check ins: Foursquare has used this model to move from simply enabling users to check in to locations to providing local deals and reviews of area businesses.

Indeed, Charlotte Miller, an analyst with Juniper Research, explained in an interview with FierceMobileContent that Facebook could eventually fold Instagram functions into its core Facebook app. Facebook has said it doesn't plan to do so.

"I do think at some point they do plan to fold it in. It doesn't make sense to have that separate photo social network when Facebook can fold it in," said Miller.

Instagram's success generated plenty of tame copy-cats

Instagram still has the lion's share in the mobile photo market, but there is room for new apps that capitalize on aspects of the photo app ecosystem that are either underserved or don't yet exist. But a newcomer to the mobile photo app market cannot simply design another photo editing app. Instead, he or she must find a way to integrate photos into a new idea or service.

Miller noted, "Photo editing apps all do essentially the same thing. A lot of it does come down to personal preference. Many people are using more than one photo app at a time." Providing that key differentiator is vital to succeeding in this market.

The mobile photo manipulation market can be broken down into a few key areas. There are apps that focus on photo editing and manipulation, apps that highlight photo sharing, apps that attempt to piggyback on the success of Instagram, and apps that want to use the success of Instagram to make strides in video.

"What Instagram serves to the industry is a mechanism of understanding that ease of use in taking photos and in managing them. The Instagram process is now going to be a vehicle that other apps use; they'll license something from Instagram or find their own way of doing a similar process," said Gerry Purdy, Principal Analyst of Mobile & Wireless at MobileTrax, in an interview with FierceMobileContent.

Type of app

 App Contenders

 Function and chances of success

Photo editing apps

Camera+, Hipstagram

Neither of these apps are newcomers, and together have amassed millions of downloads. The competition is heating up, however, and Hipstagram laid off all but its core employees in August. With larger industry players investing in similar technology, it could be rough for these two.

Instagram add-on apps

Instatext, InstaCollage Pro, InstaPicFrame, iPrintagram

These apps aim to add on to the Instagram experience by adding text or image overlays. Their influence is limited given that they require Instagram to work.

Novelty and holiday photo apps

Zombiematic Camera, Paper Camera, Instant Santa

Novelty and holiday camera apps use some of the same tools as photo editing apps but work around a theme or event. Novelty apps may acquire a lot of users, but they often lack the ability to keep active users, a key metric for developers.

Video editing apps

Viddy, SocialCam, Mobli

Video apps are in their early stages and are currently only capable of producing very short videos (Viddy produces 15-second clips). These apps (and their networks) will need to be able to handle larger files before catching on with more users.

Can video achieve the same success as photos?

Video seems the natural next step for mobile developers and content producers to follow. As the market becomes more saturated with photo apps, it seems like a smart strategy to invest in the technology to make video happen.

Video, however, is far more complicated than single images.

Miller suggests that while there is room in the market for a mobile video app, network restrictions prohibit video sharing from gaining traction in the same manner as mobile photo apps.

"Mobile video may have to come later on when network capabilities have been strengthened and people start having greater data allowances," said Miller, noting that reviving unlimited data plans could speed up this process.

"LTE is going to help, but it's not necessarily widespread yet," Miller added. "This market will mature as the 4G market does."

Purdy also noted that we're still in the early stages of photo imaging. Developers and consumers now have access to different aspects of imaging manipulation, crowd sourcing and location-based services they couldn't even a couple of years ago. He imagines developers eventually working to create 360 degree views of events, such as concerts, by integrating crowd-sourced video, an idea that would require "tremendous amount of cloud computing activity."

The mobile photo and video industry can be expected to continue to grow, but before real advancements in video editing and sharing can be made, carriers and device makers will need to develop devices with more advanced hardware and find ways to prevent further crowding networks.

Miller said that the iPhone 5, for instance, is slightly better at recording video, is better at processing and functions better in low light. She also predicted that mobile video would get its start with iOS users.

"It is interesting to look that Instagram came to iOS first; I do think it's likely that a similar video community will spring up with the iOS community as well," argued Miller. She added that iOS users are more active and spend more money on apps.

"We haven't really solved optical zoom or how to take professional-style photography via mobile," said Purdy. "Over the next 10 years that's going to change really change, as we add more software and cloud services."