Forecast: Average app selling price will plummet to 8 cents by 2017


The average selling price of all downloaded smartphone applications (both free and paid) will fall to just 8 cents by 2017, according to a new Strategy Analytics forecast.

Paid apps in Apple's (NASDAQ:AAPL) App Store currently average $1.68, reports app store analytics firm But with advertising and virtual goods sales driving a greater percentage of mobile app revenues, Strategy Analytics states free apps are on pace to represent more than 91 percent of all downloads by 2017. Josh Martin, the company's director of apps research, believes the decline in revenue and increase in maintenance costs (e.g., app submission and approval personnel, marketing and other maintenance costs) may force some storefronts to consider new revenue streams or higher revenue splits.

"Paid downloads remain an essential component of the app ecosystem," Martin said. "Paid downloads will remain an important way for smaller developers to monetize their efforts. For developers committed to paid downloads, transitioning to tablets may be the smartest way to preserve the business model over the long term. App stores will also see a revenue crunch as more revenue is earned from advertising-- revenue generated outside the bounds of the app store--and will need to prepare. Newer platforms such as [Microsoft's (NASDAQ:MSFT)] Windows 8, [Research In Motion's (NASDAQ:RIMM)] BlackBerry 10, Tizen and Firefox are building their operating systems and storefronts with this knowledge, which should go a long way to making them attractive to developers and end users."

Despite the increasing dominance of free apps, paid downloads are still on pace to generate more than $57 billion in global revenues between 2008 and 2017, Strategy Analytics notes. Consumers will download more than 350 billion smartphone and tablet apps during the forecast period: By 2017, the Google (NASDAQ:GOOG) Play storefront will drive more than 45 percent of smartphone app downloads, and Apple's will generate 56 percent of tablet downloads.

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