King.com, Supercell pioneer a new type of app powerhouse

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Breaking into the top apps lists in Apple's (NASDAQ:AAPL) App Store or Google (NASDAQ:GOOG) Play is no easy feat, and it's made even more difficult when your company hasn't already produced a series of other top ranked apps. While these app lists are usually dominated by some of the larger players like Zynga (NASDAQ:ZNGA) and Rovio, smaller development houses are making a name for themselves by making their way onto these charts.

Currently, the top two apps in the top grossing apps category in the App Store are Candy Crush Saga from online gaming company King.com (owned by Midasplayer.com) and Clash of Clans from mobile developer Supercell. Both companies offer the games for free and monetize through in-app purchases. And both companies are raking in a lot of money.

In April, for instance, Candy Crush Saga was the top grossing app every single day, explained Hendrik Koekkoek, an analyst with Distimo. That doesn't mean that Supercell's Clash of Clans was far behind though. "While Clash of Clans was higher [in terms of revenue] in March and the months before as well, Candy Crush now makes more revenue: 52 percent of the revenue of these two apps combined," said Koekkoek. Also according to Distimo, from April 1 to April 24, Candy Crush generated 81 percent of the downloads of the two apps combined. 

Even though Clash of Clans nabbed the second spot on the top grossing apps list, in February, App Annie listed Supercell as the top publisher by monthly game revenue, beating much larger firms like Electronic Arts despite having far fewer titles to monetize (Supercell only offers Clash of Clans and Hay Day). Supercell has two games compared to EA's 972 (No. 3 in revenue) and Gameloft's 263 (No. 6 in revenue).

So what are Clash of Clans and Candy Crush Saga doing that countless other developers and content publishers haven't mastered? Supercell declined to comment and King.com did not respond to a request for comment. However, in March, Distimo found that Candy Crush Saga had more downloads globally than any other free app, beating out YouTube, Google Maps, 4Pics1Word and Temple Run 2. Of those apps, Candy Crush Saga is the only one to also make an appearance on the list of top 5 revenue generating applications from the App Store, from the same Distimo report.

Pink signifies Clash of Clans, and blue represents Candy Crush Saga.
Source: Distimo

According to the above graph* from Distimo, which shows the overall gross revenue for both of these apps, between December and January you can see a huge spike for Candy Crush Saga as it jumps from the ninth spot to the second spot on that list. And by March, both apps are closely battling each other for the top grossing revenue spot.

Content publishers and developers could probably take a few notes from King.com and Supercell. For one, the freemium model really is here to stay. (Even Electronic Arts and its 972 games understand that.) Users are willing to try new games if they're free, and once they've invested time into them, many users will also invest in in-app purchases, which can often be more costly than the initial price of premium games.

But what the success of these two games really shows is that the type of game itself can vary, as long as it can rope in users and offers strong incentives for in-app purchases. Clash of Clans is an action strategy game while Candy Crush Saga is a casual puzzle game. Each of these games is going to attract a different demographic. And if there's room enough in the App Store for two very different smaller players to succeed, there's likely room for more.--Sandhya

*Distimo AppIQ provides download and revenue estimations for any app worldwide, based on daily sampling of transactional app data (>3 billion downloads/quarter) and publicly available information. When calculating downloads and revenues for individual apps, Distimo's methodology excludes that app's transactional data from the analysis to preserve the confidentiality of their users' data.

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