Relating App Store Revenue Rank to Revenue

From two of my recent Quora posts:

Question: How much money does the average mobile game make?

There are tons of games on the App Store and Google Play. Everyone seems to know about the hit games. How much revenue does the run-of-the-mill game generate? Is the revenue curve steady and flat? Do some genres do much better than others?

My answer:

Question should be rephrased:

How much money does the MEDIAN revenue rank game make.. ie game with revenue rank 100,000 out of about 200,000+ on iOS Apple US?

Answer: near zero.

Relation between mobile game revenue and revenue rank is a severe power function, more severe than the bookstore relation estimated 10 years ago and used to justify “long tail” inclusiveness in online stores.

I have estimated that top 10 revenue rank games derive 50% of revenue whereas the “long tail” of mobile game revenue ranks — games ranked 10,001 – 200,000+ derive only 5% of revenue. Long tail here is far smaller than books where revenue rank books 10,001 – 200,000 derive 30% of revenue.

To go back to the first question, I have a more precise answer. I have estimated that the trailing 12 month global mobile game revenue, less 30% cut from Apple and Google is $11.2B. Mobile game long tail — games ranked 10,001 to say 200,000 get 5% or $560M. Divide that by # of games in long tail — 200,000 – 10,001 = 189,999 560,000,000/198,999 = $2,847 is the AVERAGE yearly revenue of a mobile game in the long tail– with revenue rank > 10,000.

Question: How can you estimate the revenue of a mobile app based on its revenue rankings in App Annie?

There should be an exponential drop off, so if someone has done a study with a few data

My answer:

It is a power function with an upward kink at game rank #3-4

mapping update
As far as games, these are my current estimated revenue run rate after 30% store cut worldwide on iOS and Google (note portion of revenue is 4:1 iOS to Google)

Big 3 — what I call the “and, of, the” of a Zipf power function.

Clash of Clans $1.8B (Supercell)
Puzzle and Dragons $1.6B (GungHo Online)
Candy Crush Saga $1.0B (King)

Next 7
Monster Strike $900M (Mixi)
Game of War: Fire Age $600M (Machine Age)
Brave Frontier $400M (Alim/gumi)
Hay Day $400M (Supercell)
Farm Heroes Saga $350M (King)
Battle in Warring Games $200M (Sumzap)
Pet Rescue Sage $175M (King)

Top 10 World Wide Mobile Games by Revenue Rank receive estimated 50% of mobile game app store revenue >>> $6.5B out of $11B

In contrast, I have estimated “long-tail” of mobile game app store revenue — games ranked 10,001 + to 240,000 receive around 5% of revenue.

This is a lot less that the original “long tail” estimates for book sales of book ranked 10,000+ of around 30%

Not much loss in cutting out the “long tail” in mobile games on the app store in return for great gain in app store discovery and quality of merchandise.

RIP Long Tail Justification for Online Store Inclusiveness: 2004:2014

A Startup Street Map of San Francisco 2000-2012

The streets of San Francisco south of Market Street (SoMa) have changed tremendously since the 70s TV cop drama “The Streets of San Francisco” was shot on location. The stars of the show, Karl Malden and a young Michael Douglas, surely would be amazed at the transformation.
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The transformation, of course, has been the tremendous growth in high tech startups locating in San Francisco since 2000, the year the new AT&T (then PacBell) ballpark opened in SoMa. Lately, there has arisen a backlash against this growth ranging from bus blocking to paint bombings to blogger bitching about the long lines at Tartine Bakery and Blue Bottle Coffee.

Below is a graphic record of this transformation via an interactive Google map of 1,971 venture-funded startups by street address by founding date between 2000 and 2012. The data comes from a join of two tables in a CrunchBase database made accessible by Enigma.io, a public database infrastructure company.
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By linking street addresses to founding dates, we show graphically the flow of startup locations over time, moving early on from South Park up 2nd toward Market and also fanning out over time from AT&T Park South and Southwest toward Market again.

For those who live in San Francisco or who visit regularly, a startup street map of the city is just a graphic record of something we have already sensed. For some, the spreading dots depicted above might look like lava oozing out an erupted volcano – unstoppable and suffocating.

New startups are not a threat to San Francisco’s greatness. There is plenty of cool, albeit gritty, in-fill space available in Mid-Market area near Twitter and Square or south of Mid-Market (SoMMa?) along 8th, 9th and 10th. Dare I mention Dogpatch for those founders who want a “Blade Runner” industrial decay vibe? Locating startups in both areas would enrich city life.

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The challenge to San Francisco’s greatness is the explosive growth of the startups already rooted who wish to remain in the city. Some of the notables are listed below. It seem reasonable to assume that about 10 startups among the 1,791 listed our TechCrunch database– less that 1%- will experience at 10-fold increase in the next 5 to 8 years from less than 100 to 1,000+ employees located in the city.

While urban areas like San Francisco make great homes for software startups, it is not clear that the city, or any built-up urban area, can scale well for software startups used to homey in-fill spaces in great neighborhoods like South Park or lower Potrero Hill. Two examples come to mind.

                           Founding Dates of Some Notable SF Start-Ups
StubHub 2000 CrunchBase 2007
Splunk 2003 Lyft 2007
Trulia 2004 Task Rabbit 2008
Digg 2004 Yammer 2008
TrueCar 2005 Rdio 2008
Reddit 2005 GitHub 2008
Twitter 2006 Bandcamp 2008
Justin.tv 2006 Square 2009
Zynga 2006 Pinterest 2009
Eventbrite 2006 Vungle 2011
Marin Software 2006 Circa 2011

Strictly speaking, Dropbox was founded in Massachusetts in early 2007, but relocated to San Francisco shortly thereafter. It has quickly scaled to 650 employees with a decent shot of tripling that in the next five years. To anticipate that growth, Dropbox has moved recently into a sleek office complex with room to spare in Mission Bay, a scorched earth redevelopment area south of AT&T Park.

Mission Bay is large enough to accommodate maybe a dozen Dropbox-like growth companies. But, the area is completely void of San Francisco’s funky charm. Its sterile environment is literally better for what it was originally intended – biotech companies. Working in Mission Bay seems no different than working in Sunnyvale or Pleasanton, appropriate sounding names of bland Bay Area suburbs.

Salesforce.com represents another case study of how a San Francisco startup intends to scale in the city. The company, the pioneer of software as a service (SaaS) business model, was founded in San Francisco in 1999. It has been very successful and by 2011 employs 3,000 in San Francisco, double that worldwide. It is now the largest employer in the city ahead of venerable Levi Strauss and Charles Schwab.

The company reportedly intends to add to its concentration in the Embarcadero area by leasing about 300,000 square feet in the Transbay Tower, a 61 story building now under construct. The Transbay Tower, pictured below, will be the tallest building in San Francisco, surpassing the iconic Transamerica Building.

Is salesforce.com’s SaaS – Software as a Skyscraper — the future of San Francisco? Will a software company replace an insurance company as the name mentioned in jokes about a new iconic symbol for San Francisco?
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A Drawing of the 61 Floor Transbay Tower
Source: San Francisco Business Times