Christmas Is Black Friday for Apps as Download Record Seen: Tech

Dec 23, 2013 12:01 am ET

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Dec. 23 (Bloomberg) -- When Walt Disney Co. began considering the best time to release an iPad version of its popular online kids game “Club Penguin” this year, only one date came to mind.

“It was all designed to lead up to Christmas,” said Chris Heatherly, the head of Club Penguin. Disney anticipates getting about half of its yearly subscribers for the virtual-world game during the week of Christmas -- and especially on the holiday itself. “It’s definitely our prime time,” he said.

Disney’s strategy illustrates how Christmas has become the most lucrative day of the year for makers of mobile applications, in what is now the equivalent of a Black Friday for retailers or a Cyber Monday for e-commerce companies. That’s because Dec. 25 is the day that people take the wraps off gifts of smartphones and tablets -- immediately spurring many to download games, productivity tools and other apps from Apple Inc.’s App Store and Google Inc.’s Play store.

This Christmas is projected to set another record for app downloads, following 328 million downloads last Dec. 25 -- the busiest day ever -- and 36 percent above 2011, according to analytics firm Flurry. According to a Harris survey commissioned by mobile-app and website-testing company Soasta, 30 percent of Americans plan to download an app on Dec. 25.

“One of the first things you do when you get a shiny new present is you want to take it for a test run,” said Marcos Sanchez, vice president at App Annie, a company that measures app downloads. “It’s the magical trifecta of something new, time to waste and wanting to fill your time with fun stuff.”

Developers Prepare

While many developers like Disney plan all year for a Christmas rush, a final blitz comes in the last few weeks. Apple’s offices close between Dec. 21 and Dec. 27, leading app makers to rush to get their updates submitted and approved before the deadline. A plug from Apple on the front page of the App Store guarantees a flood of downloads.

Apple said earlier this year that 2 billion apps were downloaded last December, a monthly record. Tom Neumayr, a spokesman for the Cupertino, California-based company, declined to comment further. Christopher Katsaros, a spokesman for Mountain View, California-based Google, didn’t return requests for comment.

The holiday surge has created a dogfight among developers to get noticed in an increasingly crowded market. Apple’s App Store and Google Play each have more than a million apps available.

Different Tactics

Some developers use straightforward tactics to grab attention, such as introducing new titles, cutting prices and hunting for press. Others use digital-advertising campaigns to manipulate Apple’s rankings by guaranteeing a certain number of downloads and better visibility in the App Store. While Apple has attempted to clamp down on that strategy, the practice persists.

“There’s competition to make sure your app is ranked and app developers go to every distribution platform they can get their hands on,” said Siqi Chen, co-founder of Heyday, which released its journal-taking app this month to capitalize on the Christmas spike. He said his company doesn’t pay for downloads.

Making it harder for smaller outfits to stand out is that deep-pocketed bigger companies like Disney and video-game publisher Electronic Arts Inc. are prioritizing mobile entertainment as an important revenue source, said Fernando Pizarro, general manager for PapayaMobile, an advertising platform.

Big Muscle

Steve Stamstad, vice president of marketing for EA Mobile, said the game publisher made changes to all its phone and tablet titles ahead of Christmas. The publisher of “FIFA Soccer” will get 5 billion different “marketing impressions” in front of consumers for the Christmas rush, be it ads on Facebook Inc. and phones, or promotions done by partners like Twenty-First Century Fox Inc. for its app themed after “The Simpsons.”

Spending heavily on advertising creates financial risks. The cost of acquiring an iPhone user through an ad network is about $2.30 in December, more than double the cost in June, according to a report by SuperData, an analysis firm for mobile- game publishers. For that spending to be worthwhile, a game publisher needs to keep a new user playing for at least two months before a profit can be made, a period that’s an “eon in mobile game time,” the report said.

Free, Paid

Some app makers give away their apps to lure consumers. Tomek Sarnowski, co-founder of Byss Mobile, said his company is offering its InstaWeather app -- which usually costs 99 cents -- for free around Christmas so the company can use it to cross- promote other paid apps it publishes.

Mike Maser, the co-founder of fitness application FitStar, isn’t using advertising or free downloads. Instead, he is counting on appealing to people anxious to exercise after a calorie-rich holiday. His San Francisco-based company recently released an iPhone app in time for Christmas that features Atlanta Falcons football star Tony Gonzalez walking users through different workouts tailored to their fitness level. The company also cut prices by 40 percent to $29.99 through January for a year of access to its workouts.

“It’s not unlike a gym membership,” he said. “We marked this time of year to be ready for the Christmas rush and the New Year’s resolution time frame.”

Some companies go to great lengths to ensure their app is prepared for a flood of users. Mikael Berner, creator of the personal assistant app EasilyDo Inc., last year paid to have his servers experience a burst of 10,000 downloads in an hour to be sure it could withstand the rush of consumers. The test went through without a hitch, and the company celebrated with Berner donning a Christmas vest and serving homemade eggnog.

This Christmas, Berner said he will have people in the office to monitor downloads, especially at around 9 a.m. in each time zone when gift unwrapping is in full swing.

“If you disappoint somebody during that euphoric moment when they are downloading the app on Christmas, they are going to remember,” he said.

--Editors: Pui-Wing Tam, Ari Levy