The Truth Behind The Prosperous App Market in China
摘要： Nowadays, endless applications keep flocking into the rather stable mobile market, intensifying the fierce competition in the already crowded market. Competition and homogenization are now becoming more serious in this particular sector, which forces all those apps out there to develop into more specific and vertical areas. Apps that fail to do so will end up basically meeting their truth death.
The first thing we are going to discuss in this article is the superpower in the app sector. So, who exactly is the super app developer in China?
Mobile applications, as the representative products of the mobile Internet, have been thriving since 2009 at a rocket speed, making major changes every single day. Statistics in January this year show that there are already 1.4 million apps on Google Play Store alone while statistics in July show that Apple’s App Store now has over 1.5 million apps.
As Chinese smartphone brands start to rise and accumulate a larger user base, new apps are also being rolled out to the market fast. Given the prosperous startup scene in the country, more entrepreneurs are choosing the app sector as their entry point into the entrepreneurial world.
The app sector is seemingly thriving now. But what hides behind this sight of prosperity is just ugly truth.
Easy come, easy go
Recently, iiMedia Research and Wenjuan.com jointly released a report on the Chinese app sector, which shows that most apps have a pretty low running frequency and user retention rate. Very often most users only use the new apps they downloaded once, and such users account for 35% of the total smart phone users while the number of users who opened new apps for over ten times takes up merely 17.6%.
Additionally, statistics also show that the average lifespan of apps is around 10 months while 85% of users will delete new apps within a month. Among all apps, social apps face the fiercest competition with a death rate of 35%.
These statistics show the reality of the app sector: apps are having trouble attracting users and keeping them in the long run.
All these factors lead the app sector into a vicious cycle in which most app developers only see short term profit instead of future profit in the long run, and therefore they only care about accumulating users fast and earn some quick money for that and neglect the importance of refining the product and keeping their users. Worse still, some app developers just don’t want to make apps that can last in the first place. They keep launching new apps in order to make quick and easy money thanks to the large user base in China.
Besides that, since there are just simply too many similar apps for users to choose from, most people will only use one app out of many other alternatives. In general, if users couldn’t find what they are looking for in an app, they would completely abandon the app. As a result, users will keep trying out new apps and regularly delete the apps they don’t like or need anymore.
Such phenomena contribute to the prosperous sight of the app sector, which is in reality, chaotic. “Born fast, die fast” has already become a common trend in the app sector.
An overly crowded app market
Statistics show that by the third quarter of 2015 the number of the mobile Internet users in China has reached 668 million and the number of smart phone users has hit 609 million. While the scale of the mobile Internet user base and smart phone user is on the rise, the growth rate is actually going down.
In this case, the smart phone sector is getting saturated and tends to become stable, meaning this particular sector is reaching its limit.
This also means that the competition in the already crowded mobile Internet sector will only be fiercer as more apps flock in.
The result of this is that the competition in the app sector will be intensified while in different specific fields there are tons of similar apps. In a way this situation will make it difficult for app developers to come up with innovation and force apps to become more vertical and evolve into more specific segments.
For example, mobile apps will transform from comprehensive products to specific and customized products featuring unique functions. In the mean time, apps that are more vertical and focus on user experience will continue to emerge.
Satisfying the core needs of users
As what I have illustrated in another article of mine (The Game-Changer Of Internet Products In The Social Media Era), there’s a social media hierarchy of needs in this era: core needs, subsidiary needs, and marginal needs, which serve as different roles in the development of Internet products.
In this hierarchy, the core needs are the driving force. If developers can’t satisfy users’ core needs and are still thinking about focusing on subsidiary needs and marginal needs, then the Internet products they make are rootless, and therefore won’t be able to keep users. If a product really meets users’ particular core needs, then users who have tried out the product will grow accustomed to the product.
Endless different apps are being launched into the market every day while many die as well. The main problem that such apps have is that they only focus on satisfying users’ subsidiary needs and marginal needs, which are not the things that users will look for in the very beginning. In this case, users come and go. That’s how the app sector in China fell into the pit in which it is in right now.
Developers fail to provide users with the functions that could satisfy their core needs and users naturally would give up using the apps after a while.
iiMedia’s statistics also reveal that half of the top 20 most popular apps are the ones that can satisfy users’ core needs, which confirms the theory I have mentioned above. The rest of the popular apps are also products that can more or less meet users’ core needs.
The Matthew Effect is creating more challenges
In the Top 20 App chart, only TouTiao, Meituxiuxiu, 360 mobile security, 360 mobile assistant, and Kugou are not from BAT. The rest are all basically developed or owned by Baidu, Alibaba, and Tencent.
Additionally, in the fields of social networking, online car-hailing, mobile map, and mobile shopping, BAT’s apps are the dominant force as well.
That being said, if app developers really want to make something out of this sector, they would be under tremendous stress and should possess immense marketing and operating ability. If they could not achieve that, they would eventually be driven out of the market by BAT or acquired by them.
From this aspect, the app sector is deeply influenced by the Matthew Effect, which means powerful forces that have better resources, financial capability, and market dominance will only grow stronger while the weak ones will only become weaker.
Thus, there are generally three endings for apps:
1. They meet most users’ certain needs, and therefore are able to gain momentum and gather strength. But if BAT have products similar to them, theses apps would either be acquired or pushed out of the market.
2. Apps that don’t possess a relatively high user retention rate will end up dying shortly after their launch.
3. Unique apps that meet some users’ special needs will have a hard time growing big. However, since they have a rather stable user base, they would miraculously survive at last.
Besides that, apps also face internal technical challenges brought by integration. For instance, upgrading old apps to new systems cost a lot of money and time. It’s simply just no easy task.
To achieve integration would mean after an app is launched, it has to be updated constantly in order to be compatible to different platforms, or let’s say, hardware. That’s the essential way to provide users with up-to-date user experience.
In this case, app developers not only have to face fierce competition in the whole market but also the internal technical challenges, making it extra hard for them to survive.
Specific segments: overly diverse
The Matthew Effect and fierce competition in the market scene will lead the app sector toward the direction of growing more vertical and evolving to specific segments. That said, if apps want to survive, they have to do everything they can to bring out innovations in functions, user experience, and system. Furthermore, as apps grow more vertical, users’ needs will be further exploited to the full extent.
That’s why BAT are not willing to enter specific segments, leaving startups more space to grow. And in a situation like this, lots of different apps emerge in all those specific segments. For example, in areas like music apps, fashion apps for women, and early education apps, there have been many popular apps. However, even though there are some dominant apps in those areas respectively, they don’t actually have much of dominating advantage. Together they just have their own fair share of cake and that’s it. Nobody is controlling the market entirely.
Besides that, areas like weather forecast, local life, and photo editing are also in the same situation.
Thus, there is still room for newly-emerged apps from startup teams to grow. However, these startups will also have to struggle to fight off the stress imposed on them due to the heavy competition from their matching rivals.
At present, the app sector has long passed its golden age and the startup scene is ever changing. Entrepreneurs are no doubt facing more challenges and uncertainties than ever. More importantly, finding out users’ core needs is already hard enough for entrepreneurs.
In other words, to dig into specific segments, entrepreneurs have to truly understand their target audience. Success won’t come if you just sit around and wait for something to happen. And users only want products that are better suited for them.
[The article is published and edited with authorization from the author @Chang Ning please note source and hyperlink when reproduce.]
Translated by Garrett Lee (Senior Translator at PAGE TO PAGE), working for TMTpost.