Mobile app businesses are no different from other trades. While there are a lot of factors that can be listed to show the similarities, VCs generally look at the investment and consolidation potential of a mobile business model. As far as apps are concerned, the evaluation is often looked from the perspective of specific categories.
Before I tell you about investment in various categories, you should understand what is investment potential and consolidation potential.
Investment Potential: Possibilities of profit you can make from users (money making capability of apps)
Consolidation Potential: how far your mobile game or app can go (stay power of apps)
In the above image, you can see mobile games and apps are categorized on the basis of their stay power and money-making capability.
Now, get a close look and notify which types of apps have major investment and consolidation opportunities. They are: mCommerce, Wearables, App Store/distribution, Business, and Education. These apps demand low investment with a return promise to be long-lasting.
Let’s get closer. Can you see our favourite category: mobile games are showing poor possibility of consolidation potential and quite a fair-shake of investment potential. Mobile game investors earn entertaining dollars from players. Then why the chart is showing mobile games as a risky part of investment?
Of course it’s risky until you have a unique concept like Clash of Clans or Candy Crush Saga. You must have played any of these games and must be aware of how rich they are in terms of: concept, story, game play, graphics, power ups, number of levels or stages, etc. Anyone with such a big concept can take risk with mobile game development.
To invest in mobile games is risky, at the same time they offer major opportunities of investment potential if connected with bigger concept and effective marketing strategies. Candy Crush Saga is an ongoing game. No matter if player completes 400 levels of Candy Crush Saga, he (the player) has further options to play with next version named Candy Crush Soda Saga. Likewise, one can keep going with game by adding more levels to it. To continue the game for long, investment must be needed, but make sure you will earn more than what you invest. Profit is there as long as players are there.
At last, compare all the apps on the basis of investment and consolidation potential, you will get your answer of where to invest or not.