Canalys : Facebook announces App Center

Facebook’s App Center provides a valuable opportunity for increased exposure through a smaller, curated, social environment. However, this will also be yet another store for developers to monitor and manage, at a time when competition for developers’ attention from other ecosystem leaders and store providers is only intensifying. However, with no app store today doing a good enough job in terms of aiding app discovery, it is likely that it will be inundated.


For Apple and Google particularly, while Facebook’s store may well be helpful in sending consumer traffic to their stores to make purchases, for those customers they are losing control of the app discovery process


Also while Facebook, does not benefit directly from revenues for paid-for content on iOS and Android, the availability of the store for these platforms will nonetheless help to generate a vibrant ecosystem and storefront that should drive additional downloads on the web - from which it is able to take a revenue split for paid content - and it promotes apps that use Facebook Logins and share content using its services, encouraging greater and deeper user engagement.

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What is the significance of Facebook’s decision to launch an app store?

• App Center will aid app discoverability on Facebook by offering users the opportunity to browse or proactively look for apps
• The value of the Facebook App Center to developers will primarily be as a means to increase exposure
• Facebook’s store will drive traffic to Apple’s App Store and Google Play, yet it also threatens their control of the discovery process

Through its official developer blog, Facebook announced on 9 May 2012 that it would be launching an app store to its 900+ million users in the coming weeks. App Center will be accessible to Facebook users via the web, and through its iOS and Android apps, and it will offer users a portal through which to find a curated collection of social apps. Crucially, Facebook states that only apps that receive positive user ratings and meet its quality guidelines will be listed, with those that are ‘well-designed’ and that ‘people enjoy’ prominently displayed. It is a move that follows steps taken towards the end of last year to bring its social apps platform to mobile, (see Canalys' report, ‘Facebook as a mobile app platform’, published 5 December 2011).

Aiding app discovery beyond social

Its decision to launch an app store will address a serious problem developers faced on Facebook of how to get their apps discovered. As a social network, Facebook’s apps platform naturally lends itself to social recommendations and discovery driven by users posting updates, messages and invitations from within social apps and games; celebrating high scores, asking friends to join a game, or highlighting other in-app activities. Uptake and adoption of a social app on Facebook can quickly snowball with each new user helping to attract more contacts from their own social graph.

But despite having such a powerful, critical discovery tool at their disposal, app discoverability has still been an issue for Facebook app developers. Getting an app noticed in the first place - or found by someone who may enjoy it or find it useful but does not have a friend actively using it already - is very tough. There has been nowhere for users to go to browse through apps on Facebook, only the option to search for a specific app by name; so there have been few opportunities to ‘get the ball rolling’. This has been a frustration for some developers, particularly fromsmaller organizations with little consumer brand awareness, and a barrier to uptake for others.

App Center will tackle this problem head on. Facebook users will now have a portal through which they can browse and discover new apps. This will be welcomed by the vast majority of users, particularly if the apps on show remain of high quality. For developers, the move brings not only improved discoverability, but also additional analytics information and monetization prospects. Facebook is adding a new app ratings metric to its developer portal, Insights, which will allow developers to see how different age groups, split by gender, rate their application. Given the link between ratings and store placement, this will prove a critical metric for developers to focus on, and should ensure they respond promptly to address criticism and complaints left in negative user reviews.

Initially through a beta program, Facebook is adding support for paid-for applications (it already supports in-app purchases), using Facebook Credits where purchased on the web. From the mobile App Center, users will be able to browse apps that are compatible with their device, and if a mobile app requires installation and perhaps payment, they will be directed to Apple’s App Store or Google Play to complete the transaction and download. This will help to ensure that the two leading store providers’ terms and conditions are not infringed and that they do not attempt to obstruct Facebook’s initiative – not that either would want to risk discouraging Facebook from actively working on their respective platforms, and indeed driving traffic to their app stores.

While Facebook, therefore, does not benefit directly from revenues for paid-for content on iOS and Android, the availability of the store for these platforms will nonetheless help to generate a vibrant ecosystem and storefront that should drive additional downloads on the web - from which it is able to take a revenue split for paid content - and it promotes apps that use Facebook Logins and share content using its services, encouraging greater and deeper user engagement. Moreover, it adds value for both Facebook users and developers. Opening up and improving an additional revenue stream from paid-for apps on the web, ahead of its pending IPO, is also not a bad move for Facebook.

More than just games

The app store approach will also help social apps other than games get a better chance to get noticed. The dominance and popularity of social games from Zynga, Playfish, Playdom and others, and the fact that in-game achievements give a regular and natural reason for content sharing and notifications to friends, has ensured that to date relatively few non-game apps have been offered on the Facebook platform. Offering a browsable portal for apps, segmented by category, with highly rated apps emphasized, should give plenty of other social apps a greater chance of success. Of the six example launch titles that Facebook’s blog post refers to, half of them (Spotify, Pinterest and Viddy) are not games, and Facebook is clearly eager to position the App Center to developers as an ‘additional way to grow their apps’ and drive greater usage and downloads.

Certainly for developers of social apps on iOS and/or Android, struggling to get their offerings noticed in the vast catalogs of the App Store and Google Play, Facebook’s App Center provides a valuable opportunity for increased exposure through a smaller, curated, social environment. However, this will also be yet another store for developers to monitor and manage, at a time when competition for developers’ attention from other ecosystem leaders and store providers is only intensifying. They will need to maintain an inviting and up-to-date ‘app detail page’ on Facebook and ensure the social noise around their app remains positive or is promptly addressed – such a lively social environment will prove crucial to watch. Developers will therefore need to balance an ongoing resource commitment with the potential for greater social exposure. Apps submitted by 18 May 2012 will be prioritized for review to appear in the store at launch. With no app store today doing a good enough job in terms of aiding app discovery, it is likely that it will be inundated.

No room for complacency

However, to prove successful in the longer term, Facebook will need to ensure that it continues to improve and enhance App Center: 

• It needs to offer a demonstrable commercial opportunity for developers. It will soon need to be able to talk about success stories in which a presence on Facebook’s app store has helped developers to build credible and sustainable businesses and make real money.
• As such, consumer awareness and understanding of Facebook Credits and how to obtain them will need to be improved, and aided by the availability of locally appropriate acquisition payment models. Its prepaid voucher availability at physical retailers will be important, particularly in markets where credit card penetration is poor.
• It must ensure the store remains fresh and vibrant. It will need to continue to work to attract social app developers to deliver new and innovative titles regularly. If the catalog is allowed to stagnate, or if the storefront does not change with sufficient regularity, users will see no incentive to visit the store. It will be critical to attract locally relevant apps, particularly for non-English speaking markets, otherwise user engagement will suffer.
• It must ensure that in prominently positioning ‘well-designed’ and positively reviewed apps, it is not continually promoting the same set of apps, too many apps of the same type, or only apps from big and better known brands at the expense of innovative titles from smaller developers. This would lead to a stagnant storefront and developer frustration.
• It must ensure its app guidelines are enforced and that quality control does not lapse, otherwise users will be frustrated by poor app experiences. It will also be critical that apps which feature in App Center are secure, free from malware – particularly an issue where a listed Android app links back to Google Play - and do not endanger user privacy – a factor of special concern and importance given the level of personal information stored in some users’ Facebook accounts.
• As the store catalog grows, it will need to innovate and invest around further enhanced app discoverability tools itself, such as algorithm-based recommendations or ‘deal of the day’ initiatives. The foundation stone for Facebook App Center’s success will be that it offers developers help with discoverability of their apps. Ifthat tenet of the proposition is diluted, its value to developers will rapidly diminish.
• It should consider extending support to additional mobile platforms, such as BlackBerry or Windows Phone, in order to maximize the number of mobile users who are able to take full advantage of apps on Facebook.

There is also no room for complacency on the part of other app store providers. For Apple and Google particularly, while Facebook’s store may well be helpful in sending consumer traffic to their stores to make purchases, for those customers they are losing control of the app discovery process. This will only be exacerbated by the insufficient and ineffectual existing discovery tools of the leading app stores that get worse as store catalogs continue to grow. As such, both consumers and developers could well become less reliant for app discovery on the native store clients on mobile devices in favor of external discovery portals, sites and stores such as Facebook App Center, which brings with it significant risks, (see Canalys' report, ‘App stores risk losing control of app discovery’, published 27 January 2012). Facebook is continuing to make in-roads into the mobile space, and store providers should be wary of its aspirations to become the primary discovery portal for social apps.