The app market is officially entering its twilight years!

Business and technology journalists often like to quote the opening of Dickens' A Tale of Two Cities to evaluate the current situation, "It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness..." just as they are keen to imitate the flashback technique of Marquez's One Hundred Years of Solitude as the beginning of their technology features. In my opinion, this is the result of poor reading, rigid thinking, and media people learning from other media people. In fact, you might as well know a little more by quoting the second half of this Dickens quote: “It was the worst of times, it was the age of foolishness, it was the epoch of incredulity, it was the season of darkness; men were going straight to Heaven, men were going straight to Hell.”

Well today, I use it to describe the " App Store ".

In China, the App Store is a relatively special object of scrutiny. It is the successor to the vacant market of mobile application distribution platforms after Google Play withdrew from the Chinese market. At the same time, due to the development of China's mobile Internet , the App Store has fostered an ecological system that is completely different from that of other countries, resulting in a trend of several major forces competing against each other. You know, although the Android system is open source, for most countries and regions, Google Play is an unshakable opponent in the mobile application market like Apple's App Store , so there are almost no decent app stores abroad. The Chinese market is like a Three Kingdoms game or a Four-Nation chess game, with many warlords fighting for supremacy.

The decline of app stores is already a very obvious trend. The problem lies in how we describe it : on the one hand, it comes from the stagnation of the industry, the saturation of mobile phone shipments, the lack of new traffic in the channels, and the end of the dividends; on the other hand, it is due to external diversion, former allies have become competitors, and emerging distribution channels are on the rise; there are also risks brought about by the industry's own iterative development: cross-screen integration; the first year of VR, living room entertainment... In fact, the challenges are far more than these. In the foreseeable future, traditional app stores will face even more severe challenges.

The head is down and the whole body is scattered

The decline starts from the head. In 2014, the structure of the mobile application market was still very clear. Baidu ( Baidu Mobile Assistant ), 360 ( 360 Mobile Assistant ), UC Browser , and Xiaomi almost monopolized 70% of China's channel market share. In 2015, after Tencent's App Store and the hard-core alliance represented by mobile phone manufacturers entered the first echelon, the total market share of the first echelon of the application market has been declining, from 70% to 50%, or even lower. It can be predicted that the market share will continue to decline next year.

In addition to the decline in overall market share, the number of new users in various channels has also stagnated, and even reversed growth and regression have occurred. This is particularly prominent in 360 Mobile Assistant. Many CPs ( game developers) have clearly felt that the volume is decreasing when they are delivering content through channels, and the traffic is becoming more and more dispersed and flat. Traditional app stores are being disrupted step by step.

The author of Tiger Sniff and the CEO of a Suzhou game company, Tangcu, looks at the decline of channels from the perspective of CP: "The decline of application channels is inevitable. After all, there are too many products that use homogeneous products to attract users, and there are too many products that rely on activities to violently increase revenue without improving quality. Moreover, the growth curve of new users in the mobile phone channel should be closer to the growth curve of domestic smartphones. The growth of smartphones has gradually peaked, and the channel has no new blood, so it is naturally the same."

Where did the traffic go?

Mobile phone shipments slow down

One reason is the slowdown in smartphone shipments: According to the Global Mobile Quarterly Tracking Report released by market research firm IDC, the growth rate of global smartphone shipments in 2015 will fall to single digits for the first time. In the first quarter of this year, China's smartphone market shipments saw their first decline in six years, with shipments falling 4.3% compared to the same period last year.

The slowdown in mobile phone shipments means no new users, which is a huge blow to app stores that are accustomed to acquiring new users through pre-installation and bundling. The early promotion method of the application market was to sign cooperation agreements with mobile phone manufacturers and promote apps through binding. However, major channels can only acquire new users through exchange (replacement). To put it bluntly, they are sinking into the existing user market. It can be seen that the end of the smartphone dividend has a great impact on the application store.

The rise of new channels

Emerging channels refer to channels that are different from traditional app stores. Taking games as an example, such channels are either traffic-based products that are not closely related to games, or are a vertical segment of the game industry. In theory, all mobile Internet products with traffic are distribution channels, but the degree of match between players and games determines the strength of the distribution effect. However, judging from the current situation, the proportion of emerging channels is increasing.

As mobile Internet becomes more mature, super apps are swallowing up users' time and attention, such as WeChat. Super apps other than WeChat, such as Momo, UC Browser, and Clean Master, have already started advertising monetization and game distribution, and even set up separate game distribution departments. These super apps have eroded the market share of traditional app stores to some extent.

In addition, some channels that are almost invisible to ordinary people are also emerging. Lin Rong, former vice president of Baidu Mobile Games and current CEO of Kaopu Network, told Huxiu that there are many emerging channels, including Android emulators, Wanba, game plug-ins, game guild platforms, game auxiliary tools , cracking tools, and XX assistants, which have very large traffic. "The DAU of a powerful plug-in/guild is about several million, while the DAU of app stores like 360 ​​Baidu is only tens of millions. In comparison, it is still very amazing."

Take Kaopu Assistant as an example. Kaopu Assistant is an Android emulator, which means playing mobile games on a computer. It sounds ridiculous, but in fact, games like FPS and ARPG are very popular among users on Kaopu, and the number of users is very large. The current DAU of Kaopu Assistant is about 1 million, with information fees of 50 million last month, and it can be achieved across multiple screens (mobile phones, computers, TVs, etc.). The production of mobile games is increasingly showing a trend of terminal gaming, which means that there are more heavy games. The Android emulator has become a channel that cannot be ignored.

Impact on mobile phone manufacturers: from allies to competitors

Mobile phone manufacturers were initially allies of application channels, and they still are today. However, with the continuous growth in smartphone shipments, especially after the success of Xiaomi’s App Store, mobile phone manufacturers have also begun to try to build their own App Stores and get involved in the mobile application distribution business.

Needless to say, Xiaomi is the biggest dark horse in the mobile phone channel this year, and the biggest dark horse among them is Hardcore Alliance.

First, let's popularize what the Hardcore Alliance is. The Hardcore Alliance was established on August 1, 2014 by six mobile phone manufacturers (vivo, oppo, coolpad, Lenovo, gionee, and huawei). There are many contents of cooperation, the most core of which is to provide one-time access to omni-channel packaging. One SDK is connected to six mobile phone manufacturers at the same time, and all these mobile phone stores are connected (you must know that in the Android market , different mobile phones are connected to different SDKs, and the same game is equivalent to different regions and servers in different mobile phones, with different operating strategies and very different experiences). In short, it is to form a group.

It is worth noting that Hardcore Alliance is not a company but the name of an organization. Its daily operations are run through an organization called Hardcore Alliance Secretariat, which is affiliated to Wanka Huanju. Wanka’s founder Gao Di’nan came from Baidu and started two businesses . It was he who brought together six mobile phone manufacturers to form such an organization, which contributed to the prosperity of Hardcore Alliance today.

According to the official data released by Hardcore Alliance not long ago, as of August 2015, the total number of Hardcore Alliance users has reached 289 million, while the scale of Chinese mobile game users was 445 million in the third quarter. There were 1,988 first-run games, with a total of 3.023 billion game downloads and a total turnover of over 3.768 billion, with an average game download share of over 35%. In just one year, Hardcore Alliance has captured over 32% of the market share, with more than 25.36 million daily active users, successfully entering the first echelon of mobile game channels.

The advantage of hardcore is its strong cohesion and unified brand image. However, it is widely speculated that the Hardcore Alliance will face the crisis of separation this year due to the "inequality of wealth" within the Hardcore Alliance: Huawei and Vivo, which occupy the top position, have completely crushed Gionee and Coolpad, which are at the bottom, in terms of shipments. Huawei's shipments in 2015 were 100 million units, exceeding Xiaomi's 80 million units, making it the undisputed overlord. Huxiu discussed this hidden danger when communicating with the head of the Hardcore Alliance Secretariat more than a month ago: At that time, it was said that after the Hardcore Alliance's annual meeting in Hainan, representatives of several mobile phone manufacturers would hold a meeting together to discuss the direction and future of next year. Although no further information was disclosed in the news afterwards, it seems that Huawei is very likely to go it alone. "Since the original purpose of its establishment was to resist foreign enemies, why should I play with you guys now that I can cover the sky with one hand?" #Business is so cruel#

Baidu, Tencent, 360, some are happy and some are sad

Baidu, Tencent and 360 can be considered a three-legged race, but upon closer inspection, there are actually quite big differences between them: the business models and product forms of Baidu and 360 are the closest, the difference is that 360 relies on its multiple product matrices to acquire users, while Baidu relies more on its search advantage. The former focuses on business, while the latter focuses on operations and products, but in the process of the entire channel decline, the difficulties they face are the same.

Baidu is slightly better, because at least the Aladdin platform can continuously bring it new search users. In comparison, 360 is in a miserable situation. The users of products such as browsers and security guards have basically been fully exploited. Without search, mobile terminals have not taken off, and new sources of traffic have been slow to emerge. It is no wonder that Zhou Hongyi is so persistent in making Qihoo phones.

In fact, the big platforms are not unaware of the crisis. They have been actively responding to it at least a year ago, but the effectiveness is still debatable. Taking Baidu as an example, the first thing was a major structural adjustment. On February 3, 2015, Robin Li announced that Baidu's existing business groups and divisions would be integrated into three major business groups: Mobile Service Group, Emerging Business Group, and Search Business Group. The underlying logic was to merge the channel business and traffic (tieba, news, etc.), which were previously under different business groups, together to allow the traffic to be continuously delivered to the business line so that a unified goal can be achieved. For example, if the channel flow or channel profit is to be increased, the traffic department will actively cooperate to avoid disputes.

The other is the adjustment of internal operation strategy. Last year, Baidu Mobile Games determined the IP strategy. Let's take a look at the IP strategies of Baidu Mobile Games CEO Wang Fei at TFC (Global Mobile Games Conference) last year:

1. We also stockpile some IPs ourselves.

2. We will take out our high-quality IP and authorize some excellent CPs to jointly develop customized games.

3. We may also explore IP distribution cooperation. In the future, it may even be possible to produce and distribute our own IP within Baidu's overall community resources, because Baidu Literature and Baidu Film and Television are both resources that have the potential to generate IP.

In fact, this is indeed the case. Last year, Baidu Mobile Games released a game with the same IP as "Running Man" and also won Shanda's "Legend of Shabak". The revenue and reputation were good. Although they were not blockbusters, they at least proved that Baidu's publishing business still has a certain strength to operate a successful game. Compared with simply cooperating with CP, this strategy is obviously a lot of progress.

After talking about Baidu 360, we have to mention Tencent. In fact, Tencent had always been in a weak state before the application market, but as Tencent continued to pay attention to this channel, and with the help of WeChat and a large number of users, App Store quickly rose in the second half of last year and successfully entered the first echelon. At the Tencent Global Partner Conference held a few months ago, Tencent announced the data of App Store: the cumulative distribution volume in 18 months reached 50 billion, and the daily distribution volume exceeded 180 million. The number of registered mobile developers and the number of included applications on the platform both reached 3 million. This number is enough to make the stagnant peers stunned.

Let’s look at WeChat again. At the WeChat Power Conference on January 11, 2016, Zhang Xiaolong, who had not been seen for a long time, revealed that WeChat would soon launch application numbers:

"Now the repeated installation rate of APP is getting lower and lower, but sometimes you have to reinstall the APP to find a function. Many users now buy train tickets in WeChat Wallet, because they don't need to press the installation button for some infrequent needs, but it is not easy to install a function from the official account. We hope that there will be a new form of official account. Under this form, when a user follows an official account, it is like installing an APP. When he wants to find this official account, it is like finding an APP. He goes in and uses this official account. Usually, this account will not send anything to users, so the APP will exist there quietly, waiting for users to find it when they need it. In this way , we can try to make more APPs exist in a lighter form, but a more user-friendly form. This is a new form of official account we are exploring, called application account. "

WeChat has achieved great success after trying out games. According to industry insiders, the turnover of WeChat games last year was about 10 billion yuan, and this year's target should be between 20 billion and 25 billion. The launch of app numbers is likely to impact the entire app market, because some developers are already discussing: "Now that WeChat has launched app numbers, should we continue to make apps in the future?"

The mainstream view is that application numbers will not have an impact on apps, and the two are more about collaboration under different platforms and scenarios. In fact, from my personal understanding, application numbers are closer to services rather than so-called channels and distribution. Therefore, from this point of view, there is still a difference between the two.

We can look at two sentences that Lin Songtao, vice president of the social network business group, said in an interview with the media:

"In the past, when downloading an app, users had to know the name of an app, and search for this name or that name. However, as more and more apps are available, users are getting more and more involved, or it is difficult for them to understand what the app does after seeing some names. But users know what services they want, so it is better for them to search directly for the services they need.

So our philosophy, including application numbers and application+, is that we provide content services to users based on what they want, rather than asking them to download a so-called APP. From the perspective of this model, it helps users access services from different angles, including having many internal linkage and cooperation mechanisms under the distribution of products. ”

Summarize

When we talk about the twilight of application channels, we are referring more to traditional channels, such as Baidu, 360, UC, etc. - of course, in the process of the overall slowdown of the application market, there are still channels such as Tencent App Store and Hardcore Alliance that have broken through the siege - but it is inevitable that these channels are also facing problems such as slow new users, reduced traffic, and declining revenue. The threshold for distribution is not high, and it relies more on huge traffic as support.

In fact, the prosperity of the entire application market is built on the core hardware of mobile phones. Imagine that in a few years, if VR becomes an indispensable smart product in modern life, there will be a new wave of growth dividends and new distribution channels will inevitably emerge. If these traditional distribution channels cannot grasp the new trend, they are probably not far from death.

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