December 1, 2010 / 10:24 PM / 7 years ago

Media companies look beyond today's App stores

<p>Employees applaud customers, the first out of hundreds who queued to enter Apple's first store in Spain, during the opening of the store in Barcelona September 4, 2010. REUTERS/Gustau Nacarino</p>

NEW YORK (Reuters) - Apple Inc’s creation of a mobile application store two years ago set off a frenzy of software development -- in short order consumers could download apps for everything from high finance to burping sounds.

Today, the top application stores, those run by Apple and Google Inc, are in jeopardy of becoming victims of their own success. So many apps exist that the stores can feel overwhelming, turning into flea markets that confuse shoppers and frustrate merchants hoping to stand out.

For companies that invested heavily to develop branded apps, the trick is to find a way to be discovered more easily and keep users in their world longer.

“The apps stores are disorganized and chaotic,” Strauss Zelnick, chairman of Take-Two Interactive, said at the Reuters Global Media Summit on Wednesday.

“It’s a very unusual place for intellectual property to be distributed, because something that’s No. 1 doesn’t remain No. 1 for very long,” said Zelnick, whose company is behind the hit video game “Grand Theft Auto” and has created several top-rated apps for Apple’s iPhone. “Compare that to, say, the best-seller list at a bookstore, where something will remain a best-seller for 10 weeks.”

Anne Sweeney, Walt Disney Co’s TV chief, expressed similar frustration with the world of apps. “The biggest struggle with the apps stores is that there are just so many apps,” she said at the Summit.

STANDING OUT FROM THE PACK

The strategies for standing out from the pack are as diverse as the apps themselves.

One way being studied is an option that pre-dates app stores. It involves forging a deal with a phone maker or operator so your offering is displayed more prominently, say on the home screen of the phone rather than in the app store.

Facebook is believed to be looking at something like this with start-up phone maker INQ, a unit of Hutchison Whampoa. The social network company indicated it is working on projects that would integrate its hugely popular service more tightly with cellphones’ operating systems.

On the carrier side, Sprint Nextel has launched a service called Sprint ID that lets consumers download packages of apps related to their hobby, be it sports or gossip, or packs from media firms like Disney or Yahoo Inc.

David Katz, Yahoo’s vice president for mobile, said packaging apps together raises the odds of discovering news, entertainment or games that would otherwise be lost in the crowd.

“We’re going to experiment with every mechanism we can to make sure that folks get our stuff,” Katz said in a recent interview. “The more Yahoo stuff we can get users to consume, the more money we make.”

Another idea is to put apps in specific categories into separate stores, said Tina Unterlaender, mobile account director at AKQA, which builds apps for clients like Nike Inc.

“What I would think could happen would be that there will be more specialized app stores. There might be an app store that’s focused on, say, fitness or business,” she said.

Unterlaender, too, said a big part of the problem boils down to discovery -- finding the right app in the first place. Unless an app is listed at the top of a category or makes a “most popular” list, it is unlikely to be found.

She said that consumers complain frequently that searching for apps is “not up to scratch,” and that Google and Apple have assured her they are working to improve search.

PAYING FOR PLACEMENT

One way for companies to push their apps could be sponsorship, or paying for a top placement in an app store. This is something that lesser-known app store GetJar offers to developers. Apple and Google have resisted this option so far.

Microsoft Corp has also declined to offer sponsored apps in its Windows Phone, said corporate vice president Terry Myerson. Instead, it is working with companies on new ways to advertise their apps.

For example, he showed off Windows Phone 7 device where the backdrop of the app store displayed graphics from the popular game Bejewelled.

But nobody has yet found the perfect solution.

“How do you find out about apps? Where do you go?” asked Disney’s Sweeney. “Those are the questions we’re going to be asking. We’re looking for ways to drive viewers to our apps in the same way we drive them to our shows.”

Reporting by Sinead Carew; editing by Paul Thomasch and Matthew Lewis

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