FAN UP Market Analysis and Sales Projections Essay
FAN UP Market Analysis and Sales Projections
FAN UP is positioned within the Smartphone Applications Industry. Mobile devices with remote internet capability, smart phones, have created an entirely new market of users that can be reached on the go. Due to the recent nature of Smartphone technology, we are witnessing rapid growth and innovation in the smart phone applications industry. FAN UP allows the event host the ability to seamlessly pair a sponsor with individuals coming to the event. By doing so, FAN UP will open the door to endless brand reach through Social Media via the user, additional in-‐game/concert advertisement, fan appreciation, and a creative way for each event host to use their event to leverage underutilized sponsorships and promote their brand. Industry Analysis Mobile applications have changed a number of industry landscapes in recent history. This industry shows annual growth projections from 2009-‐2014 to be 49.8% and from 2013-‐2018 to be 28.9%. The evidence of this growth is a reason this app will be successful. Competition in the Smartphone Applications Industry is very strong.
Because of this, it is important to analyze the different forces at work within the industry. This chart, information gathered from IBIS World, lays out the industry structure: Life Cycle Stage Growth Revenue Volatility Very high Capital Intensity Low Industry Assistance Low Concentration Level Low Regulation Level Medium Technology Change High Barriers to Entry Low Industry Globalization Low Competition Level High The first key external factor in this industry is the number of mobile internet connections. As the number of smart phone purchases increases with the number of mobile internet connections in 2014, app developers will have a larger market for their products.
Secondly, as demand from e-‐commerce increases in 2014, retailers have expanded their product lines, the platforms on which they operate, and retailers are expected to create more shopping apps to assist time-‐strapped consumers. Next, time spent on leisure and sports represents one of the most key external factors. Time spent on leisure and sports is expected to decrease slowly in 2014, resulting in a potential threat for the industry. While the industry now serves a broad audience, leisure time is a major restrictive factor in a consumers’ ability to use and purchase smart phone app products. The US Census Bureau data re-‐iterates more of the same industry trends. “In 2011, U.S. nonfarm businesses with employees spent a total of $289.9 billion on non-‐capitalized and capitalized information and communication technology (ICT) equipment, including computer software. This represents an increase of 10.6% from 2010. Of the $65.2 billion spent on noncapitalized computer software, $29.9 billion was for purchases and payroll for developing software, an increase of 7.3% from 2010. $35.3 billion was for software licensing and service/maintenance agreements, an increase of $3.9 billion (12.6 percent) from 2010.”
Although the growth of mobile apps is on the rise, revenue earned from these apps is expected to increase at a slower rate. Over the next five years, consumers are expected to continue wander away from pay-‐to-‐download apps, forcing developers to embrace the “freemium” business model that relies on monetizing free downloads after the fact via in-‐app purchases. By 2019, free downloads are expected to account for about 95.5% of total mobile app store downloads. In the five years to 2019, revenue is expected to experience a 28.9% increase, reaching a total of a $34.7 billion smart phone application industry. Market Analysis The market analysis for FAN UP is atypical of most apps. FAN UP will start by focusing on the target market of Sports Franchises in the US and Concert and Event Promotion in the US. FAN UP will serve Gym, Health and Fitness Clubs in the US, Ski and Snowboard Resorts in the US, and Amusement Parks in the US in the secondary market. The sports franchise market in the US is comprised of sports teams or clubs that participate in live professional or semiprofessional sporting events (e.g. baseball, basketball, football, hockey, soccer and other team sports) before a paying audience.
This market makes up the first half of the target market. Over the five years to 2013, revenue is expected to grow at an average annual rate of 1.4% to $23.6 billion, and includes a 1.5% increase in 2013 alone. The key external factors for the sports franchise market loosely hold true for the entire scope of the FAN UP market. The external factors include per capita disposable income is expected to increase by 0.8% during 2013, the number of households earning more than $100,000 is expected to increase slowly over 2013, external competition from other sports franchises is expected to increase during 2013 which represents a threat in the industry but not the market, and time spent on leisure and sports is expected to decrease slowly during 2013. Industry revenue is expected to expand 1.5% in 2013.
Also, some franchises are opening new or remodeling existing stadiums to attract more consumers. Concert and Event Promotion in the US is the second half of the target market. This market creates, manages and promotes live performances and events, ranging from concerts and theater performances to state fairs and air shows. This industry has an annual growth projection of 2.6% from 2013-‐2018 with 49,825 operating businesses. Federal funding for Creative Arts is the key external factor that deviates from the sports franchises market. Many nonprofit establishments in this industry rely to some extent on federal funding, particularly grants from the National Endowment for the Arts, an independent agency that Congress established in 1965 to support the arts. Federal funding for creative arts is expected to increase slowly during 2013. This market has a history of good performance even when other industries struggle. Except for moderate wavering in 2010, the economic downturn has done little to deter Americans from attending live concerts and other entertainment events.
Over the five years to 2013, industry revenue has grown at an estimated annualized rate of 1.3% to $23.7 billion, including a 3.5% anticipated increase in 2013. Revenue Model FAN UP will create revenue through brokerage fees, reach bonuses, and advertising. This recurring revenues model will be paid by the host of the event (i.e. Carolina Panthers, Live Nation, etc.) for each event in which FAN UP participates. The app will be free from the App Store because, as shown in the data, consumers are increasingly less likely to pay for an app. The brokerage fees are for the access to the app’s consumer base. The reach bonus is in place because with more reach, the more the host can charge the sponsor of the FAN UP sponsorship package. The FAN UP pricing will be dynamic in that negotiations must take place with each new partner in order to agree upon the percentage of the FAN UP sponsorship that FAN UP will receive. The price of the FAN UP sponsorship package will be a negotiation between the event host and the brand.
Works Cited: 1. IBIS World 2. US Census Bureau 3. http://2012books.lardbucket.org/books/designing-‐business-‐information-‐ systems-‐apps-‐websites-‐and-‐more/s13-‐industry-‐analysis-‐smartphone -‐a.html 4. http://www.softwareengineerinsider.com/articles/smartphone-‐app-‐ development.html#.UvBroChU6xK 5. http://digby.com/mobile-‐statistics/