If you are a team of developers with good skills, you can make a lot of money with an iPhone application. The best proof: Social Gaming Network’s (SGN) Fleet Air Superiority Training F.A.S.T. dogfight game “pulled in over $1 million in download fees alone in the first six weeks it was available.”
F.A.S.T was originally priced at $9.99 but SGN has varied the pricing as part of their launch plan. It currently sells for $1.99 and is said to be bringing in as much as $60,000 per day.
It’s not clear that F.A.S.T can maintain this trajectory or how much of a lifetime any iPhone application has. But, there is something to be said for the strategy of building an engine that allows for more games to be built and for licensing the technology to others.
Still, with more than $100 million invested in iPhone start-ups, there are going to have to be a lot more companies developing high-quality games and a lot more iPhone users (which means multiple carriers) to prove the market anywhere near $1 billion and prove to be a good return on venture capital.
This also brings up some interesting questions about how microtransactions and virtual goods play into premium games (i.e. those that you pay more than $1.99 for) versus free to play social games. There’s not enough in the competitive market yet to see a trend, but I suspect we’ll see a further movement toward cheap barrier to entry and a heavier reliance on alternative means of revenue generation.