Ireland reveals burgeoning apps economy

3 Dec 2013

Apps, small pieces of software that can be downloaded to smartphones and tablets in seconds, are big business worldwide. And Irish tech firms are leading the charge in capturing a share of Europe’s €10bn apps economy.

A two-year-old messaging app company called Snapchat recently spurned an acquisition offer of between US$3bn and US$4bn from social networking giant Facebook.

Snapchat, a piece of software for phones that lets users (mostly teenagers) send each other photo messages that later delete themselves, is the brainchild of two Stanford University students in California. Just like Facebook has been, Snapchat is now embroiled in a legal battle among its original founders.

The ability to create apps and publish them to places like the Apple App Store, Amazon’s app store or the Google Play store has resulted in its own economy, where developers get to keep 70pc of the revenue of apps sold.

Apple’s launch of its Apps Store filled with 500 apps in 2008 kicked off the apps business. It had only been a year since Apple had unveiled the iPhone.

So far, consumers have downloaded more than 50bn apps from the App Store, which now has around 1m apps. Some 400,000 of those are native to the iPad tablet computer. The Google Play store has more than 1m apps and this year it also breached the 50bn-download milestone.

In Europe alone, according to a study of the European app economy by VisionMobile and Plum Consulting, the app economy generates more than €10bn in revenues.

The European app economy produces more than a fifth of all apps in the world – 22pc – across all platforms, from Google to Microsoft, BlackBerry and Amazon. Downloads of apps in Europe have reached 100bn since 2008.

The study suggests the app economy supports 794,000 European jobs, out of which 529,000 are direct app economy jobs with 60pc of those employees working as software developers.

App creation in Ireland

Ireland is home to a small but burgeoning community of app creators, ranging from established businesses like Tapadoo and Redwind Software, who have built apps for other businesses, and next-generation digital publishers like StoryToys, whose apps have gone to No 1 in kids books app charts in the US and around the world.

There are also examples of local entrepreneurs, such as Elaine Heney. She founded Tipperary-based Chocolate Lab Apps, whose gaming apps garnered more than 40 No 1 iTunes rankings globally and more than 1.5m downloads.

Brothers Aidan and Kevin Doolan founded StoryToys, originally known as Ideal Binary. In 2011, Barry O’Neill, games industry veteran and chairman of Games Ireland, came on board as CEO.
Now employing 25 people, StoryToys has raised investment from several investors, including Leaf Investments, Enterprise Ireland and AIB Seed Fund, co-managed by Enterprise Equity Venture Capital.

Until recently, StoryToys recreated pop-up books for the iPad generation based on fairytales like Snow White and Sleeping Beauty.

Goodnight Mo is the company’s first app based on an original character and story. The StoryToys team conceived and developed Goodnight Mo in-house.

The app went to No 1 in the Books category of the US App Store charts. Goodnight Mo has also hit No 1 in more than 40 countries and has been in the top 5 in more than 150 markets, making it the company’s most successful product launch to date.

According to O’Neill, Goodnight Mo is now among the top 7 digital children’s brands on the Apple App Store and on Google Play. Timing, he said, has been everything and building an app brand in the multibillion-dollar children’s publishing space has not been easy.

O’Neill said the app economy in Ireland is too small to mention and app creators have to think globally from the get-go if they wish to stay viable.

“We basically targeted a niche and so far we are the largest independent publisher in that niche. It’s a volatile segment of the market, subject to different trends and intellectual property is everything. That said, there is a big gap between Disney and ourselves, the No 7 player.”

While StoryToys competes across all the various app platforms, O’Neill said 75pc of revenues would come from iOS app sales for Apple tablets and smartphones.

“The competitive factors are really down to things like distribution, engagement with content and emotive factors, like does the content have appeal?”

Like Finnish app creator Rovio, famous for its Angry Birds games, O’Neill also has his eye on crossing over into merchandise and other media platforms for its in-house brands.

“We really have to focus on what we’re good at in the short term, but definitely we have plans to look at other platforms and mediums, such as films and TV, and we have had discussions around bringing our intellectual property into the animated TV world,” O’Neill said.

The Appys

Another successful app creation firm is Redwind Software, which develops apps as an agency on behalf of other companies and dabbles with a few of its own brands. The growth of the apps industry in Ireland can be seen through the fact it now has its own awards called The Appys. Redwind Software swept the board at The Appys in Dublin recently, winning three awards for Life in the Womb, an app it created in conjunction with the National Maternity Hospital and The Science Picture Company. The iPad app provides an in-depth visual guide to a baby’s development through the 40 weeks of pregnancy.

Conor Winders and David McMahon set up Redwind Software in 2008, and it has grown to employ 14 people. The company’s first game Movie Challenge caught the attention of major US brands and quickly the pair began winning contracts to build quiz-style games for Heineken USA and Elvis Presley Enterprises.

Redwind Software has maintained a steady focus on working solely with big brands and has just clinched a deal to create a Deal or No Deal app for TV production company Endemol.

“The reality is the app market is so big and so competitive that you really need a big brand or company behind you and that’s why working with brands like Endemol is the kind of deal we focus on,” Winders said.

He added that Irish-based app creators punch well above their weight when it comes to quality apps, drawing on the creative tapestry of animation, music and literary talent at hand in Ireland.

Emerging app talent

An example of the emerging talent can be seen through a three-person app development team called Hola Mariquita, based in Dublin. The team’s interactive graphic novel Little Details for iPad and Android won a silver award at this year’s Appys in the Best Entertainment App category, competing against big brands O2, Sky+, Sky Group, Spin 1038, and Today FM.

The team consisted of Greg O’Brien, Aurora Pérez Machío from Spain and Fabrizio Valerio Covone from Italy. Machío said they had been working on a master’s degree in creative digital media at Dublin Institute of Technology (DIT) and decided to create their own graphic novel. While the team was good at illustrating and script writing, they taught themselves how to write code in order to produce the app.

“It was really just a college project. What we had in mind when we started researching was that there were a lot of interactive books out there but often people just put sound on top of PDFs of the printed version and we decided to take it in a different direction,” Machío said.

The app economy is now extending to ordinary businesses that out of necessity and efficiency are building their own apps and realising they have a start-up on their hands.

An example of this is an app created by Bodytonic Music, owner of the Twisted Pepper bar venue in Dublin. The company has created an event-management app called DoorTonic that can be used as an office till and headcounter for any event, replacing the need for doorclickers, bingo tickets, or pen and paper.

Some 2,000 venue owners in the UK and the US, according to Bodytonic Music, have already downloaded the app, even though it has yet to officially go live on the App Store.

Shane Linehan, project manager, said the app was born of necessity.

“It’s no secret to anyone in the events industry that even at a sold-out event 10pc to 15pc (of patrons) don’t turn up, and this is a missed opportunity for more ticket sales.”

He said the team is taking baby steps with the app at the moment, yet there are definite plans to develop it into a full suite of event-management apps with the ability to accept credit-card payments and provide receipt printing.

“The company has always been up to speed with current technology and it makes sense that we’ve moved into the apps economy,” Linehan said.

A version of this article appeared in The Sunday Times on 1 December

Apps development concept image via Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years