A New Era of Alternative App Distribution

We have endless choices when it comes to buying products—from big box stores like Walmart to local farmers markets and boutiques. Similarly, companies can sell through giants like Amazon or directly to consumers. So why are we limited to just 1-2 sources for our mobile app needs? Consumer choice and preferences drive the marketplace, and they should apply the same diversity to our app choices. Historically, we’ve relied on just two vendors for our mobile app stores: Apple and Google. However, the cracks in the app store duopoly could herald a new era of app store choices for consumers and developers.

Balancing consumer confidence and scale

Smaller developers have a hard time reaching consumers, and even if they do, users are likely to trust the app stores they are familiar with—in most cases, Apple and Google. A recent example of another major brand entering the alternative distribution market is Microsoft’s recent launch of an online app store. This move signals a shift in the market and demand for more options. But it is primarily possible because Microsoft already has a large customer base and a wealth of resources at its disposal, including an already established, massive game portfolio. Even so, it will still face challenges in driving growth and scale.

For example, the need to add more apps, games, users, genres, and diversity to the store would allow it to continue to mature. However, developing these components takes a lot of time and resources. For Microsoft to maintain long-term growth and compete with Apple and Google as an app provider, it may need to partner with other app developers. Such an approach would open up its market to a wider group of developers, further diversifying the app store market.

This move by Microsoft is just the first step toward providing more direct-to-consumer distribution options.

The Perfect Storm for D2C Distribution

The need for D2C distribution has been threatening incumbent app distributors for some time, and now more than ever, the perfect storm is coming that will finally break up the duopoly and create a new landscape. Current DMA regulations from Europe, developer development needs, and available technologies are all working together to create a space for app developers to reach consumers directly, rather than through third-party app stores:

1. DMA regulations in Europe: The EU Digital Marketing Act (DMA) has already opened up the Apple and Google mobile app stores and forced them to open their doors to more developers. Microsoft wants to provide an alternative to those two outside the EU, and more paths will follow in this direction, paving the way for a new app ecosystem.
2. The need for developer development: The current 30% commission charged by major app stores is unsustainable for small developers. This high fee forces developers to pass on increased costs to consumers, which creates more barriers to success. With the right strategies in place, there are endless possibilities for new and innovative app experiences.
3. Available technologies: Hundreds of alternative stores are already available, but they have only been successful in select markets. The next phase of alternative distribution solutions will involve improving technology to provide secure, scalable distributors that enable distribution across geographies.

Preparing for the new era of app stores

The biggest companies are already working on this huge opportunity, but alternative distribution is still largely in the testing phase. This gives companies the opportunity to jump in now and get ahead of the competition:

• Invest in research: There is still work to be done to create viable ways to distribute apps. Make sure you invest the time and research to ultimately have a strong alternative solution. Learn what is currently available and test different technologies until you find something that works well and scales.
• Analyze industry trends: Pay attention to the industry and emerging trends. Developers want to reach new customers, but that won’t matter if they don’t deliver the apps users want. Even great technology will fail if it doesn’t address a compelling need or demand.
• Develop D2C business channels: It will be competitive when we recreate the app store environment. Companies need to have a solid foundation in D2C channels, such as optimized sites, strong brand identity, social media and marketing strategies, and great customer service. Taking small steps, such as finding a partner to fill some of the gaps, can be the answer to quickly emerging with the right technology and maintaining a competitive advantage.

The Future of App Distribution: Choice, Flexibility, and Options

As we move toward a new era of alternatives to app stores, the dominance of Apple and Google is being challenged by innovative distribution strategies, including those of major players like Microsoft. This shift, driven by regulatory changes, developer needs, and emerging technologies, signals an exciting new landscape for consumers and app developers. By investing in research, analyzing industry trends, and developing direct-to-consumer channels, companies can capitalize on these opportunities and stay ahead of the growing app market. The future of app distribution is diverse and dynamic, offering a broader range of choices that could reshape the industry.