Looking back at 2012, the unpredictable events that transpired continue to redefine the mobile software landscape. Facebook confronted a tumultuous aftermath from wide-eyed retail investors speculating after the greatly anticipated IPO; yet Facebook acquired Instagram shortly thereafter, further disorienting tech valuations. Zynga's rapid growth stalled as monetization didn't keep pace with user adoption expectations. Google brought the world a new line of tablets and reinserted its presence in iOS. Apple faced mounting criticism of a dry innovation pipeline, yet released the iPad Mini to further delight users' insatiable appetite for new devices with overlapping features -- a paradox countered with strong retail sales. Yet, firmly in the backdrop of a U.S. economy struggling to pull itself out of mounting debt and changing consumer spending patterns, the pace of innovation is accelerating.
With this in mind, here are four predictions that will shape the mobile economy in 2013 onward.
Mobile Gaming Grows and Goes Back to its Roots with Casino Games
Mobile gaming is alive and well. When you do it right, it's predictable and ROI positive -- mirroring Hollywood franchise films. Releasing four versions of Angry Birds is no fluke, and neither is the $873 million that the seven Saw films grossed. While we've witnessed big players like Zynga struggle to capture and monetize users at the pace Wall Street expected, developers continue to innovate in mobile gaming.
There is no better place to observe the fruits of innovation than in mobile casino gaming. According to Juniper Research, mobile gambling will grow to be a $100 billion business worldwide by 2017, driven by a surge in social-website gambling and legalization in key U.S. states. New rulings to the Unlawful Internet Gambling Enforcement Act of 2006, and WIRE Act, have shifted the ground to unlock new models for chance-based games, as states look to capitalize on tax revenue and local investment.
Promising numbers like these have inspired Zynga to double-down efforts into online gambling. Small studios, like BitRhymes, whose casino game titles stay in the top 10 grossing list on iOS and Android, have also managed to carve out a successful niche for themselves in this area.
Other examples include Betable, an online-gambling startup whose platform is already being used by several social game developers, and Hatch's own venture, CashPlay, which has seen promising early traction among gamers and development platform customers. I will wager that mobile, chance-based games will follow users from the slot machine to their slick mobile apps in users' hands, as states seek to fill their treasury coffers and developers embrace proven games that users love to play.
App Development Enters Main Street
Welcome to the democratization of software development, where building mobile apps will become mainstream. SaaS app development services are no longer reserved for tech companies and publishers with extensive capital to spend on design, development and maintenance. Look for local corner cafés to offer their own branded apps, and freelance artists, bloggers and designers using the iPad to promote their portfolios. And that's just the beginning. The long tail of immersive apps empowering individual content creators, small businesses and multimedia enterprises to market or monetize their services is growing rapidly.
The emergence of accessible, low-cost development alternatives has opened doors for the masses to build mobile apps. Kleverbeast addresses this emerging demand by empowering people to quickly and easily create beautiful iOS and Android apps without typing a single line of code. The cost of app development has been historically prohibitive for many small businesses and content creators, and has even been a distraction for large organizations whose core competency is not technology but the creation of unique and marketable content.
As app development services proliferate, consumers and businesses alike can expand beyond the reliance on SEO and conventional mobile user acquisition tactics to tap into mobile app stores and the next generation users that increasingly rely on that channel for discovery.
Funding Startups Will Become Rationale (Again)
Funding quality companies has always experienced periods of wavering discipline, as angel investors with relaxed investment criteria enter in droves to participate in a tech hype cycle. Mobile is no different. Many startups will unravel, unable to secure additional financing, because some of these deals should never have been seeded at inception. The dearth of capital leads to funneling investment dollars into quality startups, and consequently, carnage among companies that lack sustainable competitive advantages, talented teams or noteworthy market traction.
Many fresh angels have assumed greater risk than is commensurate with their early ownership and anticipated upside. Some of these investors won't have the capital to diversify their portfolios or participate in follow-up rounds of financing. The result is not a Series A crunch, but rather, a magnifying glass on rational investing, often led by institutional investors. The capital bottleneck at the Series A is simply an artificial result of the glut of capital available at the seed stage. According to a recent study by CB Insights, somewhere between 1,000 and 4,000 startups that recently received more than $1 billion combined in seed stage funding are projected to fall off investors' radar in subsequent rounds. CB attributes this to the "natural selection process."
Fresh angels, hungry to keep up with the Joneses and raise their social capital, may be investing for the wrong reasons. As these lessons are learned, angel investing will swing back to rational levels. In the process, aqui-hires will become increasingly commonplace, as startups unable to secure Series A financing, will seek earlier exits and distribution from larger companies to achieve scale vs. go it alone.
Mobile Commerce Craze Reaches Online Purchase Levels
Retail spending habits are transforming. Pre-saved payment information already allows consumers to take advantage of impromptu mobile transactions from city ridesharing services such as Lyft, Uber and Sidecar, to insider designer sales via Amazon, Gilt Groupe Mobile and Rue La La.
As mobile transaction services proliferate, we are observing early indications that people prefer to shop on their personal mobile devices through apps and mobile web sites vs. conventional, stationary computers with a lean experience designed for of a prior decade. This new lean-forward experience will eclipse traditional online e-Commerce behavior. Retailers certainly understand this movement and have begun experimenting with location-based price discrimination more aggressively. They're also investing in apps to exploit the urgent need for retail therapy, which is often not at home sitting in front of a stationary screen.
Nine out of ten U.S. consumers now own a tablet, smartphone or cell phone, which translates into roughly 216 million mobile device owners. Consequently, more than one-third (37 percent) of mobile device owners are engaging in some form of mobile commerce--either shopping and/or purchasing online or in-store or using and/or redeeming coupons or gift cards, according to a study from the Consumer Electronics Association (CEA).
IBM reported that during Thanksgiving and Black Friday 2012, 24 percent of shoppers used a mobile device to visit retailer websites, up from 14.3 percent in 2011. With growth like this, it's only a matter of time before mobile commerce eclipses traditional e-commerce.
There will be many more unpredictable changes in mobile in 2013, but if these emerging trends are any indication, we're in store for a new world -- built, consumed and reinvented by the wireless generation.
Have some of your own predictions to share? Feel free to provide comments in the section below.
Dinesh Moorjani is the founder of Hatch Labs, a mobile technology sandbox that builds startups that transform mobility for the wireless generation.
Follow Dinesh Moorjani on Twitter: www.twitter.com/dmoorjani