What do Snapchat, Waze, Instagram, Draw Something and Angry Birds all have in common? They are mobile apps that run on Apple (NASDAQ:AAPL) iOS and Google (NASDAQ:GOOG) Android smartphones and tablets. They are in fact responsible for driving the enormous sales numbers associated to those mobile devices. However, there is another factor they all have in common, these individual mobile apps are worth from hundreds of millions to billions of dollars each. They command valuations that we thought we'd never see in the mobile space. In some cases such as with Waze and Instagram, their billion dollar valuations have been validated based on their completed acquisitions by the likes of Google and Facebook (NASDAQ:FB).
It does not end here. This is just the beginning. Companies are using mobile apps as the prime weapon of choice to drive their own valuations forward and in some cases rescue and protect their valuations, or what is left of them.
Mobile apps come in many different forms from games, maps and entertainment to health, fitness and well-being. Entertainment-based apps such as the ones mentioned above however, seem to be leading the way in terms of commanding the highest valuations and forms of protection for today's consumer-facing technology companies. Let's take a few minutes to briefly analyze the mobile app offerings some companies are using to place a flag in the ground, and in the land of rich valuation.
SiriusXM broadcasts more than 135 channels of commercial-free music, premier sports, live news, talk, comedy, entertainment, traffic and weather to 22.9 million subscribers. We are one of the world's largest pure-play audio entertainment companies and we are among the largest subscription media companies in the United States. SiriusXM broadcasts to subscribers everywhere they want to listen on more than 800 devices for cars, boats, the home or office, and through a wide range of mobile devices.
SiriusXM offers an impressive array of content that spans virtually all genres and interests, including Howard Stern, Martha Stewart, Oprah Winfrey, Dr. Laura, Jamie Foxx, Opie & Anthony, Bob Edwards, Chris "Mad Dog" Russo, Jimmy Buffett, Elvis, Eminem, The Grateful Dead, B.B. King, Pearl Jam, Willie Nelson, Frank Sinatra, and Tom Petty. SiriusXM is the leader in sports programming as the Official Satellite Radio Partner of the NFL, Major League Baseball, NASCAR, NBA, NHL, and PGA TOUR and offers major college sports.
SiriusXM has arrangements with every major automaker for installation of satellite radio in their vehicles. SiriusXM products are available through shop.siriusxm.com and at retail locations nationwide. SiriusXM programming is also on Apple iPad, iPhone and iPod touch, BlackBerry (NASDAQ:BBRY) and Android-powered smartphones using the SiriusXM Internet Radio App.
SiriusXM provides premium real-time video, traffic, weather, data and information services for subscribers in cars, trucks, RVs, boats and aircraft through Sirius Backseat TV, Sirius Travel Link, XM NavTraffic, Sirius Traffic, XM Nav Weather, and Sirius Marine.
With the SiriusXM Internet Radio Mobile App, you can listen to SiriusXM's sports, talk, comedy, entertainment and commercial-free music programming on your iPhone or Android smartphone or tablet. You can access hundreds of On Demand shows and use MySXM to personalize favorite SiriusXM music and comedy channels so paying consumer hears more of what they want and less of what they don't. SiriusXM mobile app also lets consumers store and select On Demand content on their device so they can still listen even when they don't have Internet access. A SiriusXM Internet Radio subscription is required and generates revenue from the mobile app.
As a software add-on, the SiriusXM Internet Radio Mobile App can already be used in more than one million Ford vehicles that are equipped with SYNC AppLink. The product provides drivers with control of their favorite mobile applications via voice commands, steering wheel or radio controls. Essentially the consumer can be a safer driver while listening to the best radio on radio.
SiriusXM has clearly identified the important role the mobile plays in the lives of consumers on and off the road. It's now up to them to garner wide-scale adoption in order for it to have an impact on the company's current valuation.
Zynga's strategy for mobile apps remains horizontal and in the gaming area. They have cast a wide net across the mobile gaming sector. Zynga is working hard to drive its valuation forward based on the success of games such as 'Draw Something' and 'Words with Friends'. In early 2013, Zynga former CEO Mark Pincus announced that FarmVille, one of Zynga's most popular games, had reached $1 billion in total player bookings.
Some analysts and journalists have questioned the long-term prospects of Zynga's business model, especially after Zynga's Q2 2012 earnings report failed to meet analyst projections for revenue and earnings. Zynga has been taking steps to cut expenses and expand its business into areas such as licensed board games, online gambling, its own gaming platform (Zynga.com), and mobile game apps.
Zynga's new CEO's big challenge is to make a lot more money from mobile games, at a time when the success of developers including Supercell, King, GungHo and Kabam shows there is plenty of money to be made.
Analytics firm App Annie's games index tracking iOS and Android's app stores found that in May 2013, Zynga was the fifth biggest publisher on iOS globally for games downloads, but it didn't make the top 10 for iOS games revenues. The company didn't make it onto either top 10 for Android.
Poker by Zynga is the 18th top grossing iPhone game in the US App Store. Running With Friends is 27th, Scramble with Friends 59th and 90th (in paid and free versions), Ayakashi 70th, and Words With Friends 93rd. That puts Zynga in the 1% of mobile games publishers who are making it into that Top 100.
In the first quarter of 2013, 22% of Zynga's revenues were generated from mobile devices. That's $58m. In the same three-month period, Supercell made $179m from its two iOS games (Clash of Clans and Hay Day), while GungHo made $303m, mainly from its Puzzle & Dragons.
Even EA, (NASDAQ:EA) one of the traditional games publishers that Zynga delighted in disrupting on Facebook , made $109m from mobile games in the first quarter of 2013.
The most important thing to remember is that the social mobile games industry is still young and unpredictable. This market is fluid, to say the least. Zynga's new boss has plenty of work to do, but this time next year, there's every chance that there'll be a new wave of mobile-games winners on the app stores.
Chancellor Group (OTCQB:CHAG)
The Chancellor Group has a unique approach to leveraging the development and distribution of mobile apps. They are a company that essentially incubates or as they state "grow" start-ups that have a laser focus on particular mobile apps. They own controlling interest in these companies from 51-61% in most cases along with the option of placing them on the IPO track.
They have two companies that are moving various mobile apps forward. The first company is called Pimovi, a company that has built a mobile app, called CamFusion, that enables wearable Point-Of-View (POV) camera hardware, like Google Glass,Pivothead or GoPro to live-stream video and audio to the mobile app. It is supposed to be used by musicians, sports figures and other popular celebrities to more socially and intimately connect with their fans enabling them to "look through the eyes" of their favorite performer, person or friend. They have currently filed a patent application for the technology.
The other mobile app company and technology is called Fuelist. It's like an eBay (NASDAQ:EBAY) on steroids for the classic car market enabling, as they say, "data driven valuations" for the most valuable asset class today. This mobile targets a rich vertical which can be expanded to all of the worlds assets classes.
The diversified way in which Chancellor is approaching the mobile app space seems smart and could turn out to be quite effective for a multi-pronged approach toward entering the billion dollar valuation club.
Vringo's mobile app, Video ReMix, is an application that enables users to create their own Music Video on a Smartphone or Tablet. The app is available in partnership with music artists and brands. Tapping different elements activates beats to remix a song on iPhone, iPad or Android. The video can be uploaded to YouTube and shared on Facebook, Twitter (NYSE:TWTR) and Email.
Vringo's new mobile, music video remix platform for iPad was customized as part of a live, on-site marketing program for Heineken at the Coachella Music and Arts Festival, which was sponsored in part by Heineken and several other international brands.
The new Vringo Video Remix platform for iPad creates a customizable app experience on an interactive Video soundboard. For Heineken, Vringo created a personalized app, called "Star Mix," that features music from "Dirty Vegas" and live video footage from the Coachella Music and Arts Festival event.
Approximately 30 hostesses armed with the Vringo Remix app on iPad were on-site to encourage Coachella event patrons to create their own soundboard mixes. Finished video mixes were played, shared and posted across social media and the web on YouTube and Facebook.
"Event promotion, and marketing promotion in general, represent a new revenue opportunity for Vringo that leverages the buying power of advertisers such as Heineken and drives greater exposure to new prospective users." Stated Vringo's CEO.
In addition, the Fan Loyalty engagement mobile app is designed for "Idol Format" TV Shows and lets the audience truly feel a part of the show. Vringo provides fully-integrated live voting capabilities and exclusive video content direct to viewers which can be set as video ringtones. Will it become a billion dollar mobile app? Only time will tell.
As described on the BBM mobile app page, the BBM mobile app lets users send and receive messages in seconds with up to 2000 characters, and to know when their messages are delivered and read. There is also the ability to share photos, videos, voice notes and files up to 6 MB, and show others what you're listening to on your BlackBerry smartphone. Consumers can also choose their picture or animated avatar, add a personal message and customize chat bubble colors to make their BBM their own. One can also switch their BBM chat to a BBM Video conversation with just a tap and catch up face-to-face. The new Screen Share feature lets you show photos or your browser, or review a business document. You can also share the view from your camera.
Other options include switching your BBM conversation from text to a call and speak to your BBM contacts, from virtually anywhere they are in the world for free over Wi-Fi. With BBM connected mobile apps, consumers can chat with BBM friends within their apps and select BBM contacts right from the app to invite them to join in on the fun or download it. Facebook, Twitter, BlackBerry Travel mobile app and BlackBerry World are BBM connected mobile apps. So users can share their Facebook status updates, Tweet, travel itinerary or other mobile apps directly to contacts through BBM, without ever leaving the BBM connected apps.
Social aspects are important for mobile apps today and Blackberry claims the BBM mobile app is one of the best ways to connect with friends and family.
One of the strong points of the BBM mobile app lay in its internationalized platform. All you have to do is take a look at the languages it supports on its iTunes Preview page.
However, the real question is whether Blackberry's mobile app effort can be enough to save it from going under let alone driving any kind of new valuation for the company.
All companies above have new and different approaches toward driving valuations using mobile apps. As we continue to observe the way the mobile market is maturing, we can be certain that a few key ingredients will always matter. These are mobile apps that target the most compelling of consumer experiences whether in entertainment or wide-scale practical use. To the investor, it is of utmost importance to keep innovative companies like these on the radar.