mHealth app developers won’t make money with current pay per download business models

BERLIN, GERMANY: Despite the hype around mobile health applications and big market projections mobile health app developers will not be able to create big revenues with a pay per download business models. But how will mHealth apps generate enough sustainability to meet the rising expectations during this hype phase? And how will mHealth business models evolve in the next five years?

Mobile health applications are experiencing a second hype phase after first enthusiasm in the early 2000s. By looking back a few years we can see how the business will evolve in the future. Business models of traditional mHealth solutions which long existed before the smartphone app market hype already showed the revenue sources which will become important in the future.

Traditional mHealth solutions from 2000-2008 have typically been sold in bundles, which include connectivity charges, a device, and the application and/or service charge. In the more sophisticated traditional mHealth solutions the price for the application and the application sales revenues were minor contributors to the total revenue generated by the solution. Frequently the price for the app was not even disclosed.

The first generation of mHealth solutions in the new smartphone applications market have adopted a narrow range of business models, concentrating on revenues generated from application download sales, and subscriptions for content access over a period of time; average of 4-8 USD per download depending on the app store. In a very few cases publishers have linked the application to a device/sensor or service, such as the WiThing Scales Sync which provides a free application for use with a scale which is sold through the publisher’s website.

The business model will broaden once more when the enabling technology becomes sufficiently advanced. Sensors and special devices that are designed to take advantage of the smartphone interface will facilitate more advanced applications, and at the same time healthcare industry players with the capability of providing complex service offerings will enter the market.

These factors will allow revenue generation through multiple sources apart from application downloads including for example through service charges for HCPs remotely monitoring patients’ health condition, or through product sales for special devices and sensors that relate to an application’s functionality.

As the market develops, applications will facilitate the sale of products and services such as medications through a compliance application or a mobile pharmacy application. These device and service sales will become the major revenue source for mHealth application providers by 2015.

Advertising revenues will become a revenue stream, as it will across the smartphone application market and will add to the mHealth providers’ income but only to a little extent.

As opposed to the traditional model, connectivity will not be part of the bundle, as most smartphone users will already have some kind of data plan.

Today’s dominant pay per download business model will give way to those other revenue stream. Developers of mHealth applications should be aware of that and adopt their products and service accordingly.