Why Most App Developers Fail: The Hidden Dangers of Bad Market Research

If you’ve ever considered launching an iOS app, you’ve probably heard how competitive the market is. In fact, more than 1,000 apps are released on the App Store every single day. The harsh reality? Less than 5% of those apps actually make money. That’s a brutal statistic, but it highlights just how tough it is to create a profitable app in today's market.

You’re probably thinking, “Alright, the solution is to do solid market research before diving in.” And you’re not wrong. But even if you put in the time and effort to research, there’s still a major trap that developers fall into—one that leads them to fail, even when they think they’ve done everything right.

In this post, I’ll break down the common mistakes app developers make during market research and why these mistakes often lead to failure. If you’re serious about launching an app, this is a must-read to help you avoid wasting months of effort on the wrong project.

The Illusion of Market Research

We all know market research is critical. But here’s the kicker: even doing research can lead to the wrong conclusion. The biggest mistake I see developers make is basing decisions on incomplete, surface-level information. They take a narrow, fragmented view of the market and end up chasing trends without understanding the bigger picture.

Let me show you how this plays out.

The Sensortower Trap

Sensortower is a fantastic tool for getting a sense of what apps are performing well in the App Store. Many developers will dive into Sensortower, see an app making good money, and think, “I’ll just replicate this business model and I’ll be golden.” But here’s where things start to unravel.

Let’s use AI tattoo design apps as an example. Right now, they’re all over the place and appear to be crushing it in the market. You might see a few of these apps on Sensortower, showing tens of thousands in monthly revenue, and it’s easy to assume you’ve struck gold with this idea.

But here’s the problem: you’re not seeing the full picture.

The Red Ocean Reality

Yes, AI tattoo design apps are hot right now. But if you zoom out, you’ll see that this niche is already a “red ocean”—meaning it’s oversaturated with competition. Just in the last year, there were 120 apps with the name “tattoo design” released on the App Store. Out of those 120 apps, only a handful are generating significant revenue.

Here’s a related screenshot that puts this into perspective:

So, do you still think this is a good business to replicate? Let’s be real: the chances of launching an AI tattoo design app and breaking through the competition are slim to none. Unless you can provide a better user experience than dozens of existing apps, your chances of making money are very, very low.

And this isn’t even touching on the fact that big competitors in this space already have paid user acquisition (UA) strategies in place. These larger players are scaling up their Facebook and Instagram ads, dominating the market with paid traffic while smaller developers struggle to get any organic installs.

Paid Traffic: A Battle You Probably Won’t Win

When you’re competing against well-established apps, one of the biggest challenges is user acquisition. Many developers think they’ll be able to rely on App Store Optimization (ASO) to gain organic installs. But here’s the truth: it’s nearly impossible to get organic traffic in a market flooded with similar apps.

For example, if you were to try competing with those AI tattoo design apps, you’d be going head-to-head with companies that are spending tens of thousands of dollars every month on Facebook ads. Here’s a screenshot from Facebook Ads Library to show you just how aggressive their UA campaigns are:

When you’re up against this level of paid acquisition, it’s almost impossible to compete unless you have a massive marketing budget and a standout product.

A Smarter Trend: Color Analysis Apps

Let’s take a look at another hot trend: color analysis apps. This niche is growing, but it hasn’t yet reached the level of saturation we see in AI tattoo design apps. Over the last year, 16 color analysis apps were released, and three of them are generating revenue.

Compare that to the 120 tattoo design apps—16 competitors looks a lot more manageable. And if you’re good at user acquisition, this could be a wave you can still ride.

Here’s a screenshot showing the revenue generated by color analysis apps:

The key takeaway here is that while color analysis is also a trendy niche, the competition is far less intense than in the AI tattoo design space. If you’re serious about building an app and you’re capable of running effective UA campaigns, this might be a better opportunity.

The Cycle of Market Saturation

The reality is, this cycle happens all the time in the app market. A couple of apps hit it big, and within a matter of months, the market becomes flooded with similar apps. It’s only a matter of time before the same thing happens in any niche.

So, what does this mean for developers?

First, you need to be fast. If you’re entering a market that’s just starting to gain traction, you might have a shot. But you’ll need to execute quickly before it becomes oversaturated.

Second, you need to make sure you’re really solving a problem. Don’t just clone an app you saw on Sensortower. Think critically about how you can offer something better. Whether that’s through superior user experience, better marketing, or a unique feature, you have to stand out.

Finally, don’t rely solely on ASO for traffic. Paid acquisition is critical, especially in crowded markets. If you’re not ready to invest in Facebook, Instagram, or TikTok ads, you’re going to struggle to scale.

Final Thoughts

The harsh reality of the app market is that it’s incredibly competitive, and making money is harder than ever. Even when you think you’ve done the right research, you can still end up chasing a trend that’s already oversaturated.

The key to success is not just identifying a hot trend, but understanding the full market picture. Take the time to analyze competition, consider your UA strategy, and make sure you’re entering a space where you can actually compete. Otherwise, you’ll just be another app developer chasing a red ocean—and ultimately failing to make any money.