90% of the games that are currently on my iPhone were a) made by dev teams with 1-3 people, b) provide a unique and polished experience, and c) became known mainly based on community outreach. None of them are currently in the top rankings, but as far as I can tell they make enough money for the teams to get by. People keep talking about "hidden gems" on the App Store that failed to succeed despite having an excellent product, but so far, the only ones I've seen were either outright clones, failed to do any outreach at all, or had a poor business model. (Freemium with very little incentive to upgrade, for instance.)
Sure, if you're a hundred-person company, you might need to resort to shady means to be profitable. But I don't think that's at all necessary to make money on the App Store.
Unfortunately, that doesn't make up for the 400k indie games out there that are not making the top 100 and are competing between them to have a little piece of cake.
There aren't 400k polished and unique indie games. There are 399.9k shit quality clones and a few gems. The question to ask is "if I make a quality game that is at least somewhat novel does it have a chance to do ok" where ok = enough to fund a 2-4 person team for their next project.
The answer is Yes, where "OK" is directly proportional to "uniqueness/novelty" factor. When judging, a novel gameplay idea will win me over before anything else. Good gameplay trumps all, but it's the toughest thing to get right, especially with the terribly limited interface you have on mobile devices.
This equation also works, sadly, when you replace "uniqueness/novelty factor" with "boobs." Look at the top apps and see that this is true.
One very notable example is Sword & Sworcery EP. The guys behind the game did a talk at GDC '12 about making games for niche audiences instead of stooping to the lowest common denominator, but I can't seem to find it.
Simogo has made a couple of very unique and artful games, including last year's Mobile Game IGF winner Beat Sneak Bandit. It's notable that their games are premium priced ($3), but still have hundreds of reviews.
Mika Mobile is a husband & wife team with a number of fantastic brawlers under their belts, including Battleheart and Zombieville USA 2.
Tiger Style is (in their own words) a "distributed collective of independent game developers" that have most recently developed the award-winning exploration/space-gardening game Waking Mars.
Jeff Minter releases a new iOS game what seems like every other week. (Though he once characterized it as "run[ning] frantically on the iOS treadmill".)
Zach Gage has made a number of small, fairly popular games, including SpellTower and Bit Pilot. ("Net Gross for me is probably around ~110k for 3 years of work. but the profits would probably be quite a bit lower than that")
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Notable recent failures include Punch Quest (F2P model didn't yield any income, so they switched to paid) and Gasketball (again, the F2P model they were using was too permissive).
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So, not a perfect ecosystem, but not an abysmal wasteland either. Enough for the kooky hobbyists to get by as long as their products are top-notch and their business model makes sense. (At least that's how I see it.)
90% of the games that are currently on my iPhone were a) made by dev teams with 1-3 people, b) provide a unique and polished experience, and c) became known mainly based on community outreach. None of them are currently in the top rankings, but as far as I can tell they make enough money for the teams to get by. People keep talking about "hidden gems" on the App Store that failed to succeed despite having an excellent product, but so far, the only ones I've seen were either outright clones, failed to do any outreach at all, or had a poor business model. (Freemium with very little incentive to upgrade, for instance.)
Sure, if you're a hundred-person company, you might need to resort to shady means to be profitable. But I don't think that's at all necessary to make money on the App Store.