Commercial WordPress theme sales is a known business today. Folks have been selling themes since 2007 and many sellers experienced some very good years. The market commoditized itself quite significantly, and it's harder and harder each year to stand out.
Of course, new entrants can still succeed, but it's rare to experience a windfall of sales and profits in theme sales currently. There are so many providers and the barrier to entry is still quite low — at least to create a theme that is passable to a prospective buyer.
I actually questioned whether this would happen in 2010, when the boon was in full swing:
Yesterday, I was reading an old column on economics written by Austan Goolsbee, President Obama’s new chief economic advisor. In the article, he referred to, “the oldest line in the economics book: No barriers to entry mean no big profits.” He was talking about real estate agents, but it got me thinking how such an idea may apply to WordPress.
The basis of the theory is that when you don’t have to spend money to get into the market, the providers for the market continue to grow as the demand for the product grows. It’s just too easy to get in on the action. The article references a study that shows that even though the real estate market soared in the mid 2000s, the average realtor wasn’t making any more money than before. Why? Because more and more realtors were entering the emerging market.
At the time, it didn't feel like such an obvious outcome. I believe that we are in a lull of theme innovation, but simultaneously we are coming up on a new era of potential for theme designers and developers.
The commoditization of themes
Most themes we see today are a commodity, and I think it is inevitable that the theme market will always seek to commoditize itself. The theme market is inherently different than the plugin market, and its nature will always present a struggle for companies wishing to rely on consistent growth, and to do so will continue to require constant marketing, iteration, and/or innovation.
I've seen many folks blame ThemeForest for the commoditization of WordPress themes, but I don't believe that to be true. ThemeForest has merely been a convenient host for an inevitable market shift.
Ebb and flow of innovation
Looking at the ebb and flow of the theme economy, I think we can highlight periods where innovation was higher, and therefore competition was lower — enabling some folks to do quite well.
The first paid themes, themes with custom page templates, niche non-blog “CMS” themes, responsive themes, themes that build in non-theme functionality, builder themes, minimalist themes, and themes with deep plugin integrations: these are some of the tides we've seen since 2007.
Differentiation has been required to enable success. A few theme makers seek differentiation, and then once they find it, the hoards copy it and commoditize it again. Some differentiators hold on, while others slowly lose their grip due to waves of copycats.
The tide is out
I believe we are in a lull right now where differentiation in themes has ebbed, but we're close to a new tide, where some old players and some new players will differentiate themselves.
I'm not saying there has been no innovation at all in themes, but there hasn't been significant differentiation in a couple of years, and not much of it has been user facing.
And while I certainly think ThemeForest has helped spur more rapid commoditization, I think it has been inevitable with each wave of differentiation — with or without ThemeForest.
Marketing, iteration, and innovation are the three things I noted theme shops need to do to survive. When you look at the theme shops that have been around the longest and still actually focus on themes, they have done at least two of these things well.
Surviving long term
The common quality across surviving shops has been iteration. Successful theme companies have been consistent — whether with frequent theme releases, reliable updates to frameworks where they built trust with their communities, shifts in pricing and licensing to promote more sustainable business models, or other evolutions. Others have iterated right out of themes and into plugins, or at least diversified to include some non-theme income.
Marketing and innovation, however, differ based on the company. Some companies are relentless marketers and have done okay without consistent innovation. Others are innovative and have gotten by without major marketing campaigns.
In total, most theme shops are not doing very well. Most non-new entrants will tell you that their sales have been flat at best for the last couple of years. Without significant innovation, more new entrants have been able to water down the market, shrinking most everyone's piece of the pie, save for exceptions like the consistent top sellers on ThemeForest (which I think is more due to the fact that ThemeForest makes it so much easier to defeat the enemy from the high ground).
As I consider what can differentiate a theme shop today, a few things come to mind. However, it's important to remind myself that what comes to mind may also be a lie. For instance, when I thought to myself, ‘What can differentiate a theme shop right now?', one thing that came to mind was a heavy embrace of the customizer for page building. Disregard the fact that that is probably already on its way to being commoditized, and instead realize the bigger flaw: “embracing the customizer” doesn't explain anything to the customer.
As a developer and WordPress best-practice snob, what can differentiate a theme to me is different than what will differentiate it to the end user. So, making a theme that let's you “build a beautiful custom website in 15 minutes” is a better pitch than one that embraces some feature only known by those intimate with WordPress.
Another thing I really, really want to say will change the commercial theme landscape is the WordPress REST API. And it will — for developers — but it's not yet obvious how this will significantly change themes for users, as well as their buying behavior. We know the REST API will enable developers to build themes in whole new ways, but if that doesn't translate to a theme that's easier or somehow more special to the end user, then it won't matter much in the end for distributed theme differentiation.
But these things will only enable innovation; theme makers will still have to take the tools and make something great to differentiate themselves.
The next question is: what will the next wave of innovation look like? And who will be the differentiators? Maybe you.