How app monetization is different from what we have learned from the web - Andrei Dementjev - Fortumo

 New smartphone sales in Q2 2011
Microsoft Others 1%
Bada 2%
2%
Android
RIM 12% 43%

iOS 18%

Symbian
22%

 Every second smartphone sold is running
Android.

 Smartphones in US (July 2011, comScore mobilens)
Microsoft Other Symbian
6% 1% 2%

RIM
22%
Google
42%

Apple
27%

 iOS and BlackBerry are installed on 49% of US
smartphones

4.90% 4.70%

7.70%

82.70%

Nearly 83% of app store revenues are made on iOS.

 Glu Mobile: Android Revenues make only
1/10 of iOS revenues

 Challenge:
Why develop for other platforms if iOS is
making most of the revenues?

 iOS has the highest level of competition

by Distimo

 Rovio Angry Birds:

Android revenue = iOS revenue

 Answer:
Every platform can bring
you money
 Keywords:
competition, experience, expertise, st
rategy

Going Global

 Challenge:
Developers are only aiming at established
and rich markets like US and Western
Europe

 Android sales in 2011

 40% of smartphones are sold in Asia-Pacific

 America: 29% vs Asia 70% vs EMEA 31%

 Answer:
You should have a monetization strategy for
every region.
 Asia Pacific
 USA
 Western Europe
 Middle East
 Latin America
 Eastern Europe
 CIS
 Africa

 Challenge:
Developers are ignoring alternative app
stores

 Alternative stores:  Regional stores:  Manufacturer stores:
 Opera Mobile App  Andronavi (Japan)  HTC Market
Store  Samsung Apps
 Wandoujia (China)
 GetJar  LG smartWorld
 Appchina (China)
 Appia (Pocketgear)  Shop4Apps (Motorola)
 Fasmicro App Store
 AndAppStore
(Africa)
 Handango
 OnlyAndroid  HiAPK (China) and many more..
 Insyde Market
 Amazon App Store  Operator stores:
 SlideME  Vodafone Live! ..2 000 000 000
 Appoke  OrangeWorld downloads on
 O2 Active
 YAAM GetJar only

Premium vs Freemium

 Challenge:
Developers rely on
premium distribution
models.

 Percentage of free apps:

Apple App Store

Nokia Ovi Store

BlackBerry App World

Windows Phone Marketplace

Android Marketplace

0% 10% 20% 30% 40% 50% 60%

 Why Premium is bad?
 App stores are full of low quality apps
 App purchase is an investment
 Cultural differences
 Weak and non effective billing solutions
 Free competitors
 Limited distribution options
 Piracy

 Why Freemium is good?
 More downloads
 Target long tail (just like offers)
 People are used with free apps
 Ability to adjust to different ability to pay
 Better global reach
 More distribution options
 Lower dependence from app stores
 Piracy

 75% of top 100 grossing iOS apps are games
 65% of them are freemium

 Answer:
Avoid selling your games
and use Freemium models!

Earn money from free games

 Mobile ads
 Offers
 In-game purchases
 Sponsorships and special deals

Mobile ads

$15 billion in 2011.

 Challenge:
Mobile ads makes my game slow and ugly.
 Answer:
Do it smart!
 What's critical:
 Ad coverage
 Respect low-end devices
 Try different advertisers
 Think about UI and design
 Place ads on loading screens

Mobile offers

A great way to monetize non-paying users.

 Pros:
 great for monetizing non paying users
 global reach

 Cons:
 be careful with what you offer
 you may be promoting competitors
 don't overload your game by offers
 don't replace payments with offers!

In-app purchases
 What can be sold?
 virtual credits
 extra levels
 trial version activation
 extra features
 personalization
 banner-free version (weak)

 Consumable goods (virtual credits) 68% of in-app purchases

 Challenge:
Developers are using ineffective payment
methods

 In-app payment methods:
 App store billing (Google checkout) – mostly credit card based, high store
margins.
 Mobile operator billing (direct billing, premium sms) – good coverage
and conversion rates, low revenue shares.
 Credit cards (Visa, Mastercard) – bad coverage, high revenue shares, kills
conversion rate.
 Paypal – works in limited number of the countries
 Prepaid cards, kiosks and vouchers – low conversion rates
 Direct debit and others...

or

 Answer
Analyze your user base and select the most suitable
payment method and additional methods if needed.

 Challenge:
Bad user experience during payment flow

vs

 In-app payment is impulsive
 Every new screen kills conversion by 10-15%
 Customers are not yet familiar with mobile
purchases
 Payment should look secure

 Answer:
Golden rules of in-app payment: the user
should reach to the payment with a maximum
of 3 clicks.

 Challenge:
Developers don’t benefit from ingame
promotion.

 Holidays discounts
 Achievement based bonuses
 Limited time offers
 Exclusive items and gifts

 Answer:
Active promotion of ingame purchases
increases the revenues by 30%!

 Challenge:
Developers ignore small details.
• Currency
• Localization
• Terms and conditions
• Operator/billing provider logos (+ 15% conversion)
• Helpdesk and customer care
• Track user reviews and comments
• A/B testing

 Answer:
Make your payment flow perfect!

 Challenge:
Wrong game balance

 Game is too difficult => they leave before buying
 Game is too easy => they don’t need to buy
 Too few free levels => they are not yet addicted
 Too many free levels => they had enough

 Answer:
Develop the perfect balance for introducing
paid content.

 Challenge:
Wrong pricing policy

$2 in USA $2 in China
 Answer:
Adjust the prices according to purchasing
power.

 Challenge:
Lack of offline mode support.

According to Localytics, 15% of mobile apps are
launched while offline .

 Answer:
Your game should be prepared to work and
monetize while offline.

Спасибо!

Andrei Dementjev
andrei@fortumo.com
skype: andrei.dementjev

How app monetization is different from what we have learned from the web - Andrei Dementjev - Fortumo

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