Last week saw Amazon take its in-app purchasing platform out of beta phase and release it into the wild. The move gives Android app developers another way to monetise their Amazon Kindle Fire apps, but will it equate to more revenue?
Will Amazon In-App Purchases Reap Big Rewards for Android App Developers?
In-app purchases, for those of you unfamiliar, are transactions that take place within an app’s ecosystem, allowing users to pay for enhancements or extras from without leaving the app. So for example, videogame developers may sell in-game virtual items, or in-game currency, to users, which make the game easier, while other apps could simple upsell extra features to increase functionality.
Both Apple and Google already offer such a service and there is enough data suggesting in-app purchases are a more effective way to monetise apps than mobile advertising. Back in 2010, when in-app purchases on the iPhone were barely a year old, Android app developers were already seeing average revenues of $8 per user, as opposed to the $1-per-user typical to ad-revenue models.
Skipping ahead to July last year, and research from Flurry revealed that 75% of revenue generated among the top 100 grossing iOS apps came from videogames, and 65% of those games were funded by in-app purchases, with the average transaction being a surprisingly high $14. Last September, US carrier Verizon added more weight to the healthy numbers with research showing 72% of iOS app revenue came from in-app purchases. Android App Developers, such as Epic Games and XMG Studios, have also done very well out of deploying in-app purchases in their games.
Good News for Android App Developers
Although the above numbers are certainly good news for Android app developers, there’s two things that you need to consider when thinking about using in-app purchases. Firstly, as you may have guessed from the above examples, the success of this revenue model appears skewed toward videogames. It’s not hard to understand why – if you get a user hooked on a compelling game mechanic, they’re much more likely to succumb to impulse-buying in order to enhance the experience. The other thing to consider, is that most developers are making money from iOS users, not Android users. It’s well known that iPhone users spend more cash on apps than Android, which is not surprising, as Android’s success has occurred mostly in the budget-end of the smartphone market. Also Android’s incredible scale (which is growing by the day) may mean ad-based models are still be more viable on that platform.
So what about Amazon? Well Amazon will be sticking to Apple’s 70/30% split on revenues (which is good news considering that Amazon retains the right to implement its own discounts on prices) and early data shows Amazon Kindle Fire users, like iOS users, are happy to spend money on apps. It’s also worth noting that the top ten paid apps on the Kindle Fire are dominated by videogames, which means its users have a healthy appetite for the kind of apps that work best with in-app purchases.
This is all bolstered with some very robust sales and traffic figures for Amazon’s tablet. So, Android app developers, thinking of developing an Android app (especially a videogame), then adopting an in-app purchasing revenue model and targeting the Kindle Fire could be a real money spinner.