In-app billing is shaping up to be more than a 2011 mobile megatrend; it may be the only way developers can make real money selling their applications – period. Why? For one, the freemium model – which offers consumers free applications as a means to cross-sell, or up-sell consumers to a variety of paid content and services later in the consumer journey – makes the ability to offer in-app billing options critical.
More importantly, in-app billing is emerging as the only form of billing that puts developers and publishers in complete control of their app pricing, marketing and distribution. This is because this approach also allows them to circumvent cumbersome default payment systems and market development distribution agreements on many app stores.
The in-app imperative
Reports (and common sense) show that users expect a quick and simple payment experience – and will drop out of the payment flow if it is tedious. As Patrick Mork — CMO of GetJar, the world’s largest, open app store with over one billion downloads to date – stated to Computerworld: “The best purchasing experience is probably the one where you never have to leave the app.”
This dovetails well with a recent report from Netsize, a Gemalto company and enabler of mobile commerce and communications. Specifically, the company’s Application Store Billing report (based on a survey of 1,000+ mobile professionals and practitioners across 67 countries) identifies the business models and billing methods likely to deliver app stores and developers mass-market success.
To achieve optimum results, respondents agree application stores must harness a variety of billing mechanisms. Chief among these is operator billing, indicated by 85 percent of respondents as a key enabler for application store mass market appeal. Respondents also reported a huge opportunity ahead for app store providers that will be driven by freemium-type models. The report concludes that making money in this new ‘Application Economy’ will therefore require providers to employ in-app billing and solutions that allow them to sell content, virtual goods and add-ons from within their app.
How fast are developers/stores taking up in-app billing?
Bango, mobile analytics and payment company, reports on its blog that in-app billing adoption has been slower than predicted. Specifically, only 5 percent of payments billed through its own mobile payments platform were in-app payments. However, this will change dramatically in 2011 when an estimated 30 percent of all apps will use in-app billing as a charging model. This 600 percent growth rate in in-app billing will be driven by the removal of a variety of technical limitations (currently, most app stores simply don’t offer the functionality to enable payments from within the app). BlackBerry has announced it will offer in-app billing support in early 2011, for example.
Vendor spin aside the reports identify a real and lucrative business model likely to impact the app landscape at all levels in 2011.
This also comes through in Mobile Games: App Store Strategies, Business Models & Forecasts 2010-2015, a new report published by Juniper Research. It forecasts that revenues from in-game purchases will overtake the traditional pay-per-download model as the primary source of monetizing mobile games by 2013. With Apple’s in-app billing mechanism showing the way forward, the report reckons that total end-user revenues will surpass $11 billion annually by 2015, nearly double what they were in 2009 ($6 billion).
In-App Billing seminar December 8th
The explosion of interest in in-app billing (and the positive outlook for its widespread adoption in 2011) makes it an ideal topic for the next Knowledge & Networking seminar, hosted by AIME. MSG is proud to be a media partner with AIME and will continue to support this worthwhile organization in the New Year.
Tomorrow (December 8th) in London AIME wraps up the conference and event season with In-App Billing 2.0: Taking the Application Billing Core out of Apple. The seminar, which is sponsored by OpenMarket and hosted by AIME, will map the business landscape for in-app billing. In addition, billing providers, brands, MNOs and media agencies will be on hand to discuss their experiences and share case studies.
Issues to be discussed:
- What are the advantages to a brand being able to offer in-app billing in its apps?
- How can digital agencies serve their brand customers better by utilizing in-app billing?
- Direct operator billing, premium SMS and WAP billing options – what’s best for in-app billing?
- Collecting one time payments and recurring subscriptions
- Giving developers and publishers greater control over in-app purchases and content marketing
- Technical integration issues
- Rob Wells, Head of Mobile Products and Services, Virgin Media
- Joe Ranson, Project director, EMEA, TigerSpike
- Rory Maguire, Head of Payments, 3
- Paul Rawlings, CEO, Screen Reach
- Alex Moir, General Manager, Europe, OpenMarket
- Chair: Andrew Darling, AIME
The seminar will include a Q&A debate with between speakers and the audience where you will have the opportunity to ask the panel critical questions about in-app billing and how it affects your business. Following the seminar, please join OpenMarket in the bar for networking over pre-Christmas sponsored drinks.
VENUE: London Grange Fitzrovia Hotel, Portland Suite, 20-28 Bolsover Street | London | W1W 5NB
TIME: Registration opens at 5:30pm, Seminar starts 6pm
The future of in-app billing
No doubt the outlook for in-app billing will be a major topic during the knowledge seminar. It’s a little early to call winning business models and approaches, but this interesting commentary offers us an entirely new perspective on mobile payments.
The scenario offered by the author (Russell Berry is Director of AppCreatives) suggest that the next generation of mobile phones will have specially-made SIM cards that include an app for mobile shopping payments.
“Users follow simple on-screen instructions either to pre-load their mobile with funds, like a pay-as-you-go phone, or link the app directly to a bank account. To purchase something the cashier swipes your mobile over the terminal. A beep registers the sale and users get the message ‘Accepted’ – or ‘Declined’ if the account is already maxed out.”
Exciting stuff indeed –
Editor’s note: MSG explores the future of payment and other megatrends in FUTURE FILE, a special series of guest columns from major players and influencers, including Gemalto, Millennial Media and Yahoo.
Disclaimer: Netsize is an MSG client and supporter; Bango has been an MSG supporter.