Mobile Games: Climbing the Uphill Monetization Battle

By Tim Cronin

In March, VentureBeat writer Dan Takahashi moderated a panel on mobile monetization at the Game Developers Conference where he called mobile monetization the “Achilles Heel” of the gaming industry. In his words, “with more than a billion users on mobile, it seems like it should be easy to make a ton of money by collecting pennies. But the struggles of big publishers – many of whom appear to be running in place even as they grow – suggests that this is a very hard nut to crack.” Hard, indeed. As much as consumers are “hooked” on mobile games like Scramble With Friends and Angry Birds, getting millions of downloads, playing sessions, becoming a viral ‘hit’ and winning awards is one thing; monetizing is another. That’s where a lot of gaming publishers and app developers struggle.

But there’s a light at the end of the monetization tunnel. According to the International Data Corporation’s newly published report, “Worldwide Gaming-Optimized Handheld, Smartphone, and Tablet Gaming 2013-2017 Forecast,” the number of paying smartphone and tablet owners will surpass the number of paying GOH (categorized by Nintendo’s 3DS and Sony’s PlayStation Vita) gamers worldwide in 2013 and rise at a rapid rate through 2017. And total mobile/portable gaming revenue is expected to hit $23 billion in 2017. Those are some pretty staggering figures and line up with the findings of a survey conducted by Frank N. Magid Associates, which found that 59 percent of US tablet owners played mobile games on their devices. The study also indicated that US mobile gaming revenue will come from a combination of paid downloads, in-game purchases of virtual goods and in-game advertising.

Just look at what Rovio, the maker of hugely popular Angry Birds, has done. According to its 2012 financials, Rovio had a record-breaking year with reported revenues of nearly $195 million due in large part to its games and consumer products – that’s up 101 percent from $97 million in 2011. While monetizing mobile games may be tough, it’s an uphill battle that can definitely be won. It just requires some ingenuity in terms of how publishers and app developers think about monetization. So how can other publishers and app developers climb the uphill monetization battle with their mobile games and replicate the monetization success of Rovio?

Keep users interested with fresh content.

To monetize a mobile game, publishers and app developers have to not only create games that are fun, cool and entertaining, but they’ve got to make sure the game “hooks” users through fresh content. It may seem like a no-brainer, but if a game can’t keep users engaged and coming back repeatedly, they’ll surely click or tap right out of the game and into another game. Once they are addicted and can’t help but come back for more (and tell their friends about it, too), users are much more likely to pay a fee for more content and content that’s different and exclusive. Producing content that users want and will be willing to pay for can make all the difference in whether mobile games have the “sticky” value that will get users to fork over their money in-app.

Freemium works. Just do it right.

As important as it is to excited, entertain and evoke that inner competitor in mobile game players, it’s also important to get them to spend money on attractive in-app purchases. For example, allowing a gamer to purchase extra lives or levels keeps them playing and spending in your app. In-app upgrade purchases also allow app developers and publishers to monetize off a single user multiple times. According to app analytics firm App Annie, worldwide revenue for freemium apps (apps that are free to download and then have in-app purchases) on iOS have more than quadrupled over the last 24 months. While the monthly average spent on in-app purchases is low now, mobile game developers who focus their monetization strategies on quality, content-driven in-app purchases can really build off of this expected increased mobile spending.

Zoom in on video ads.

We all love movie trailers. They’re usually action-packed, packed with daredevil stunts and introduce viewers to the main characters and the storyline. Although not as lengthy and detailed as film trailers, mini video ads used to promote apps and games are becoming an increasingly popular way for app developers and publishers to acquire new users and monetize via in-app purchases. Last year, Flurry revealed that one of its AppCircle Clips customers found that consumers acquired through video ads used apps 43 percent more often and played 23 percent longer per session than normal users acquired through traditional banner ads. These numbers point to the value of video ads – they tell a compelling story and increase click-through rates, video plays and overall revenue for app developers and publishers.

HTML5 vs. Native Apps: The Debate Continues

By Tim Cronin

The debate over HTML5 vs. Native apps has been going on for a while, and the term ‘web’ is no longer limited to only desktop and laptop PCs. Mobile hasn’t just made its mark on the web; these “always on, always connected” devices are now on pace to overtake PC shipments. According to the International Data Corporation, PC shipments dropped to 76.3 million units in the first three months of this year – that’s a 13.9 percent decline from the same period in 2012. And then there’s the shift in how consumers worldwide are using tablet devices. These once clunky and expensive devices are now sleek, easy to use and affordable and so much so, that consumers are using tablets to perform the types of activities once reserved for PCs, such as accessing bank accounts/financial information, reading news, watching videos and listening to music. So now that we know the future is in mobile, the question remains: Is it better to connect through the web (HTML5) or native apps downloaded to our devices?

It’s an app world and the browser just lives in it.

If you don’t already know it, it’s an app world and the browser just lives in it. That’s what a recent report from Flurry Analytics says. The study, conducted to celebrate the five-year anniversary of the firm’s launch, found that the U.S. consumer spends an average of 2 hours and 38 minutes per day on smartphones and tablets. 80 percent of that time (2 hours and 7 minutes, to be exact) is spent inside apps and 20 percent (only 31 minutes) is spent on the mobile web. Now add to that the staggering statistics that the average number of apps launched per day by consumers climbed from 7.2 in 2010 to 7.5 in 2011 and finally to 7.9 in 2012, and it’s hard not to see that native apps are leading the debate.

On one hand, Native apps provide greater functionality through the use of features such as the device’s camera, microphone, calendar, and GPS, as well as a simpler, cleaner UI design. In the current market, publishing native apps allows app developers and publishers to cater their offerings towards their audience, thus providing features and functionalities that work across their chosen platforms. Using the app market framework also allows increased app visibility, but it means that publishers and app developers have to give Apple about 30 percent of their revenue.

HTML5 has some maturing to do.

With Facebook CEO Mark Zuckerberg announcing that using HTML5 was a strategic mistake back in September, many developers are still wondering if the cross-platform functionality of HTML5 will ever make up the differences of functionality that can be achieved in native mobile apps. The key question for any app developer or publisher is really to examine what is best for your monetization strategy and which development choice works well for your customers.

At the moment, HTML5 is still in its programming infancy. Though it allows app developers to write one set of code for multiple mobile platforms, HTML5 itself has a long way to go to catch up to all of the added benefits of a native app. Data tends to be extracted more slowly, making it harder to execute mobile payments. Lag in execution time can also turn away many mobile users, causing a loss in mobile revenue. However, as much as HTML5 apps may lag behind native apps at the moment, these apps are constantly improving and adding features. A recent report from BI Intelligence predicts that HTML5 will eventually win out over native apps, citing the absence of Apple or Google regulations that may accompany HTML5 apps.

Although native apps may have the upper hand (for now), HTML5 apps will definitely begin to entice app developers and publishers who are looking to keep 100 percent of their monetization revenue, like the Financial Times, one of the first to sidestep Apple and develop its own web app. Many of these web apps like the Financial Times are already profitable, even though they exist outside of app marketplaces. HTML5 might eventually win the app battle, but it still has a way to go yet before it is the clear victor.

The key to deciding which programming language and distribution option is best for app developers and publishers really comes down to what you are offering, what audience you are trying to attract, and whether you are willing to give up a portion of your revenue in exchange for increased visibility in the app store and more stringent regulations.

What Is Mobile Mapping?

By Tim Cronin

There are many ways for publishers and app developers to monetize their mobile offerings, and one of the main ways is by taking advantage of mobile mapping data. Geographic data can help app developers and publishers reach their intended audience with far more accurate targeting. But what is mobile mapping?

Mobile mapping is the process of collecting geospatial information (or geographic location information) from a moving vehicle, such as a car. The mobile mapping vehicles are equipped with photographic, laser, radar, or other equipment to build up digital maps and geographic data, sometimes creating geo-tagged videos and pictures. GPS devices use mobile mapping to create their street data, road images and even to show you a picture of your destination address. Turn-by-turn direction apps are a great example of a mobile service utilizing mobile mapping data and a user’s GPS-enabled smartphone or tablet device.

Data gathered from mobile mapping offers a key advantage to publishers and app developers who want to monetize their mobile advertising using targeting parameters such as geo-location. Using mobile mapping geographic data, publishers and app developers can choose whether to target users in a specific city or even down to a certain street or zip code. This type of targeting allows app developers and publishers to maximize ad impressions served, and in turn, increase their ROI.

One important thing to remember is that location is not everything. Publishers and app developers need to incorporate targeting into their monetization strategies. One such way is using consumers’ GPS to analyze where they go and then ensure that the types of ad units being served across mobile devices address those behaviors.

Upping the Monetization Ante for Financial Apps

By Tim Cronin

According to Varolli Corporation’s “Can You Bank on Your Banking App?” study, financial institutions just aren’t following through (monetizing) on the high rates of consumer use of financial apps. The study found that 44 percent of consumers used a banking app, 8 percent had downloaded an app but not used it, and the remaining 48 percent had never downloaded a mobile banking app. One of the more telling findings of the report is that consumers want to be able to conduct sophisticated functions such as depositing checks and receiving real-time notifications from banking apps.

But the good news is that some financial institutions are doing mobile well and right. Take Wells Fargo, for example. With more than 9,000 stores and 12,000 ATMS nationwide, Wells Fargo has smartphone apps for Android, BlackBerry, iPhone and Palm devices as well as a mobile site and a text banking program, followed by its iPad app that was released in December 2012. It has also rolled out its Send & Receive Money feature, which lets Wells Fargo and Bank of America clients receive and send money to each other. The service works by using an email address or mobile phone number. As Brian Pearce, Senior Vice President and Head of the Retail Mobile Channel for Wells Fargo, stated: “The key for us it to not [let mobile] compete with other channels. We know that people have adopted this mobile lifestyle, and we want to make sure we are doing everything we can do to manage their finances while on the go and serve all customers in that manner.”

In addition to apps released by major financial institutions, there are plenty of other financial apps that are both useful for consumers and monetize for app developers. Here are three financial apps that are doing a good job of monetizing (or are well on their way to doing so).

Mint

Many financial apps allow users to track their personal expenditures, but the Mint app for iOS and Android goes beyond the basic math of mobile banking and lets users create and monitor their budgets. In today’s economy, consumers are especially concerned about keeping their finances in check. To monetize an app of this kind, it’s important that your monetization strategy takes that into account. What the Mint app does that makes it so cool (and easy to monetize) is that it suggests similar financial services/products, e.g. credit cards, in the form of sponsored ads. What really makes this work for Mint is that these suggestions don’t feel or look like ads to users (and thus, are less likely to irritate/turn them away). In fact, the Mint app will even recommend non-sponsored services if they will save users more money, as opposed to a sponsored product. Not only does this practice provide users with a more relevant and useful user experience, but it adds a layer of trust which will likely get users to click on in-app ads, but also recommend and share the app with other users.

Pageonce

Paying bills can get complicated, and Pageonce works with consumers to make that easier. Available on all mobile platforms, Pageonce provides its users with reminders and the ability to pay their bills through its app. Pageonce charges a small transaction fee when users pay bills via a credit or debit card, but they are currently looking to expand their monetization strategy and are possibly looking at ad platforms. It will be interesting to see how Pageonce incorporates advertisements or another strategy and how that will translate to consistent ROI and revenue for app developers.

Expense Manager

One of the advantages of Expense Manager, an Android app, is that it lets users track their expenses in multiple currencies and take photos of receipts. Expense Manager utilizes relevant ads as its monetization strategy, but in deference to its professional audience, allows users to upgrade to an ad-free Pro version for $4.99. The important thing to note with Expense Manager’s monetization strategy here is that ads only appear on the bottom of the account summary page, so that they are not disturbing or cluttering the app experience. Even more important is that when ads are served in the free app, the ads are targeted and relevant, thereby driving an increase in click-through rates.