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Platform and Marketing Strategies of Platform-Based Mobile App Stores Reiser Wang 1
Research Motivations Smartphone industry “Destructive innovations” Changes of user behaviors (in 2 years) Smartphone adoption App mania Change of mobile apps App developers: gold rush 2
3 Research Objectives What kind of strategies would be appropriate for platform-based app stores to pursue potential opportunities and avoid threats in the view of a multi-sided catalyst platform? What are the business and marketing strategies should application developers adopt to maximize their potential revenue opportunities?
Landscape of Smartphone Source: (Weinberg, 2009) and Wikipedia
Worldwide smartphone volume by OS Source: Wikipedia and IDC
7 Smartphone Adoption On The Rise Source: (comScore, 2011)
App Stores Mobile application stores (app stores) are storefronts, either embedded as an application in the mobile headset or found on the Internet, offering mobile application download for mobile subscribers.
9 Mobile App Store In early 2000s, app stores were centered on providing simple apps and the store were hosted by MNOs. Value-added service Increase ARPU In Jul 2008, Apple Inc. introduced App Store, a service for the iPhone, iPod Touch and iPad Hosted by platform Direct sales model 70/30 revenue split
Apple App Store 70/30 revenue sharing One time developer fee ($99) and paid apps (from $0.99) Direct sales to iOS device users By passing MOs Eliminate developers’ entry barrier by facilitating transaction, distribution, promotion Source: IDC and Wikipedia. Accessed on March 25, 2010
13 Market Perspectives In a survey conducted by Gartner (Shen, 2010), while mobile operator portals remained the most accessed sources (35%) for application and content downloads, application stores went from nowhere to being used by 30% just in 2 years after Apple App Store.
Analysis: Users Differences in usage by regions Different brand preference by gender and age Shift of usage
17 Pay Per Download Decreasing average selling price Pricing matters Developers could either give an app away for free or charge for it. Some developers or companies opt to ship only paid versions when they have recognizable brands or apps. For amateur app developers or companies with more original, less-recognizable titles tend to release free, free-trial, or lite versions to promote themselves in the app store.
18 Subscription Mostly for contents Apple Subscription Service Google “One Pass”
19 In-App Purchase App developers sell digital goods and subscriptions inside their apps Apps can be distributed for free. For developers, they need to obtain users’ eyeballs in app stores, engaging players first with free-to-play models then monetizing content over time. Demonstrate value first and offering flexible payment options to customers. Allow developers to continuously create updates by adding new features or contents to gain more revenue from in-app purchase
20 In-App Advertising According to Gartner, mobile application advertising will be generating a little under one third of the revenue generated by application stores, up from 16% in 2010. Advantages of in-app advertising Better and integrated experience Better targeted audience
Payment Platform Social Network Platform Mobile Advertising Platform Affiliated Platforms Payment Platforms Developer Group User Group Mobile App Stores Social Network Platforms Mobile Advertising Platforms
22 Billing / Payment Platform Billing and payment are key enablers of the business of mobile app stores Operator billing Direct end-to-end billing Apple iTunes Google Checkout PayPal
23 Mobile Advertising Platform Mobile platforms are expanding in mobile advertising On Jan 5 2010, Apple announced their acquisition of mobile advertising network Quattro Wireless. Later in Apr 2010 Apple announced iAd On May 27 2010, Google outbidded Apple and announced to acquire AdMob Microsoft: AdCenter BlackBerry Advertising Service
25 Social Network Platform According to Gartner (Shen, 2010), social networking is one of the fastest growing apps in mobile apps A important player in WOM marketing Apple – Game Center Third Party – Open Feint
27 Select A Platform Developers are better off working on 1 or 2 platforms Key factors for selecting a platform include current and future market share, market potentials, monetization options, capabilities of devices, has app stores, and size of developer community.
28 Choose A Business Model Paid or Free apps? External Factors Internal Factors Price Competition Buzz Matters
29 Marketing The vast majority usually take a brief spike of downloads upon release and quickly fall off as other newly-released apps fill in behind them For all developers, there is an exposure bottleneck in mobile apps that needs to be conquered. “Stand out in the crowd” Keywords, use cases, etc Dual business models Limited discounts or free downloads WOM marketing – solicit feedbacks, reviews
Economic Platform In (Evans & Schmalensee, 2007), economic catalyst is an entry that has (a) two or more groups of customers; (b) who need each other in some way; but (c) who can’t capture the value from their mutual attraction on their own; and (d) rely on the catalyst to facilitate value-creating reactions between them. 31 Source: (Evans & Schmalensee, 2007)
32 Mobile App Store as Catalyst Platform App Developers Platform-Based Mobile App Stores Users a way browse, search, download, pay for an app in an easier, streamlined, trust-worthy way reaching out and selling their apps to users directly and reducing cost and barriers in transaction, distribution, and payment. Payment Social Networking Mobile Advertising
33 Functions of Platform-Based App Stores in Catalyst Platforms
34 The Catalyst Framework for Mobile App Stores
35 The Catalyst Framework for Mobile App Stores
36 Conclusions Ｐlatform-based mobile app stores demonstrate as an example of a catalyst business, which facilitates interactions between two or more groups of customers (developers and users) who need each other. At meantime, app stores increase own value and play a key role in mobile platform penetration. We identified revenue options and business models of mobile apps, as well as three affiliated platforms that app store platforms must either integrate or partner with . For app developers, selecting a platform, choosing a business model, monetization, and marketing are key factors in developing their business in app stores