"Monetizing Apps: Lessons from Photo App Developers" by Hans Hartman, President, Suite 48 Analytics

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Rebooting the EU App Economy / Fraunhofer HHI, Berlin, Germany / 13th November 2013

Hans Hartman, President, Suite 48 Analytics

"Monetizing Apps: Lessons from Photo App Developers"

Hans Hartman is president of Suite 48 Analytics, a market research company focused on mobile photography, and chair of Mobile Photo Connect. Previously he was chair of the Seybold PDF Conferences and conference director of Future Image Mobile Imaging Summit Europe. Hans is also a GigaOM Pro Analyst and was recently named “Mobile Power Player” by AlwaysOn.

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"Monetizing Apps: Lessons from Photo App Developers" by Hans Hartman, President, Suite 48 Analytics

  1. 1. Monetizing apps – lessons from photo app developers Hans Hartman President Suite 48 Analytics Chair Mobile Photo Connect November 13, 2013 Suite48Analytics
  2. 2. Sources —  Monetization interviews for RPI ◦  Photo app developers use diverse monetization models; open to experiment —  Monetization panel at Mobile Photo Connect conference ◦  Scalability determines monetization options —  Photo/Video Apps Market Analysis ◦  With category maturing, successful apps adopt higher prices and in-app purchasing —  Ad hoc discussions with developers Suite48Analytics 2
  3. 3. Monetization options popular among photo app developers —  Charge —  In-app for app purchasing (IAP) —  Advertisements —  Selling —  Pay-out third party products later: at exit Suite48Analytics 3
  4. 4. Charge for app – trend —  Trend: more top selling photo/ video apps charge higher prices Pricing over time 45% 40% 35% 30% 25% $0.99 20% $1.00-1.99 15% >$1.99 10% 5% 0% Suite48Analytics Suite 48 Analytics Photo/Video Apps Market Analysis, November 2013 4
  5. 5. Charge for app – considerations —  How high are your user acquisition costs? —  How viral is your paid version vs. a free alternative? —  How high are your support costs? —  Is a free super lite version with IAP an alternative (de facto trial version)? —  Can revenues from paid apps scale enough? Suite48Analytics 5
  6. 6. In-app purchasing – trend —  Trend: IAP is still growing among top selling photo/video apps 60% IAP on iOS over time 60% 50% IAP by OS/payment 50% 40% 40% 30% 30% 20% 20% 10% 10% May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 0% Suite 48 Analytics Photo/Video Apps Market Analysis, November 2013 Suite48Analytics 0% iPhone free (n= 50) iPhone paid (n= 50) Android free Android paid (n= 50) (n= 50) Suite 48 Analytics Photo/Video Apps Market Analysis, November 2013 6
  7. 7. In-app purchasing – considerations —  IAP was the buzz 6-12 months ago, inspired by the games world —  IAP is only scalable per user if many options, often refreshed inventory —  IAP poses tradeoff challenges: “in your face” vs. user-friendly Suite48Analytics 7
  8. 8. Advertising —  Methods: ◦  Generic ads – low revenues, often not relevant to user ◦  Targeted ads – leverage user data (content categories, geo data, hashtags, etc.) ◦  UCG-integrated “ads” – promotions, contests, brand mixed with UCG integration, sponsorships: today’s buzz —  Scale matters ◦  Ad networks vs. in-house sales ◦  UCG-integrated “ads” require large base Suite48Analytics 8
  9. 9. Selling third party products —  Products offered through APIs: ◦  Physical products, e.g. photo products ◦  Third party functionality, e.g. photo filters —  Considerations: ◦  How many different APIs can you realistically support? ◦  What happens if you stop offering third party products? Suite48Analytics 9
  10. 10. Payout later – at exit —  No monetization yet – build a viral, loyal user base that has long term monetization potential and is attractive for acquirers or IPO Suite48Analytics 10
  11. 11. Takeaways photo app market —  Scalable user base – produces most monetization options long term —  Ads – the more scalable & targeted the user base, the higher the revenues/user —  IAP – hard to scale, safe interim solution —  Paid – viable option up to a certain scale; challenge is to devise “consumable” products or services —  Be clear about your revenue goals – they might limit your monetization options Suite48Analytics 11
  12. 12. Thank You Hans@suite48A.com Suite48A.com 12

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