The Joys (and Otherwise) of In-app Billing

POSTED BY Global Administrator
I would argue strongly – very strongly – that one of the main reasons we now have a $36 billion mobile entertainment industry is that it has become incredibly easy to buy content on your phone. Yes, I know there are other factors at work here too – there’s a lot more decent content on offer, the touchscreen interfaces have become rather nifty, larger screen sizes allied to WiFi mean you can actually enjoy watching video – but to monetise all that wonderful content, you first have to make it fairly straightforward for consumers to part with their greenbacks. And boy, have they made a good job of that. Let’s take a small girl – let’s call her Amelie, since it’s her name, and she won’t complain about this blog otherwise it’s no pudding tonight - who is particularly fond of Angry Birds, and who has become accustomed to playing it on the smartphone of a close relative. Angry Birds now allows you to buy all sorts of wonderful accessories from within the app using a variety of billing mechanisms; the smartphone in question had Google Checkout enabled; you can guess the rest. Suffice to say that the coffers at Rovio were just that little bit fuller by the time she'd finished. Now, I am not suggesting that the young lady in question is responsible for the bulk of in-app billing (although give her enough phones and she’d give it her best shot); rather, that the impressive array of extras that she accrued demonstrates how far we’ve moved over the past few years in terms of payment mechanisms. In fact, not so very long ago, pretty much the only monetisation method open to Rovio would have been a one-off payment at point of download. Which also presupposes, in those antediluvian pre-app store days, that consumers would have been able to find the content in the first place. The freemium model – give ‘em the download and charge ‘em for the extras – has rapidly gained in popularity over the past couple of years, and it is easy to see why. Firstly, the model allows developers and publishers to create an ongoing revenue stream: when new or additional content becomes available, it can be monetised from within the app. Secondly, an increasing number of payment providers enable in-app direct billing, meaning that rather than rely on pre-registered credit cards, consumers can simply charge the virtual items, bonus levels or whatever to their monthly phone bill. Hence the fact that this model now accounts for around 60% of consumer app revenues. Like I said, it’s now incredibly easy to buy that content. The trick, as ever, lies in creating content that people want to buy. Again and again and again…