Picking up from Monday in discussing aspects of Opera’s Mobile App Subscription Store, it is appropriate to delve into its value for developers of premium mobile apps. Why is this something you would want to get into? How can it really improve your revenue vs. single copy sales? You can talk to a member of our support team if you already know Opera’s Mobile Subscription Store is something you want to investigate further.
If you were to visit any traditional brick-n-mortar business, you would see that there is a lot going on behind the storefront, itself. For large supermarkets like Walmart, you will find many large warehouses, lots of people receiving and stocking products. You will find a fleet of trucks delivering pallets of goods to each store. There are all manner of other costs involved – costs of the buildings, the fuel, the insurance, etc.
In the mobile world, the closest things to brick-n-mortar businesses are the mobile carriers themselves. They have the license to operate in a particular country or region; they have the towers; arrangements with local mobile phone dealers to sell phone cards or arrange long-term subscription plans; plus their own marketing and advertising personnel and budgets. These are multi-million, sometimes multi-billion dollar businesses in their own right.
There are two major obstacles to overcome as relates to international sales – 1) affordability, does the customer have enough money to buy your product?, and 2) payment method, is the customer able to pay in an acceptable format?
The majority of the world, outside of Europe and North America, do not have credit cards or Paypal accounts. Does that mean they don’t have money? Does that mean they don’t buy stuff? No, it just means there is a gap between their ability to pay and your ability to collect payment.
The Subscription format resolves the first. Opera Mobile Store’s expertise along with the in-market specialization of each Mobile Carrier identifies the “happy point” at which customers are willing to pay for mobile apps. This completely offsets the need for developers to apply to price segmentation or concerns that someone from Europe might pick up what you are offering in Southeast Asia on a bargain basis. Most large scale businesses do apply to price segmentation because the Purchasing Power of a Dollar in Ukraine, India or Brazil is not the same as in the United States, Italy or Japan.
Mobile billing takes care of the second. Customers are able to buy time for their mobile phones. That “time” basically is money. The mobile carrier collects payments on behalf of the customer and processes those funds to Opera Mobile Store in a format that can be paid to you – the developer.
Economy of Scale
Together, between the 1) logistics, 2) financial systems, and 3) market penetration, working with Mobile Carriers in the sale and distribution of premium apps makes it much easier to achieve Economy of Scale, per Wikipedia
In microeconomics, economies of scale are the cost advantages that enterprises obtain due to size, output, or scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.
Enterprises. Do you think of your mobile app development company as an enterprise? If not, maybe you should – as if you produce quality apps worthy of a premium price tag, the subscription store can help really give your efforts the kind of boost they deserve!
Low Revenue per Unit vs. Offset of Your Advertising Costs
The only downside to the subscription store sales model is that you, as the developer, will make less per individual copy than a traditional premium app sale. At the same time, however, you are paying ZERO ADVERTISING unless you choose to supplement the Mobile Carrier’s marketing and advertising efforts with your own.
This is not a guarantee that your app will be heavily promoted by the mobile carrier, only that if your app is in their mobile app catalog that it will be available to all of that carrier’s mobile subscribers. The mobile carrier is also seeking to maximize their revenue. That means that your place in the catalog will go through a number of rotations, relative to the time that your app is in the catalog, and where with reasonable notice, you can withdraw your app from it.
These points are worthy of much, much deeper discussion as they also figure into the structure of your marketing strategy. During the initial release of your app, you may not have a large advertising budget. So, what better way is there to get free advertising and substantially boost your short-term revenue to boost your own marketing and advertising budget?
Let’s talk about your app!
Another factor that deserves note is the simple ability for you to be able to say that your app is available through “Big Company Name/s.” This can be very useful for start-ups and independent developers, alike.
Historically, getting products accepted by a large-scale retailer is a lengthy, expensive process. Under Opera’s Mobile App Subscription Store – the process is free, and relatively fast. With it, you can go from single copy sales to a mass distribution environment.
Contact our support team now to begin the process of getting your app seen by millions of mobile subscribers in promising mobile app markets.
The Opera Subscription Store is a relatively new service offered by Opera Mobile Store to Mobile Carriers. It is an open catalog of premium that Mobile Carriers can offer to their mobile users. Mobile users pay a weekly subscription fee for “All You Can Eat” access after a free seven day subscription. The “All You Can Eat” model is rapidly becoming an international industry standard for generating superior revenue over traditional single sale installations. For astute developers, and readers of this blog, the Subscription Store approach is also the basis of a larger marketing strategy.
Distribution and Revenue Model
The Opera Subscription Store does add another tier to the division of revenues, but it also adds another level of distribution. It expands the market reach of your mobile app to include the millions of mobile users serviced by specific mobile carriers. This is an economy of scale approach that is impossible to replicate so cost-effectively with non-digital products.
The mobile carrier receives the first slice of revenue from the subscription store for acting in traditional terms as a “retailer.” In this model, Opera Mobile Store serves as the distributor. You, as the developer, stand in the role of the producer or “original equipment manufacturer” if you are more familiar with traditional retail.
As the developer, your share of subscription revenue is based upon how many times your app/s are downloaded relative to the total number of apps downloaded across the entire storefront. It is possible for you to have several premium apps in the subscription store.
The largest question is whether as a developer you are measuring individual app sales, total revenue, rate of revenue, or market reach by number of customers on your mailing list? Different developers have different objectives, different measurements. The only standard by which the “All You Can Eat” subscription model may come up short is on the revenue you may see compared to individual app sales.
For simplicity’s sake only, you might receive $3.00 for selling one copy of an app, whereas the subscription service might see $3.00 for generating 10 downloads. The question then is whether 1 registered user is worth more than 10 registered users? That’s when marketing people get into establishing “average lifetime values of a customer.” Will you ever develop another app? Do you have other products for sale? Do you produce a newsletter? Do you network and do business with other app developers and businesses? If so, the average lifetime value of your customer does not end when they download your app… it is just the beginning.
Your bottom line and breakeven point is the same whether you sell only 1 copy or 10 million copies of your app.
One of the best things about the Subscription Store is that the Mobile Carrier takes care of the payment method. This enables you to reach millions of people who do not have access to a credit card or Paypal account. In Europe and North America, these payment methods are taken for granted. Credit card access is less commonplace in other regions and for a growing number of people even in developed countries with previous credit problems.
Without a payment processor able to receive funds in a manner that customers are able to pay, you have no market. That is one of the primary reasons why most app developers have thus far failed to monetize many developing markets. The ability for mobile carriers to accept payments removes that problem for you.
Mobile carriers are largely defined by their areas of coverage, like MTS Ukraine obviously services Ukraine. This simplifies segmenting your user groups by country and language, which is particularly useful for developing and organizing your customer email lists – facilitating your potential for localized marketing efforts. That is, instead of sending out mass-mailings in English, you can design them in Ukrainian or Russian while also including a link to see the e-mail in English.
The ability to segment your user groups is also a facilitator for social networking. You know their language, their mobile carrier, and that they have an interest in your app. This offers a variety of actionable possibilities – where you can hire or source a community developer, find community representatives, and/or identify the leading social figures (bloggers, members or leaders of organizations, or others with large followings).
For one angle on this, you might check out Working with and Encouraging Fan Sites . For a second angle, consider Super-Users and Monetization under how can you appeal to your top evangelists. In summary, these two articles should stimulate some ideas on how you might expand your reach into a specific market by promoting the people who are already promoting you and/or by making it easier for them to promote you. Again, sometimes you don’t need to have an established marketing presence in order to have an established market presence.
The more you are able to think like Borg, the better you are able to be Borg.
Knowing that you have a dedicated user community means that you have a ready market for any additional apps that you develop. You have their email addresses and can market directly to them, in their language. Through your social and business networking with others in a particular region or using a particular language, it is easier to find and establish relations with people who can help you with your localization efforts on a more cost-effective basis, potentially even for free. There are some very generous fans out there.
Regional Migration and Expansion
Having an established market presence in one country makes it easier to get into neighboring countries. This is also part of any social or business networking efforts, suffice that many carriers have an international or regional presence. By working with Opera Mobile Store, we are able to facilitate your apps availability to Mobile Carriers in Eastern Europe and South America, and expect to have additional arrangements in Asia and Africa.
We’ll cover more on Wednesday…
How can you know if an app idea will be profitable? You can’t, but you can define its potential for profit. There are really about five core components involved with a profitable app – 1) size of target market, 2) your reach within that target market, 3) conversion rate, 4) popular acceptance of the app, and 5) pricing or business model.
1. Size of Target Market – It is very important to define your target market as precisely as you can. This involves demographical and mobile market data:
Using the references here, you should be able to define most of these points on a combination of ballpark number and percentage point basis. Age range can be tricky, particularly with premium games for children requiring adults (parents) to purchase on their behalf.
The size of your target market is itself very useful at least for helping to define what is not likely to be profitable in the way of free and freemium apps.
2. Your Market Reach – This will likely be much harder for you to define as it will require you to know the demographics reached by your advertising venues. Further, you will need to approximate what portion of their audience you will be able to reach through your advertising – how many people in your defined target market will actually see your advertisements?
3. Conversion Rates – How many people reached by your advertising will proceed to purchase, install, use it, upgrade or make in app purchases? You want to track all of the conversions applicable to your app. Projecting these rates is difficult though. Your previous experience can be a useful guide. Alternatively, factoring in an extremely conservative rate (like 10-25% of what you would expect) plays it safe. You might also factor in how actively you will be watching and working to improve your conversion rates.
4. Popularity – While there is a lot that you can do to influence the popularity of your app, a large portion of this will relate to the overall quality of the app and how competitive it is compared to similar apps. Getting a viral lift can propel an app’s profitability into the stratosphere, but for as many times as that happens – it does not happen for 999 others. It’s best to consider this as icing on the cake when making projections on an apps potential for profit.
5. Pricing or Business Model – Whether you decide to go with a free, freemium, premium, or subscription model will substantially define your profit potential. There are other factors to include, here, too – possible revenue from B2B arrangements, monetization of surveys, or even whether you opt to produce your app via crowdfunding. These all influence the extent to which you will depend upon your app’s lifecycle and end user longevity.
Customer longevity should really be included as a sixth core point for the purpose of any but premium apps.
All of these points taken together can give you a reasonable approximation of an app’s potential. The size of your target market, how many you can reach and then convert are your primary indicators – and can help you define the optimum business model.
The basics of supply and demand are worth considering, too. You might have a very small target market – for example Canadian Doctors and Medical Professionals. If your app is useful and interesting to them, that could push your app into a high-end premium or subscription payment model.
If you are in the business of producing apps or software, you really want people to like what you are producing – whether it is a game or utility. The follow on question is what do you do when someone really does like your app, game or utility? Some will set up a fan site or dedicate a few pages of their existing site to your talk up your app. How do you encourage this? How can you work with your fans to help them get the most value and mileage out of their efforts promoting you?
Fan Site Package – Make it easy for your fans to promote your app. Provide graphics and terms and conditions information that they can “copy and paste” into their web site. Encourage them to let you know they are starting a fan page by providing your appropriate contact information.
Fan Site List – Keep and maintain your own list of fan pages on your site. This gives them a highly relevant and valuable backlink to show that they are “official” fan sites. Periodically review them on your own site. This can be just a brief 1-2 sentence description of what their blog is talking about this week, or point to a feature article for the month.
Privileged Access – Be available to them! Have a member of your team sit in with them on a podcast or YouTube video production. Be open to interviews, provide guest article content on game features, update them first on any new plans and upcoming releases.
Monetization Potential – Look into offering fan sites an affiliate program where they can receive a commission (5-15%) on the purchases of any new users who make purchases through your app. This can be in real money or in app currency.
“Guilds” and “Friends” – This is something that should be considered during the initial app development phase, to include or not. The idea is to make it very easy for other users to interact with others, to reach out to newcomers, and contribute to the formation of relationships, casual or professional. For purposes of utilities, while you may not use the term “guild”, you can still allow the formation of “groups”.
In example, if you are producing an app for “marathon runners”, “dieters”, “investors” (or anything like that), you have your base app that does whatever it is designed to do. Add to this a messaging system so that others can send motivation or advice.
Contests and Events – There is nothing better for a fan site than for it to have its own contests and events, especially when “everything they need to do for them” is provided. You can run your own contest or event for everyone, too; if you like. You can give your fan site/s the ability to offer their own prizes supplied by you, or provide incentive to them for helping you promote your global event. There are all kinds of activities possible in this direction – for holidays or specific professional occasions, a weekly TGIF or a nightly “happy hour”. Anything goes.