Today, we take a brief look at joint ventures and what role they can play in the mobile market. This is an advanced topic for serious developers. Those with the interest will need to undertake their own business and legal research specific to the markets they wish to enter along with proper due diligence evaluations. The main intention here is how joint ventures could be applied without getting into the technicalities – which we can explore later.
A Joint Venture (JV) is an agreement between two or more parties to form a new business entity for a specific project. There are several types of JV’s, but typically the participating parties share in the control this business, its revenues and expenses.
Essentially, a Joint Venture is considered when a particular business is unable to perform a project on its own, but has a relationship with another business with which it could. There is a massive amount of this within the mobile app development market as it relates to localization and being able to effectively market in different countries with different languages and payment systems.
With payment systems like MPesa, for example, in order to receive mobile phone payments from end users in Kenya, you need to have a physical presence in Kenya or perhaps another area serviced by MPesa. That’s probably beyond the capabilities of most small and even medium-sized businesses. A joint venture, however, could help bridge the gap. This is not advice so much as it is to lay the idea out there for you to examine further.
Arrangements like this require a strong level of trust between both companies along with due diligence by both sides to make sure each party is doing what they should be doing. This is not something to jump into without serious consideration, a strong relationship, good communication, a plan, delineation of duties and responsibilities, and a legal expert in the local market.
From observation, likely the most critical component in any just venture is defining and committing to a solid protocol for handling any disputes. They will arise. Some people will just quit if they don’t get their way and aside from being unprofessional, it’s bad for mutual long-term profits. So, if you do move in this direction – there will be the excitement of starting something new, something meaningful, being “international”. After that fades, be completely committed to resolving problems.
So – you might be able to develop awesome apps in English, and while you think the app will perform well in Russia or Indonesia, you simply don’t have the means to market it there. Others can. Again, while it might be nice to have 100% of the profits, 100% of little or nothing is not very much. With cooperative efforts, more people get a slice of the pie, but there are more people making pie.
Pie, Pie, Pie!
We’ll come back and revisit JV’s and perhaps even SPV’s in the near future.
So, for about $15 – real dollars, you can buy a “tome” on one MMORPG that will raise your character’s attributes by two points. Or, you could pay about $40 and boost them by 4 points. Say what? Yes, that’s exactly what I said about DDO Unlimited, unbelievable. So, today we’ll look at mobile games and MMO in-app purchases.
A lot of games started out with a subscription model only to move to a Free to Play platform and become more profitable by selling game specific “virtual merchandise” ranging from potions to pets, to armor, weapons, fancy clothes, woolly war mammoths, dragons, new types of tanks, aircraft, you name it. We’re talking pixels, digital goods that require virtually no physical inventory space or shipping and handling. It IS the ultimate money making system — IF you can get a few hundred thousand people, preferably a few million people to play it.
The mechanism is simple enough – you create virtual products, associate them with a price in your virtual currency. Then you determine how many gold coins a player’s real dollar can buy, typically offering discounts on bulk purchases. Variants, well at least until Spring of 2014, Diablo III has a real currency auction house, but that is closing due to its adverse impact on game play. For World of Warcraft, the “Black Market” gold vendors would buy game currency and items to resell. At one point, the cost of Epic WOW PvP gear acquired this way cost more than the real Black Market rate for a real T-72 tank.
People take their entertainment very seriously. More people will get upset and possibly /ragequit over changes in a game than if they lost their job, their wife, their house, their car, and their dog. That says a lot of things, and as a developer — you can take advantage of it. Ethical developers will want to put a cap on that — there’s a fine line to walk there and if you are blatant about it, people will stop playing.
There’s also a fine line between Free to Play and Pay to Win. The more a game depends upon players to pay for anything “meaningful” – the fewer free players you will have and that will cascade to reduce the number of paying “vanity” players, too. The Free to Play mechanism is critical these days given the near saturation in online games of all varieties. The best games with the the best play AND the most players typically wins. It’s hard to get one without the other.
Many games have adopted a policy that their online stores will only feature cosmetic and convenience items. Consumables tend to do very well simply because it’s more “cost effective” to drink a healing potion than wait 3 minutes for your character to heal.
Some people will pay unbelievable amounts of in-game currency for the “right cloak” or for a limited edition pet. Both are typically vanity items. Mounts that move faster and that are visually impressive can be vanity and convenience items. They don’t necessarily impact game play.
If you are developing to take advantage of the Vanity Market, then your #1 task is to create a wide variety of each item you want to market. Like Warcraft, items are divided into common, uncommon, rare, epic, unique – each with a different look. And, there’s the potential of adding additional customization – like gems or dyes. Face it, some players will grind for hours, sometimes months to get a specific piece of gear just for the stats. So, being able to customize that further – with a few “extra gold coins” or “diamonds”, seems perfectly reasonable.
First, you need the players… or do you? There are countless mods for countless online games and some of them do charge on a per download basis. The real question is whether your mods (apps) will comply with a specific game’s terms of service, limitations and conditions. Concurrently, there is nothing to prohibit you from making a proposal to a major game publisher to sell or license your apps through them. Security and liability issues are the biggest sticking points here, aside from some publishers who insist upon doing everything in house.
But, as I suggested a long-time ago in relation to Warhammer Online – publishers should begin looking at letting its customers actively assist in game development — creating their own quests, for example. Neverwinter Online took this to heart and in consequence has a constantly expanding amount of unique content. In the future, we can expect online publishers to engage their customers more actively – and that also means engaging independent developers, too.
Here’s the kicker — Vanity Items need not be restricted to online games. It may take some creativity, but for all of the things that apply to entertainment – some apply to their work, to family, to pets, to their vehicles.
One approach is to tie repeated use of your application to “unlocks” – perhaps new features or perhaps a discount with different businesses in the same niche. Many businesses have discount cards that they practically give away, but don’t advertise. Rounding up and enabling a coupon or membership-card like system in your app should not be particularly difficult in taking advantage of this idea.
Depending on how extensively you network within your niche, Vanity Items could include such things as:
With these, you might even consider going the way of different paid memberships, each with its own set of services and features. Point is to be creative, think beyond your app – and to the industry it serves, the people and businesses in it. Just because you may not personally have the resources for something, does not mean that you don’t have the resources. You aren’t just creating an app… well you might be, but you could be creating links through your app between people.
Market reach counts – advertising on Opera Mobile Store can get your app in front of millions of end-users you are not likely to reach otherwise. Contact our sales team today!
If you are looking for different ways to monetize your app, you may find the following articles of interest to you:
Don’t quit, watch everything, don’t get too far ahead of the pack, be willing to deal, and be in to win. Looking over the past 20 years, the following is my advice for anyone in the technology sector for the next ten.
Never quit. Even if you decide to step away from something, keep a placeholder on it. Never abandon a web site, never abandon an app you have designed, never abandon software, or any industry contacts you have made. Ever. Easier said than done, but consider a web site can be kept “seemingly live” with a single update every quarter — not so difficult at all. All good business people have an exit plan with every project they initiate. What happens when I don’t want to do “this” any more? You always have options — you can sell it, license or lease it, use it as the basis for a cooperative initiative, make it freeware and continue to use it to promote your newer projects, move it into open source or donate it. All of these may not apply, but some will.
A quick three minute email to someone can keep a relationship relevant. A new “dated” paragraph on an old web site, will keep it alive. Publishing an article every 3 to 6 months, will keep your name and expertise relevant.
The same goes for retirement — just because your conventional work days are through does not preclude you from continuing to be the expert you were as a consultant or board member for other projects.
Watch the trends. New devices and software (to include apps) change markets, but not immediately. In 2002, it was difficult for most people to imagine they would prefer to read electronic books vs. hard copy. E-books made their debut, but except for the early adopters there would have been no market at all. Fast forward 6 – 10 years, some governments have been looking at, even implementing e-books for public schools – they went semi-mainstream. Mobile first started getting real attention around 2006, and by 2010 reached the same “semi-mainstream” position – half the time. Anything that shows solid growth over about 18 months from making its debut is worth considering as an addition to your development portfolio.
The point that goes with watching the trends is to watch what the competition is doing. Competition is a good thing. Every time a movie for one genre is successful, a slew of others “just like it” come out. Those who watch one like the genre and will likely watch other movies like it. That goes a long way to explain the success of the inundation of zombie and superhero movies. Pro-wrestlers vs. Zombies… um… It is why when you go to the supermarket, you have choices on everything from breakfast cereal to toothpaste and toilet paper… why some candy bars come with nuts, some don’t.
Early adopters. It is “prestigious” to be on the leading edge, but not always profitable. Prestigious applies to “doing jobs no one else wants to do”. Prestigious “military units” get assigned missions no one else in their right mind would ever think of doing. Same thing in technology, the amount of money needed to push something into mainstream use is out of the reach of anyone but the largest corporations. They let the small, cutting edge business developers do the hard work, then “buy them” – frequently enough. Knowing that, it can be a strategy unto itself. The difficulty here is that early adopters take pride in what they’ve produced and don’t want to relinquesh the reins, think they can do it, or hold out for a better offer.
Hold-outs are frequently left in the dust because larger corporations are looking at “Time to Market”, cost and convenience. If a large corporation has the means to do what you are doing faster, cheaper or easier than you are already doing it — odds are pretty good that they will, unless there is something else unique about your business (special patents, for example). Just because you might be first, does not mean you are the only one with the same idea or product. In example, Craiglist has served to seriously disrupt traditional classified advertising – despite its retro interface – but there are well over 50 other documented cases of other’s trying to build a “bigger better Craigslist”.
Being first does not inherently equate to market domination — except in the short term. The long-term is a totally different story.
100% or 1%? The question for early adopters is whether they want to hold onto 100% of “a small pie” or 1% of a “much larger pie”. These are extremes, but helps to provide context. Even if it is equal, say your 100% share in a business translates to $10,000, while another’s 1% share in a similar business is worth $10,000 (its value being $1 million). Where would you place your bet? A business worth $1 million is much more likely to capitalize upon its inherent value than one worth just $10k.
In to win. Probably the most important aspect of getting into anything is getting into it to win. Winning, however, is very subjective – related more to your personal goals than any external arbitrary assessment as to what “success” really means.
If you enjoy what you do, you are far ahead of the 75-80% who really don’t enjoy what they do. I know quite a few people who are very good at making money – via a job or a business, but who fundamentally – absolutely and completely hate every minute of it. That’s the other extreme.
It is always a matter of leveraging one to advance the other. If you have the money, apply it in ways that lead to your enjoying what you do more. If you don’t have the money, it is usually a much longer route to leveraging what you do enjoy most so that you can financially engage it even further.
My view of winning is being able to do what you enjoy most while achieving your financial goals in a way that lets you have meaningful relationships with the people closest to you. What’s yours?
Getting a government grant to develop a mobile app is not easy, but is it worth it? Well, let’s find out… Here, we will take a look at some of the grants that have been awarded and what government agencies have awarded them.
Before jumping into this, I’d like to point out a few things. Grants are awarded by more than governments. Non-Government Organizations (NGO’s), Non-Profit Organizations (NPO’s), individual companies, and more are also known for issuing grants. While it may be very difficult to compete with some of the corporations going after top level government grants, most of these corporations also sub-contract and solicit development proposals of their own. With major projects, the downline can reach out to 2 sometimes 3 levels of subcontracting and bidding proposals. Tracking them is a simple matter of following the money.
While these are not the kind of mobile apps likely to appear in mobile stores any time soon, they are the kinds of projects that can finance the growth of your collective development efforts.
The European Union announced in a February 13, 2013 press release, €50 million in research grants for 2013 to develop ‘5G’ technology. Fifty million Euros might raise an eyebrow or two, but it gets better. There is the 2020 Digital Agenda for Europe that deserves examination, too – aiming, for example, to see 50% of the EU population to buy online by 2015 and to double public investment in ICT R&D to € 11 bn by 2020. Here’s even more.
In conjunction these efforts, the European Union plans to pump €100m in grants into 1,000 digital start-ups around Europe.
Let’s emphasize that last bit… €100m in grants into 1,000 digital start-ups around Europe. We’re not talking about grants to major corporations or even existing SME’s… start-ups.
Coinciding with this, I’m aware of at least two business incubation programs, one in Odessa and a second in Kiev which are actively seeking start-ups and going so far as to provide some initial seed capital. None of this is bluff.
This kind of thing is not isolated simply to Europe. Europe, however is large, the EU is more centralized and in many regards “somewhat” more organized than what you will find in other regions.
Let’s take a quick look at the mobile app grant scene in India…
April 26, 2013, Bangalore: Nokia India, in collaboration with AppCampus (Finland) and members of Harvard Business School Alumni Angels (India Chapter), today announced their initiative, ‘Appcelerate-India’ to boost mobile app development on Nokia Lumia &Windows platform… will invest in excess of $500,000 in ‘Appcelerate-India’ and provide a combination of grants, seed funding, mentoring, incubation resources to discover disruptive applications and nurture talented Indian mobile start-ups.”
Okay, that may sound like small beans compared to what the EU is doing, but we’re not talking about a Government grant in this case. India announced plans in June that it was planning to issue grants, too – but had not determined the total amount of grants that would be funded. These funds, however, would be carved out of the Rs 700 crore (US$111 Million) allocated to its national e-governance plan.
For International Development – sponsored by the United States, there is USAID which recently announced $100 million in grants to India for the development of clean energy, however it also welcomes unsolicited proposals — USAID is an umbrella organization for many other opportunities — including the Global Development Alliance (GDA) through 2006 alone, “had put together more than 600 public-private partnerships, committing $1.5 billion and leveraging $4.8 billion of partner resources.”
In Russia, while not specifically for mobile apps, the Federal government is investing — 135.6 billion rubles (about $4.1 Billion) in Skolkovo to feed the startup culture similar to the rise of Silicon Valley. Its developers are expecting to raise an addition $11 Billion in private funding. The point there is that this venture is expected to reach maturity over the course of 17 years, so getting connected within that network now is a reasonable basis for getting in on future opportunities.
There’s pretty something for almost everyone if you look hard enough —
even for Darth Vader – like… DARPA which runs contests, grants and can provide funds for proposals it finds interesting… like — using Smartphone Technology for Smart Unattended Ground Sensors.
Some final notes… As mentioned, these avenues for funding mobile development are not your typical fare for the regular online mobile app market. There are a lot of variables though, some programs require any patents or copyrights to go to the funding agency, some don’t. The core issue as I see it though is that there are a lot of developers who are finding it difficult to capitalize upon their mobile app development capabilities. On a business level, it makes sense to get paid for some projects while that “paycheck” keeps food on your plate letting you develop other apps on the side.
Even more to the point, there are opportunities everywhere but to apply to them requires thinking outside of the box, non-linear as it relates to “who exactly your customer will be”. Secondly, it requires research and going through the process – the paperwork, and perhaps developing additional business skills (submitting project proposals being one) beyond just developing mobile apps.
One more final point, as with the earlier post about the Service Corps of Retired Executives, take the time to explore what your government and local business development services have to offer and take advantage of them. There’s truly a world of opportunities out there, practically at your fingertips — and help is available in virtually every form that you might need.
For maximum exposure, make sure your mobile apps are available on Opera Mobile Store. Fast, Free and Easy – sign up here!
If this article was relevant to you, you may also find the following articles helpful: