The Android apps economy (II): games as a service

The Android ecosystem is changing economic rules for game developers and publishers, as we explained on a previous post. Basically, what it is happening is that the biggest success is achieved by free apps and games, while monetization comes via ads (mostly AdMob), in a very similar way how mass media obtains its revenues. The more traffic and use, the more money. That is why Google is not very worried about new Android app stores already available or soon to come, as we explained last October. Apps as a new mass media.

Beside that, Android is also going to allow In-App-Purchases (IAP) very soon, as they announced some days ago. This is something very important because every report shows they are the key factor for revenues, as we stated on a previous post about it. We just have to wait and see which are the features Android provides and its revenue share model.

These two main sources of revenue (ads and IAPs) may only work if gamers get engaged with apps and games. So it is key for developers to provide not only good software but also to reach stickyness. Apps and games should be used and played again and again to obtain good economics. And that is why we talk about that apps (and games, our focus) should become a service, and will never be again a product.

Games as a service means players may receive from time to time extra features for their games that encourages them to play once more. In the past, while games were a product, when a player finished the last screen, the game ended and that was all. Now, players (ideally) may want to come back again and again to its favourite game because it offers them something new.

That is key for the two models:

• Ad based. If you want your users coming again and again you may have to offer them something new from time to time. And, of course, they will come again only if the game has satisfied them in the past (the mere addition of new features is not a success guarantee). This new content has to be provided often, because something we have learned within the market is that users may get rid of their apps very quickly if they have finished them (and even when they have not). That is something that applies specially to games, because other apps may be kept on a bigger percentage.
• In App Purchases. A smart movement would be to provide extra and new features via IAPs. This is the philosopher´s stone of the business, in our opinion. If developers may provide to its gamers with a title that is engaging, treating it not as a product but as a service, and are able to deploy a sustainable In App Purchasing model, they may be successful in economic terms.

We think Google is teaching developers via data obtained in every title update that this is the model they want to push: every time a developer updates its titles already published in the market, it receives a big flow of new users. That is because the app appears again in the "new" featured apps, but also it is a clear statement: the more developers update their apps, the more users they get for them.

Apps and games as a service. And IAPs as the summit of this model. We will go on working on this, and keep you informed. Stay tuned!

Our first month in the Android Market. Emotions and numbers post

We released our first Android videogame, Vector Ace, last December 28th. And have enjoyed already one month of learning and happy understanding of the Market, the OS and the personal goal we set for ourselves, which was our main interest when we decided as a hobbyist team to develop, publish, distribute and communicate & market Android videogames.

We wanted to create original games, not replying other´s initiatives. That is why we decided the motto "Smart Weird Games" for the company. And that is why Vector Ace was created. It is a game that makes us remember our old school times, since it is an interactive recreation of the paper-and-pencil game we used to play together during boring classes. So we are very happy just with the release: only that it is indeed a big success for us. But we have found even more.

First of all, gamers´ critics and opinions. We knew from the very beginning that Vector Ace is a very strange, weird and even freaky game. In fact, we think it is opening a new genera. So we knew it was going to be difficult for gamers to properly understand it. And that has happened. We have suffered some bad critics by people who have not understood the game at all, and even have thought their time spent on it has been a loss. We knew that was going to happen, but the surprise has been other people´s opinions saying the game has been interesting for them, gifting us with good valuations. In fact, after 32 qualifications we have an average of 4.25 stars over 5. Taking into account those negative approaches we mentioned before, it is not bad at all! Thank you all!

We have even received very deep test and feedback by some smart gamers, who reviewed our game and provided us with very useful information and reported some small bugs or good and easy improvements we have been solving in the game updates. Thank you community for your support and feedback!

Beside that, the mentions we have achieved on the Internet, via games sites and blogs, have been impressive. We have been collecting them on this page of our site. Even in other languages different from English, the mother tongue of the game in this first versions of it. It is so nice when someone recommends your creation on a different language. Thank you Google Translate for letting us enjoy this!

And what about THE NUMBERS? We suppose many of you are waiting for them. But, before them, we wanted to say that our target was not (and it is not) gaining money or become rich, but enjoying the experience. Of course, we hoped (and still hope) to obtain some money with our games, but not as a primary goal. Remember we do this from a hobbyist perspective, since every member of the team has its full-time job.

So the numbers are these ones: we have obtained 3.100 downloads within the first month. Please do note the game is free and it has not ads to monetize it. Is this number good or bad? Since we had no expectations, it is just the number we achieved in the first month. And we are happy with it. But we do not want to stop here.

We have seen a very big number of downloads in the first days in the market, while after that, the game entered in a long tail where we gain an average of about 50 new installations per day. Of course, we have peaks when releasing updates of the game, and other small or big ones after some PR & communication actions. By the way, the most interesting and fruitful PR action was talking about our game from a very honest and fresh perspective in the reddit Android community.

This post could be a post mortem post, but it is not. We do not understand why some developers write "post mortem" texts about their apps, since we think this is a live environment, and a lot of things have to be tested, learned, achieved and enjoyed!

In fact, we have a lot of plans and projects we shall implement. But not only about new games, but also about this particular game, Vector Ace, which is just starting to live now. And we may explain them on this blog. Stay tuned!

The Android apps economy: a new mass-media

Despite its enormous and increasing growth and real leadership, Android apps economy is still not understood by most companies and developers. Much part of the confusion comes via comparing it with iOS environement, but that is a common mistake we helped to clarify in a previous post, which may be summarized with this sentence: Apple is a hardware company, so iOS is an strategy to sell devices, while Google is an ad seller firm, so Android is the weapon to dominate a new world: mobile, a space where Google wants to be ubiquitous.

Developers who do not follow this statement try to repeat on Android what learned on iOs, but usually this tactic may not work properly. The first common complaint has to do with the giant amount of free apps: "Android users do not buy anything, it is a different culture". The conclusion most people obtain is that the Android apps economy is not worthy. It is sadly odd that many big names in the industry have not entered Android Market. The first ones (Zinga or EA) are just doing some experimental movements.

But it looks like they may learn soon what Rovio and other smart companies have experienced: they earn even more on an add-financed-free-app model than in a pay-to-buy-app approach, and money is even bigger than on iOS.

What companies should look at is the mobile ecosystem as a new mass-media. That is a common sense statement big Tomi Ahonen likes to repeat as a mantra. And it is completely true. And what does it mean to developers?

If we think in mass-media, as radio, television or newspapers, there are usually two common business models: pay-to-consume and ad-supported. These two business models may work also together, and that is very common. In fact, the first one works alone if and only if the content deserves a payment because it has a very big demand. It is the case of live sports events or real premium content. But most of the times, what really finances mass-media is advertisement. And that is very clear in nearly every mass-media.

So, what about the mobile ecosystem as a mass-media? It is certainly a very new environement, and there is still a lot of confusion, but it is starting to be clear that the free model is gaining economic traction. Of course, as in other mass-media, a good option is to mix the two biz models, or mantaining only the pay-to-consume one if you have a really objective premium content.

But, for 99% of contents, behave as a mass-media. We in Okapi Lab are going to do it and shall comment our discoveries. Stay tuned!

Google Android Gingerbread, Google Chrome OS and fragmentation

These last days there has been a lot of buzz about Android vs. Chrome OS, and also about Android fragmentation. Probably that is because both Android Gingerbread and Chrome OS are about to be born. But there is something more. The point is that people are getting nervous since both look like they are not ready for the Christmas campaign: they should have been launched already for that. There is a clear delay on the products.

As well, many people think Android and Chrome OS may compete on some devices: tablets, TVs, cars, etc. Eric Schmidt, Google´s CEO, said recently that Android is for touch devices and Chrome OS is for keyboard devices. What about TV? Google says Chrome OS, but Google TV is Android based. What about tablets or even smartphones with keyboards? Confusion. Even Google executives are not clear on their statements and we have seen contradictions between them.

Beside that, people are worried about Android fragmentation. They say it is a question very difficult to manage when you are a developer, and say situation is going to get worse with Gingerbread and Chrome soon appearances. To properly provide every Android device with an optimized software is hard work, they say, and Rovio is an example with their extra effort to create Angry Birds personalization for low-profile Android handsets.

So, for many people, everything is a mess, and more if compared with iOS simplicity.

On a recent post, we explained Google and Apple are very different. And that Google is happy with many app stores.Here is why. In this post we say fragmentation and (for many people) confusion has exactly the same explanation.

Google´s target is ubiquity. They want to gain the biggest market share on mobile, TV, netbooks, and on every hardware segment, and sell ads for them. And it looks like they are achieving their goals very quickly. So, all the buzz about delays on Gingerbread and Chrome, fragmentation in Android, and confusion between Android and Chrome is something just anecdotal for Google. The important thing is being leaders in every device. Even if they have to compete again themselves.

As well, everybody should understand reality is uncertain by definition. So Google does several bets, not laying all the eggs in the same basket. Time will say. And, no matter whay finally will succeed, it will be Google´s.

What should we do as developers on this scenario? Work. Rovio´s effort to create special editions of Angry Birds is often commented on a negative way (hard to work on Android, etc.), but, if they do, wouldn´t it be because it is worthy? Efforts are positive. There are nearly 5 billion mobiles in the world, and business is in all of them.

We in Okapi Lab will go on working.

We are global!

Interesting this feature.
We have checked where do our Twitter followers come from, and here you have the result.

We have Twitter followers in every continent (apart from the Antarctica).
Thank you all!

AdMob revenues: OK but, what about in-app-purchases on Android?

Yesterday we read this post by Sean Kauppinen with links to some very interesting infos and data about ARPUs for social games. We have looked for info about revenues for developers within the Android market but we have not find many things, apart from isolated data by fellow developers.

Apart from the price of the title, the main revenue source is advertising. And the option for that is (of course) including AdMob. What to expect? Google said recently it is a market 1 billion worth in 2010. But, what about the developers point of view?

In this post, Omar Pera (thank you for sharing) says they are doing with AdMob aprox. 50 dollars per day with three Android games that have been downloaded 200K times and have 100K active users. On a personal meeting with a pal in Madrid, he told us he is achieving aprox. 6-8 dollars a day with a game with 40K downloads. So you may expect that with every 4K downloads, you may reach aprox. one dollar a day, isn´t it right? Well, at least we have a starting point.

Is this enough for developers? We think it is some kind of "minimum", at least. But to really boost the market, other things should be done. It is interesting to highlight the enormous importance of in-app-purchases per revenues. As this report by Flurry states:

In-app-purchases (red) is the real money. But Android only let its fellow developers the blue part. Please Google, implement in-app-purchases for Android ASAP.

Android: not one app store but many. Here's why

Since its launch, Google Android has been compared with iOS, the mobile operating system by Apple. This comparison makes sense, but they are two completely different initiatives. And one of the points where there are more differences is precisely the app stores, something weird to many people: Why Apple has only one app store and everyday there are more for Android?

It is important not to forget that Google is a company that gets 96% of their income through advertising, and Apple is a hardware company that obtains over 90% of their income by selling different devices.

The Apple AppStore is not intended primarily as a tool to generate revenue for Apple, but as a natural extension of the hardware. What worries Apple is controlling the user experience of their customers to ensure their satisfaction and, consequently, to sell more devices so that they complete their "collection". What is important is cross-selling hardware and its continuous updating. In case they get AppStore revenue, it will be just a little extra. It currently represents a percentage in the income similar to what Apple gets from the sale of software or peripherals. See link above.

In Google's case, the important thing is advertising. In this particular economic field it is the leader in web by far. And Android is a bid to extend Google's advertising kingdom towards the mobile domain. That´s why its CEO said recently that his rival is Microsoft´s Bing, not Apple. The company wants to dominate the mobile ecosystem via its OS to dominate advertising.

With this in mind, you now understand Apple may only allow one exclusive shop. But Google not only is not worried about the proliferation of Android app stores by carriers (Verizon, Vodafone, etc.) or retailers (Amazon, GetJar, etc.); Google think it very likely will help to expand Android market share in mobile, which is their true goal. No matter where a person buys their Android applications: what matters is that they have installed the operating system Android.

So we shall see more and more Android app stores. And Google will be happy because they will help them to achieve its target.