Why Doesn’t Premium Work on Android?

In the beginning of February, Fortumo participated at the Taipei Game Show. Since we have close to 3 years of experience with app monetization on Android, I was asked to share our monetization experiences to Asian game developers. Here’s a short summary of the key facts to keep in mind when figuring out the business model for your app.

Android is the undisputed mobile OS volume leader. Android currently holds nearly 70 percent share of the global smartphone market.

Android is closing the gap with iOS in terms of revenue. Previously, there has been an issue with Android not monetizing well. This is changing fast – Google Play revenue doubled during the last three months and the gap with Apple’s App Store is closing fast.

Flexibility of Android allows for many sources of revenue. In addition to Google Play, there are dozens of other app stores (global, regional and preloaded such as Samsung Apps) and alternative revenue streams (carrier billing, advertising) available for Android. This means developers don’t have to depend on one channel for success. If all the alternative channels are added up, Android might already be very close or equal in revenue to iOS.

Freemium is overtaking premium on Android, especially in gaming the segment. In January 2012, revenue from Google Play’s freemium and premium apps were roughly equal. Nine months later, freemium app revenue was three times bigger than premium app revenue. Freemium works better on Android because of several reasons:

  1. Users don’t want to risk paying for a low-quality application
  2. App-store billing is weak (e.g. low coverage for mobile payments)
  3. There are free alternatives available to paid apps
  4. App piracy

If the outlined arguments have convinced you to aim for a freemium business model on Android, I would suggest doing the following to increase probability of success:

  1. Go for emerging markets, these offer the best potential for Android
  2. Use carrier-billing, which can help you to monetize almost all mobile users (almost 5 billion phone owners as opposed to 1 billing with credit card)
  3. Payments need to be priced locally. One dollar in USA is much less valuable than one dollar in China – adjust your prices according to the market
  4. Use many distribution channels, combine the alternative channels with “official” Android channel

Fortumo can help you with carried billing as well as getting access to alternative distribution channels.

If you want to find out more about how to better monetize your Android app, let us know at bd@fortumo.com.