This post is the third in the ReadWrite series Making Android Pay, focusing on the opportunities and challenges that mobile developers face trying to make money from Android Apps.
In the waning hours of the Google I/O developers conference last week, an Android developer stood at a microphone to ask a very pertinent question: “If I am in the top 2% of Android apps on Google Play, how much money am I really making? $30 a month? $3,000? $300,000?”
The two poor Google product managers on stage couldn’t or wouldn’t give him an answer. They declined to cite revenue of other Android apps on Google Play’s top lists. They refused to share a general number of how much successful Android apps earn. The two Googlers, Ibrahim Elbouchikhi (product manager of Google Play Commerce) and Bob Meese (Google Play games business development), had highlighted earlier in their session that average revenue per user had more than doubled in Google Play in 2012.
But the developer in the audience was essentially saying was that twice zero was still zero.
To The Winners Go The Spoils
Unless your apps are massively popular on Google Play, it is very difficult to make a good living with Android app development. Developers building apps for Apple’s iOS still make more money than those building for Android, and Apple’s download rate is considerably higher (50 billion for iOS against 48 billion for Android) despite Apple’s considerably smaller installed base).
During their session, Elbouchikhi and Meese gave developers several tips on how to make money from Android. The focus was on two specific topics: games and the top lists in Google Play.
Essentially, Google is saying that you need to hit the top lists on Google Play to even have a chance at making a decent living. (Getting there is difficult, of course, but developers “get a lot of sales [just] from being on the top sellers list.”) The top lists are almost all games – and almost all monetized via in-app purchases. Look at the top grossing apps in Google Play. Of the top 25 grossing apps currently in Google Play, 24 of them are games. The only exception is Pandora, which brings in most of its money from its subscription service.
The domination of games is not unique to Google Play. The Apple App Store’s top grossing and paid sections are also filled with games. Smartphones and tablets are great for gamers, especially casual gamers. This has led us to believe that there is a coming golden age for game developers.
Non-game developers may be in a bit of trouble though. Yet there are things that developers can do to entice their audience to pay up. The idea is to first acquire users (through a variety of means), retain them by delivering excellent apps and customer service and then turn them into passionate users. It is only then that you can ask them to pay you for your product.
5 Keys To Android App Success
Elbouchikhi and Meese highlighted five important aspects of Android that make it easier to monetize an app:
- Tablets pull in 70% more revenue than smartphones: It helps to create a version of your app optimized for the tablet form factor, which Google made easier to beginning with Android 4.0, known as Ice Cream Sandwich.
- Employ in-app purchasing systems: In-app revenue increased seven-fold in 2012. While the “freemium” model can be manipulative, it does help developers make money from their users. Once you have created a relationship with a user, you can then hit them up for the “upgrade” (usually in games) or the subscription model (like Pandora). You’ll have to deal with any ethical dilemma concerning in-app sales on your own.
- Subscriptions work: Android has seen 200% app subscriber revenue growth in recent quarters. This approach can work for app developers focused on businesses and enterprises, media publications or music services. Some games employ subscription models but most go for the in-app purchase freemium model. (Meese noted that almost all of the top apps are free-to-play. “The barrier to success for a paid title is very high.”)
- Better ratings means more revenue: Google has done significant work to help developers get better ratings for their apps. That entails standardizing design principles for Android, working to minimize fragmentation and performance issues and letting developers reply to users who have rated their app. This critical, because the higher the rating, the more money the app earns. According to Google, apps that earn a 4- or 5-star rating average almost 29 times more revenue than do lower rated apps.
- Go global: Google realizes that most of its subscriber base is not in the United States or even in Western Europe. This is why it released its transcription service in the Google Play Developer Console at I/O last week.
“I think we are at the beginning of that and we will see that beginning to happen next as people get used to the process and developers get creative in figuring out how to build those passionate users and when the right time is to ask for payment,” said Ellie Powers, product manager for Google Play. “And also what are the types of things that people are willing to pay for. There are things that people are not willing to pay for and some things that they are.”
Top photo by Nick Statt: Google’s Ellie Powers introduces new Google Play Developer Console features at I/O 2013.