Apps developers look at new revenue models
AppsArabia suggests utilities-based revenue model, in-game purchases
Apps developers are considering new revenue streams and models to earn money from their creations, according to David Ashford, general manager of AppsArabia.
AppsArabia is a UAE-based investment fund which aims to help create a sustainable apps development industry across the MENA region. The company invests in apps and app ideas that are commercially viable.
"If someone applies for investment for an app idea and we can see clearly that the demand for that app exists and consumers are willing to pay for that app then we want to invest in that," said Ashford.
One of the alternative business models available for apps developers and investors is advertising.
"A large percentage of people in the study said they were willing to surrender personal information, navigation information, location information to receive targeted advertising, so they are willing to do a trade off, allowing companies to see where they go, what they are doing and content consumed in return for targeted advertising and content, so there is another revenue model apart from just trying to sell an app," said Dan Healy, CEO of market research firm Real Opinions.
The only problem with relying on advertising revenue for a steady income is that to make it viable, the app must have over 100,000 active monthly users.
"The challenge is that advertising is only really financially viable revenue stream at a very large scale, what we are interested in are revenue streams that can work on a small scale such as download fees, in-app purchases and subscriptions maybe, even sponsorship deals maybe," said Ashford.
The in-app purchase idea has already been utilised in the popular game Angry Birds, which introduced the Mighty Eagle character, which costs $0.99 and allows users to skip a difficult level and unlock the next one, earning points and achievements along the way.
The in-app purchase of Mighty Eagle was projected to earn the game publishers $1 million per month.
Ashford is pushing for a utilities-based revenue model for apps, where heavy users pay higher fees.
"If you use an app ten times more than another user, why should I pay the same as you, you should be paying more, so a Pay as you Go model. If you consume an app and use an app and get value out of it ten times more than I do, then you should pay ten times more than I do. This is an interesting model why not?" he said.
In the UAE, the top types of apps are communications apps and those that make the user's life easier, differing from global research, according to Ashford, which said that games, weather apps and social networking were ahead of every other platform.
"The top types of apps were really those that can improve your life and are based on functionality rather than entertainment, but there was approximately a 20% gap between all the categories. With that 20% gap there is an opportunity for developers across the board to see where these gaps are and try and localise these apps to the marketplace and region," he said.