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Amazon enables in-app purchasing to attract developers to Appstore

The Amazon Appstore is making it easier for developers to monetize their applications for Kindle Fire tablets and other Android devices via a new in-app purchasing service.

The in-app purchasing service gives developers access to millions of Amazon customers who are already familiar with the company’s 1-click payment system. Limited in-app purchasing has already been available for several months, with Flurry Analytics recently reporting that the Amazon Appstore generates three times more revenue per user than Google Play.

“The real news is that the payment system is broadly available and with clear revenue share terms,” said Peter Farago, vice president of marketing at Flurry Analytics, San Francisco. “It will leverage Amazon’s one-click purchase and be used for any kind of in-app transaction like virtual currency purchases and subscriptions.

“This is a great thing for developers,” he said. “Amazon has a decade of experience with commerce and transaction management, including pioneering the one-click purchase.

“Already in the iTunes App Store, we see that 65 percent of all revenue generated by apps comes from in-app purchases from games, the most advanced users of the in-app purchase business model.”

A familiar experience
In-app purchasing is the dominant business model for app developers and expected to account for at least 75 percent of all revenue generated by developers for the rest of 2012, per Mr. Farago.

The move by Amazon to make in-app purchasing more widely available will make it easy for developers to take advantage of the online retailer’s significant experience in digital commerce to offer digital content for sale and subscriptions for purchase.

Many Amazon Appstore customers have shopped with the online retailer before and are already familiar with its payment process. This could help developers drive higher conversion rates for their in-app purchases.

The Amazon Appstore for Android also features other shopping features that Amazon customers are familiar with such as personalized recommendations, customer reviews and bestseller lists.

By enabling developers to generate more revenue from their apps, Amazon will be able to attract more and better quality apps to its app store.

Several developers and publishers have already integrated the in-app purchasing API, including Disney, Glu Mobile, Conde Nast and Dow Jones.

G5 Entertainment, creator of Virtual City Playground, reports that by offering a product with in-app purchasing via the Amazon App Store, its conversion rates increased as did the amount of revenue generated per title.

Developer support
The Amazon Appstore for Android enables customers to find, discover and buy thousands of apps. Customers can access the store directly on Kindle Fire, from any computer or on an Android phone or tablet.

With the ability to generate revenue a key factor in developers’ decisions about how much to support different platforms, the news from Amazon suggests more apps will be introduced for Kindle Fire this year. At the same, Google Play may find itself struggling to maintain developer support because the monetization potential is not as significant.

“This increases the pressure to improve aspects of their store and commerce infrastructure,” Mr. Farago said.

“If the platform provider does a good job at enabling app makers to earn revenue, more developers will build for that store, which brings in more consumers, and so on,” he said. “It’s key to creating a virtuous cycle.

“If there is friction in the commerce experience, then developers are less motivated to build for a particular platform.”