Rebooting the EU App Economy / Fraunhofer HHI, Berlin, Germany / 13th November 2013 Hans Hartman, President, Suite 48 Analytics "Monetizing Apps: Lessons from Photo App Developers" Hans Hartman is president of Suite 48 Analytics, a market research company focused on mobile photography, and chair of Mobile Photo Connect. Previously he was chair of the Seybold PDF Conferences and conference director of Future Image Mobile Imaging Summit Europe. Hans is also a GigaOM Pro Analyst and was recently named “Mobile Power Player” by AlwaysOn.

1. Monetizing apps –
lessons from photo
app developers
Hans Hartman
President Suite 48 Analytics
Chair Mobile Photo Connect
November 13, 2013
Suite48Analytics

2. Sources
— Monetization
interviews for RPI
◦ Photo app developers use diverse
monetization models; open to experiment
— Monetization
panel at Mobile Photo
Connect conference
◦ Scalability determines monetization options
— Photo/Video
Apps Market Analysis
◦ With category maturing, successful apps
adopt higher prices and in-app purchasing
— Ad
hoc discussions with developers
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3. Monetization options popular
among photo app developers
— Charge
— In-app
for app
purchasing (IAP)
— Advertisements
— Selling
— Pay-out
third party products
later: at exit
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4. Charge for app – trend
— Trend: more
top selling photo/
video apps charge higher prices
Pricing over time
45%
40%
35%
30%
25%
$0.99
20%
$1.00-1.99
15%
>$1.99
10%
5%
0%
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Suite 48 Analytics Photo/Video Apps
Market Analysis, November 2013
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5. Charge for app –
considerations
— How
high are your user acquisition
costs?
— How viral is your paid version vs. a
free alternative?
— How high are your support costs?
— Is a free super lite version with IAP
an alternative (de facto trial version)?
— Can revenues from paid apps scale
enough?
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6. In-app purchasing – trend
— Trend: IAP
is still growing among
top selling photo/video apps
60%
IAP on iOS over time
60%
50%
IAP by OS/payment
50%
40%
40%
30%
30%
20%
20%
10%
10%
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
0%
Suite 48 Analytics Photo/Video Apps
Market Analysis, November 2013
Suite48Analytics
0%
iPhone free
(n= 50)
iPhone paid
(n= 50)
Android free Android paid
(n= 50)
(n= 50)
Suite 48 Analytics Photo/Video Apps
Market Analysis, November 2013
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7. In-app purchasing –
considerations
— IAP
was the buzz 6-12 months ago,
inspired by the games world
— IAP is only scalable per user if many
options, often refreshed inventory
— IAP poses tradeoff challenges:
“in your face” vs. user-friendly
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8. Advertising
— Methods:
◦ Generic ads – low revenues, often not
relevant to user
◦ Targeted ads – leverage user data (content
categories, geo data, hashtags, etc.)
◦ UCG-integrated “ads” – promotions,
contests, brand mixed with UCG
integration, sponsorships: today’s buzz
— Scale
matters
◦ Ad networks vs. in-house sales
◦ UCG-integrated “ads” require large base
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9. Selling third party products
— Products
offered through APIs:
◦ Physical products, e.g. photo products
◦ Third party functionality, e.g. photo filters
— Considerations:
◦ How many different APIs can you
realistically support?
◦ What happens if you stop offering third
party products?
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10. Payout later – at exit
— No
monetization yet – build a viral,
loyal user base that has long term
monetization potential and is
attractive for acquirers or IPO
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11. Takeaways photo app market
— Scalable
user base – produces most
monetization options long term
— Ads – the more scalable & targeted the
user base, the higher the revenues/user
— IAP – hard to scale, safe interim solution
— Paid – viable option up to a certain
scale; challenge is to devise
“consumable” products or services
— Be clear about your revenue goals –
they might limit your monetization
options
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12. Thank You
Hans@suite48A.com
Suite48A.com
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