Google Play risks destroying market for premium apps on Android

ENGLAND: Flexion Mobile Limited , the company that provides one-click monetisation solutions for mobile apps, has found evidence that Google Play is underperforming for developers, resulting in dramatically lower revenues.

Whilst Android is generally considered to be weaker in terms of monetisation than other smartphone platforms, Flexion recently conducted some research to find out how bad it is. The study found that mobile operator billing is on average ten times more effective in terms of conversion than Google Play billing.

In Flexion’s study, Google Play’s in-app billing offered at best around 1 percent conversion from free trial to purchase. In other Android stores that use operator billing the conversion rate can be up to 10 percent after free trial. This means that consumers could generate up to ten times more revenue for Android apps in Google Play if offered a different billing method.

“Our research findings should act as a wake-up call for Google and developers,” said Jens Lauritzson, CEO of Flexion Mobile. “Android is the world’s fastest growing mobile OS and Google Play is the biggest app store and home to thousands of developers. We believe it is Google’s obligation to offer good monetisation tools and it is pretty clear that by mandating the use of a billing SDK that does not convert well, it puts the whole ecosystem in danger.”

The results were consistent with Flexion’s findings from other stores where operator billing is used, which suggests that it is not Android the platform itself which is under-performing, but rather, the monetization mechanisms mandated by Google Play.

“When traditionally successful premium titles in the App Store such as Doodle Jump turn to ad-funding in Google Play, we can see that premium monetisation is not working as well as it should,” added Lauritzson.

Flexion’s research has shown that developers could make substantially more revenues if Google Play offered better coverage of operator billing. Nokia, Microsoft, RIM, Samsung and even Facebook are all seeing the benefit of operator billing but Google does not seem to be in a rush to implement it.

“It would be fairly easy for Google to acquire a global operator billing business, but their approach seems to be that if operators want the business they should integrate with Google. That will take a while and by then developers may have given up on premium altogether, and advertising may be the dominating model. As the biggest online advertising network, the question is whether that would be such a bad thing for Google,” Lauritzson added.

“This attitude by Google and the loss of revenue potential for developers may provide an opportunity for another ecosystem, such as Windows Phone, to flourish. Given Microsoft’s strategy to allow developers to bring their own monetisation tools they may be targeting Android’s weakest spot.

“Since Google Play is pretty much the only store Android developers know about, they somehow need to adapt to low prices and low conversion in an overcrowded store, either by coming up with new monetisation and discovery models or by simply focusing on other platforms,” added Lauritzson. “There is obviously a reason why a whole new industry of monetisation vendors has popped up in the last few years.”

There are over 800,000 applications in Google Play, which makes it the biggest app store in terms of number of apps. Google has made it mandatory for developers to use Google Play billing but there are no restrictions on which advertising networks can be used. This means that developers rely on either Google Play billing or advertising to generate revenues.

In such a crowded store environment, however, it is clear that if developers don’t get featured or supported by advertising, their apps will not hit the charts. In addition price competition has also contributed to generally low pricing. For most developers, this means that it is almost impossible to make money from their apps in Google Play.