Google I/O: Here’s how to make money on Google Play; IAP revenues up 700 percent Y-o-Y

android-logo-250-250At a Google I/O session today covering monetization in Google Play, Ibrahim Elbouchikhi, Google Play product manager for commerce and monetization, revealed that in-app revenues increased 700 percent year-over-year from May 2012 to April 2013.

Elbouchikhi also says since launching the ability to monetize through subscriptions a year ago, revenue has doubled each quarter. He notes internet radio service Pandora as a perfect example of a top grossing app which monetizes its users via a subscription model.

Android for tablets is starting to show some growth now, Elbouchikhi reveals. In the past 12 months, Google was seeing a 1.7 times higher purchase rate of apps on tablets compared to apps on smartphones. “The additional cost of optimizing your apps for tablets is well worthwhile,” he says. Additionally, there’s a 2.2 times higher purchase rate on recent platform versions compared to prior ones. “Take advantage of the latest features, whether its Google+ sign-in or all the latest APIs released at I/O this week.” On top of all this growth, average revenue per user (ARPU) is 2.5 times greater year-over-year.

Below is a chart, showing that higher-rated apps in Google Play monetize better:App ratings monetization

Google hasn’t been slowing down at all when it comes to adding and optimizing forms of payment. In July 2012, Google introduced the Google Play gift cards at retail. Google also launched promotional campaigns for Google Play credit by partnering with pre-paid phone providers, offering a $50 Google Play credit if a user purchases a particular pre-paid phone, for example. Carrier billing, one of the most lucrative forms of monetization in various parts of the world, is now available to 50 percent of Google Play’s daily active users. Google also optimized the purchase flow, making it more contextual, faster and simpler. According to Elbouchikhi, Google has dropped latency by 35 percent when users make purchases. Looking forward, Elbouchikhi says Google will invest more in expanding Google Play gift cards to more markets as well as carrier billing.

“We do want to get to the point when anyone can code an awesome app and make a living out of it,” he says.

Following Elbouchikhi, Bob Meese, who leads games business development for Google Play, shared some case studies from large, successful publishers which were defined as publishers who had a large amount of installs as well as monetized well. Messe hopes the case studies help developers understand what successful publishers are doing and how developers can apply those lessons to their own businesses. Before diving into case studies for particular publishers, Meese point out that a majority of the top grossing apps are free-to-play, with Minecraft – Pocket Edition as the one exception, which backs up Google’s 700 percent growth in in-app purchases.

“We’re not saying you need to push everything free-to-play, however also recognize the dominant trend toward free-to-play,” he says.

Meese then presented four case studies from Kiwi, DeNA, Kabam and Pandora. As we already reported at the 2013 Game Developers Conference, DeNA’s Blood Brothers has been monetizing well, doubling ARPU special, in-game events. Pandora, in particular, was the one case study of an app that wasn’t a game or built around an in-app purchase model. In February, Pandora implemented Google Play’s in-app bulling subscription feature, streamlining the purchasing process. Before, users had to leave the mobile app, subscribe to Pandora via the web then return to the mobile app. So now when Pandora prompts a user who’s exceeded the 43 hour listening limit, the app will ask the user to pay for a subscription from within the app. Below is a chart that shows how that change significantly increased revenue for the company.Pandora revenue