In-app billing Revenue to grow steep, Opportunities for Two-Screen Experiences and Ancillary Revenue for TV industry

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Ancillary RevenueBango forecasts that for 2011 in-application charging will grow more than 600 percent to account for close to 30 percent of all mobile applications payments as reported by Mobile Commerce Daily. The expectations for in-app payments are high, being the catalyst that can diffuse micro-charging as a revenue model. But the adoption of in-app billing has been slower than predicted, less than 5 percent of payments billed through its mobile payments platform in 2010 were of this in-application variety.

Vanessa Daly, marketing communications manager at Bango said:

“In the industry in-app billing has been talked about for a while, and it’s been seen as the answer for developers to generate revenue from their mobile apps. Despite this, adoption has been slower than we all thought, with only a few developers experimenting with this payment model.

Less than 5 percent of the revenue from mobile applications we see through our system has been from in-app channels. In-app billing maximizes distribution and conversion rates in cluttered app stores, which as a result brings more money to the developer and of course the App Store, but still only a few app stores are starting to experiment with this payment method.

Surprisingly, app stores have been very slow at solving their technical limitations, which has meant they haven’t been able to offer this functionality—but with the removal of these limitations already starting to happen, we forecast that 2011 will see a revenue growth of 600 percent.”

For the TV industry this means real potential in have access to ancillary revenue and a way to apply the micropayment model to monetise their two-screen experiences. Analysing the opportunities "bottom up" we can distinguish three topics that 

Mobile

Mobile devices are becoming increasingly used in creating new formats and TV experiences. Mobile trends data support two-screen Social TV experiences and in terms of hardware: global tablet device shipments are to exceed 80 million annually by 2015. Contents wise you can think of EPG's, synchronous contextual content and a holistic two-screen experience such as ExMachina.

Many kinds of mobile layers to the TV content can be monetized, offering access to more content, buying credits, virtual goods and access to particular features are just a few to name. This will be advanced by the impact of in-application billing, increasing the seamingless and plug-and-plauing experience of buying via apps.

Two-screen experiences

Two-screen experiences is something we extensively write about on AppMarket.tv, new opportunities being able to service enhanced content and experience plus an increase in engagement, especially when we approach this from the Social TV point of perspective. Interacting and sharing to your network (via Facebook and Twitter) and having the ability to purchase virtual goods that relates to the person or the topic of the content that is shown.

Digitizing TV industry

The digitizing TV industry is both the cause and effect plus a potential catalyst to generate and grow ancillary revenue besides content formats, tv advertising and so on. One of the biggest challenges in this rigid industry is changing to the new situation, many players try to stick convulsivly to their existing models and lock their users in (cord cutting is just one of the examples). 

The interesting opportunity is monetising beyond the primary -premium- content, virtual goods and services are a good example, generating over $2 billion in 2010. The key behind these new models is adapting the exisiting content to these new opportunities and involve new opportunities in the stage of format creation. 

Besides unlocking ancillary revenues there's the catalyst function as well, last week we reported that Social TV helps to drive Television Advertising growth. Existing revenue models can be boosted by applying new technologies, trends and adapting to changing (TV) behavior that all accumulate to the next phase in the TV industry.

The big fat "short-tail" in terms of revenue creation will diminish by competitors/new entrants like Netflix, Apple TV and Google TV. Instead of hold on to these (B2B) incomes and perceiving change as a threat, the industry have to perceive them as B2C, "long-tail" and fragmented opportunities. Fragmented in relation to long-tail is in the digital space an interesting option, spreading risk and being able to monetise a larger share of the target groups.

Lowering the barriers to convert by means of in-app billing is a great development, and an opportunity that must be investigated and integrated in propositions and experiences.

 

 

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