The gaming industry is going to change beyond recognition in the next few years and that offers huge opportunities for developers. Those who move most quickly will reap the biggest rewards, DT’s Shalom Michaeli predicts.
Shalom Michaeli, Managing Director, Alternative App Stores at Digital Turbine, foresees a tectonic change within the mobile app ecosystem which will present massive opportunities for app developers – but also mobile carriers, mobile manufacturers and users around the world.
Digital Turbine* works with the entire mobile ecosystem, supporting app developers, leading-brand advertisers, mobile carriers and manufacturers. With a vast SDK footprint and strong on-device presence, DT offers a variety of monetisation and UA solutions at scale.
Just as Flexion is building on its expertise in alternative markets to help game developers take the next big step, Digital Turbine is already using its expertise in app growth to help developers adapt their strategies and operations to the growing alternative markets.
“It’s like a tango between Apple and the EU, with a constant back and forth which will affect how alternative stores will look on iOS – as Apple is forced to finally open the market to competition – both for new app stores and alternative payments,” says Shalom – speaking of industry developments like the Digital Markets Act (DMA) in the EU. “But we’ve gone past a tipping point: developers feel they don’t get the same value from Google and Apple anymore and many feel they’ve reached the limit of what the two giants can do for them. There’s only so much Google or Apple can do to stem the tide.”
Digital Turbine itself is one of the actors driving change. It has recently expanded a partnership with South Korea’s ONE Store, acquiring its International subsidiary, boosting the alternative market in the US, EU and Latin America. The big win for developers is that Digital Turbine’s SingleTap technology will enable frictionless app instals, making this a realistic route to new users.
“We are looking at two core changes that will have to take place to drive a real shift to a more open, democratic app ecosystem,” Shalom says. “Apple will need to allow alternative stores and alternative billing within those stores. If the regulator enforces these two things successfully, we will see the dramatic shift the ecosystem has been waiting for.”
There has been a long series of legal proceedings where the gaming giant Epic has challenged the way Apple and Google have blocked its direct engagement with users.
“Recent legal developments focus on prohibiting Google from paying or incentivising carriers and mobile manufacturers to preload Google’s app store on devices. They are also demanding that Google cannot prohibit the preloading of alternative app stores,” says Shalom. “Developers will sink or swim based on the entertainment value their games offer users, and their skill in marketing those games.”
Change #1: discoverability
The deals Digital Turbine has with telcos for preloading apps creates a huge advantage for discoverability within the alternative store front the company operates for mobile carriers. People are drawn to preloaded app stores when their device is new and they are exploring new apps. Once they have discovered great games, they are likely to go back to the same store time and again.
This offers an excellent route to market for game developers. Instead of their games being lost among millions of others in the Google and Apple app stores, now they will have more prominence in an environment where only the best will feature.
Change #2: keep more IAP revenue
Changes Apple and Google have already been forced to make have opened up the possibility of sending users from game apps to developers’ own webstores to make in-app purchases (IAP). This could offer a considerable saving over the 30% cut the major app stores take on IAP revenue.
“Apple and Google use different tactics (such as screen warnings) to discourage users from installing apps outside of their stores,” Shalom explains. “This is not very user friendly, to say the least. It can sometimes take users dozens of clicks to download a single element from a non-Google APK app, which very few users have the patience for.”
Digital Turbine has a technology called “Ignite” to solve this problem. By partnering with carriers and OEM’s, this enables frictionless app instals of non Google play applications. This is a dramatic change that reduces the number of clicks for custom APK instals and allows distribution at scale.
Change #3: getting a better return on UA
With the app stores, privacy changes have been making it increasingly harder to target the right users with the right ads so UA costs (CPI) have constantly increased while the average revenue from users (ARPU) constantly declined – affecting the return on UA spend. In this new reality, app developers should explore alternative avenues that might improve their bottom line.
“As developers lean further into alternative distribution solutions, they must have an alternative UA strategy in mind as part of their approach,” says Shalom. “UA is driven by data. Building a strategy that combines the organic and non-organic UA for custom APKs is key to growing alternative distribution revenue at scale. Developers need to start learning this from now – finding the right prices, channels, platforms – and much more. One channel is the pre-install, another is the programmatic. With DT’s tech we can facilitate both – pre-installs and programmatic transactions.”
Flexion, for example, has been promoting influencer marketing as an important part of the mix to drive new users to games. But this is a chicken-and-egg situation, Shalom points out. Until developers get their feet wet with alternative app stores, they won’t be in a position to experiment with UA strategy.
“Developers need to get in early because there is a learning curve on the entire strategy, particularly on UA.”
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Full disclosure: Flexion is a partner of Digital Turbine.