Why In-App Purchases Will Make Your Subscription Revenues Soar
In-App Purchase Revenue Opportunities for Media
Within media, App Stores such as Apple’s iTunes and Google Play enable brands to accept recurring and one-time purchases for content, known as In-App Purchases (IAP), across various devices, globally. It’s not hard to see the benefits of IAP, as it offers a unique proposition which many other payment methods cannot, including brand exposure amongst the millions of App Store users, centralized payment wallets and single identities to process frictionless purchases, and the ability to operate various models to charge for content, supported by promotions & vouchers.
It comes as no surprise that over the past 18 months, the impact of COVID-19 has fueled the growth of digital entertainment, and in-app subscriptions have been no exception. Gaming, entertainment, and music subscriptions to name a few are seeing huge growth. In 2020, global app spending was up 30% from 2019, up to a record $111bn. Post-pandemic, this is unlikely to plateau, with a CAGR of 19.8% from 2020 to 2027 expected.
App Store Tax Battlegrounds
Such a premium in accessing this vast global user-base comes at a cost, with App Stores typically taking a 30% cut of all App Store purchases. The likes of iTunes & Google Play, however, reduces that 30% to 15% after the user has subscribed for 12 months, or for businesses who earn less than $1m (USD) per year, will auto-qualify for only 15% of earnings until they hit that $1m threshold, tipping them into the 30% category. In other words, maximizing customer lifetime value (CLTV) can be very lucrative for businesses with earnings in excess of $1m each year. The fight for CLTV and enticing users to tip the 12-month threshold, keeping all the benefits of managing app subscriptions & payments centrally, is an attractive proposition for app developers.
Additionally, the recent lawsuit between Fortnite’s maker Epic Games and Apple has raised the prospect of circumventing App Store commissions, with Apple agreeing to relax rules surrounding alternative payment methods. The change permits app developers to provide links to sign-up through their site, directly from the app, bypassing the App Store. It also enables brands to email their existing App Store users about alternative payment methods, without the fear of breaching App Store terms and conditions. This unlocks a substantial opportunity to greatly improve margins for new and renewal purchases, by incentivizing those users (possibly in the form for a short-term discount) to subscribe direct, for example via their website. This ground-breaking relaxation in App Store rules facilitating brands to reduce cost per subscriber has triggered share increases amongst major streaming platforms, such as Spotify who posted a 6% increase after the announcement was made by Apple. The changes to Apple’s App Store rules is estimated to go-live early 2022.
Removing the Complexity of Managing In-App Purchases with eSuite
Leveraging in-app purchases as a channel to market is an easy decision. But supporting the complexities of in-app purchases and the various nuances of each App Store isn’t an easy undertaking. This is where MPP Global’s subscription management platform, eSuite, unlocks significant value for OTT services & publishers. We live and breathe media, and understand that in-app purchases are a mission critical channel to exploit and maximize recurring revenues within this space
eSuite seamlessly connects directly to all major In-App Purchasing (IAP) platforms such as iTunes, Roku, Amazon, and Google Play, which allows eSuite to accept purchases and synchronize subscriptions directly within the IAP platform. This means that for every app store subscription, a mirror of that user is created within eSuite, along with a corresponding entitlement, centralizing all users, across all channels in eSuite, remaining in sync with the various third parties. For every event such as the subscription being paused, put on hold, renewed, or a user resubscribing, eSuite is updated to reflect the changes. By leveraging the very latest server-to-server notifications from the IAP platforms, eSuite optimizes the subscription synchronization to provide up to the minute lifecycle events and status changes, where other solutions in the market typically rely on daily callouts to check for updates.
MPP Global has recently enhanced its integrations further, and will continue to do so, against the App Stores outlined above, ensuring that we can offer the latest and greatest features the IAP platforms have available. eSuite’s ability to capture App Store receipts and order references to record purchases, billing, offer information i.e., discounts, subscription statuses, renewals, refunds, etc. enables clients to centralize subscribers, reporting, and entitlements within a single solution.
However, much to the frustration of developers and many media businesses, each App Store has subtle nuances in collecting data, managing offers etc. Fortunately, eSuite caters for all subtleties, whilst presenting a generic solution to minimize the complexity of integration. Our latest releases support functionality that includes subscription pause/holiday, account hold, grace, introductory pricing, discounts, offers and trials, upgrades, downgrades, and cross-grades (within the parameters imposed by each independent App Store).
The Perfect Mix: Centralizing Subscribers From All Channels (including IAP)
In-app purchases represent one of the most appealing revenue generation opportunities for media businesses, with an enormous reach of potential subscribers, and vast benefits for the user – at a cost! But given the recent announcement from Apple, App Stores may start to become an even more commercially enticing acquisition channel.
Implemented correctly, leveraging all the latest features and real-time updates, in-app purchases opens up a realm of possibilities to maximize acquisition, lower cost-per-subscriber, optimize existing revenues and reduce churn. The real icing on the cake though, is the ability to centralize all those users, using tools such as eSuite, alongside all your other subscribers, so that products, offers, reports etc. can all be managed from one single solution.