Netsize has released “Application Store Billing”, a report that analyzes the wave of recent application store developments and reveals the business models and billing methods that will bring application store mass-market success.
The report concludes that credit card billing is by no means the way to reach a large and global audience. According to the analysts, to achieve this respondents agree application stores must harness a variety of billing mechanisms. Chief among these is operator billing, indicated by 85 percent of respondents as a key enabler for application store mass market appeal. Almost half (46 percent) of respondents believe operator billing alone will dominate; 39 percent also include credit card billing in the mix. A minority of 15 percent of respondents indicated only credit card billing.
“The survey shows providers will need to develop much more than a me-too application storefront modeled on the Apple blueprint,” noted Stanislas Chesnais, CEO of Netsize.
“Clearly, to guarantee a seamless user experience and a ubiquitous quality of service, application store providers must support a variety of payment mechanisms including operator billing,” he said.
The research also presents substantial proof that a long tail of application stores is indeed emerging. To illustrate this key trend Netsize has identified and ranked the top 52 application stores by size and the number of applications on offer as of May 2010. Predictably, application stores linked with the Apple iPhone and Android platforms lead the list. However, a substantial number of independent application stores run by mobile operators and independent providers also hold top positions.
“New entrants are breaking on the scene with niche application stores that target geographies and vertical markets, such as retail, enterprise, and even cars,” Chesnais explained.
“There is huge opportunity ahead for applications stores providers, but the bulk of their business growth will be driven by freemium-type models that offer consumers free applications as a means to cross-sell or up-sell consumers to a variety of paid content and services, ranging from real-world physical goods to digital services. Making money in this new ‘Application Economy’ will therefore require providers to employ in-application billing and solutions that allow them to sell content, virtual goods and add-ons from within their app,” he said.
This conclusion is further supported by the report findings, which show that 28 percent of respondents deem in-app billing to be a key factor for application store success.
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