Amazon Matches Apple’s Revenue Split for In-App Payments
Starting today, Amazon is finally giving developers in its Appstore the opportunity to sell digital content and subscriptions within their apps.
As part of the announcement, the retailer is also confirming that it will take a 30 percent cut of each transaction, which is the standard across Apple’s App Store, Facebook and Google Play (Correction: In an earlier version, it stated that Google takes 5 percent, which only applies to the Google+ game network.)
The announcement is not a huge surprise, since Amazon has been testing in-app payments over the past few months with a number of developers in the Amazon Appstore, which runs on the Kindle Fire and a number of Android handsets.
The payments platform utilizes Amazon’s well-recognized and trusted “1-Click” purchasing experience that so many consumers are familiar with from shopping online. By bringing it to mobile, it will make it easy for consumers to purchase a few more coins inside a game or to subscribe to a magazine.
But while the announcement sounds fairly basic, the rollout is important for Amazon to get right, since developers’ initial reception to the Appstore was a little strained — and stories of making money on the platform have been mixed.
That’s because, unlike other app stores, Amazon has decided to dictate how much an app sells for, and in some cases, the company elects to make apps free as part of its Free App of the Day promotion. In doing so, developers sometimes make less revenue than they would normally expect (especially since there was no potential upside from in-app purchases).
Developers and publishers will be able to set the price of the items within the store, including virtual goods or subscriptions, an Amazon spokesperson said.
Based on developers that participated in the beta tests, so far Amazon’s Appstore looks like it has been monetizing well.
Storm8, which was one of the game developers that participated in the beta test, told AllThingsD that it generated $700,000 in revenue from in-app purchases in March — before Amazon’s cut. The Redwood City developer said it has 10 free-to-play apps in the store, including such titles as Kingdoms Live, Nightclub Story and Farm Story; at one point, four of its games ranked among the five most popular free apps on Amazon.
Flurry, which provides analytics software to developers, also estimated that Amazon’s in-app payment platform monetizes well, and that it outperforms Google Play, but falls short of the industry’s gold standard, which is Apple.
Still, it’s unclear whether Amazon will be able to woo developers, given that it is so much smaller than the other players. Last month, after celebrating its first year in business, Amazon confirmed that it had more than 31,000 apps in its store, which is far fewer than either Google or Apple.
It’s also unclear how many devices the Appstore is installed on, since Amazon does not share much information, including how many Kindle Fires it has sold.
According to a report by IHS iSuppli, Amazon shipped 3.9 million Fires in the fourth quarter, to claim 14.3 percent of the market. That makes it the world’s second-largest tablet vendor, surpassing Samsung, which has been in the market far longer, with many more devices.
In the future, what could potentially be even more interesting for developers than in-app payments is if Amazon will let them use apps to sell merchandise, such as Rovio’s plush toys, or DVDs and other cross-promotional items.
An Amazon spokesperson declined to comment on the possibility.