NIVEDITA SHARMA

Institute:
Contact:

NMIMS
8879003325

Summary

REFLEC
T

Market research &

in-depth interviews

I NQUIRE

A social gaming
company wants to
assess the market
size of in-app
purchases to
make business
decisions

The Challenge:
Market size for inapp purchase
Factors for
adoption &
challenges
Pricing & best
Practice

Provided solution
based on
detailed
understanding of
consumer insight
& Indian market

64%
64% of
of respondents
respondents
say
say game
game
app
app is
is the
the most
most
Research
Insights
popular
popular app
app type
type

44%
44% of
of respondents
respondents say
say music
music app
app is
is the
the most
most
popular
popular app
app type
type

Popularity
Popularity of
of in-app
in-app purchase
purchase is
is increasing
increasing in
in India
India
Ideas & suggestions
due
due to
to various
various income
income &
& behaviour
behaviour related
related changes
changes
based on consumer

In-app
In-app purchase
purchase motivators
motivators for
for games
games are
are beat
beat
Insight
tough
tough level,
level, unlock
unlock new
new level,
level, upgrade
upgrade characters
characters &
&
resources,
resources, purchase
purchase virtual
virtual currency
currency

Penetration
Penetration of
of in-app
in-app music
music download
download is
is very
very low
low in
in
Steps to customer
India
India due
due to
to weak
weak intellectual
intellectual property
property rights.
rights. In-app
In-app
loyalty & pricing
purchase(games)
purchase(games) has
has better
better market
market prospects
prospects in
in
India
India compared
compared to
to music
music segment
segment

Mobile
Mobile users
users spend
spend up
up to
to 10X
10X more
more time
time in
in games
games
than
than other
other apps
apps but
but retention
retention in
in games
games remains
remains aa
problem
problem
Source:http://www.gamesindustry.biz/articles/2015-09-30-costSource: Primary
* Excel sheet attached for market
size((Source:http://www.gamesindustry.biz/articles/2015-09-30-cost-

SUGGES
T

ELEVATE

In-depth
In-depth
interviews
interviews

PRIMARY
PRIMARY RESEARCH
RESEARCH

Understanding the
Problem Statement

Research
methodology

Case
Case Overview
Overview

Primary
Primary
research
research
among
among 100
100
college
college
students
students

Newspaper
Articles
Research
papers
Company
Reports
Survey
Reports
Industry
Research

SECONDARY
SECONDARY
RESEARCH
RESEARCH

Approach

Action
Hugepoints/Objectives
potential in

game in-app
purchase due to high
internet &
smartphone
penetration
Music apps industry is
sill in its nascent
stage
Advertising plays a
vital role in the

Market Size Highlights

Games Apps

Music Apps

1.Revenue in the "Mobile Games" segment amounts to

mUSD 1,095.5 in 2015
2.Revenue is expected to show an annual growth rate
(CAGR 2015-2020) of 9.90% resulting in a market volume of
mUSD 12.9 in 2020
3. User penetration is at 19.19% in 2015 and is expected to
hit 32.20% in 2020
4. The average revenue per user (ARPU) currently amounts
to USD 6.22
5.From a global comparison perspective it is shown that
Revenue
most revenue is generated in China (mUSD 7,436.4 in
projection
2015)
3000

1. Revenue in the "Music Downloads" segment amounts

to mUSD 8.0 in 2015
2.Revenue is expected to show an annual growth rate
(CAGR 2015-2020) of 10.90% resulting in a market
volume of mUSD 93.7 in 2020
3..User penetration is at 1.05% in 2015 and is expected to
hit 1.84% in 2020
4. The average revenue per user (ARPU) currently
amounts to USD 0.83
5.From a global comparison perspective it is shown that
most revenue is generated in the United States (mUSD
2,590.1 in 2015

100
90

2500

80
70

2000

1500

1000

Total

60

Download Games (Full

Version)

50

Mobile Games

40

Online-/Browsergames

30

Total
Music Downloads
Music Streaming

20
500

10
0

0
2014

2015* 2016* 2017* 2018* 2019* 2020*

2014

2015*

2016*

2017*

2018*

2019*

2020*

Revenue in million U.S

12 key steps to consumer adoption

Barrie
rs
Salien
ce

Factors

What to do ?

1. Segments of online shoppers

1. SegmentsOffer
of online
shoppers
Distinct
True Innovation
proposition

Game Attention
currency,
Catching
game hints,
health
Comm extraMessage

How to do ?

Why ?

What gap it fills

Relevancy to customer

Sports season
Get Noticedpass,
Colourful, engaging
user interface
subscriptions

Land your message

Name of the product

NonNon- renewing Auto

unicatConsumma
connection
ion ble
Consummabl subscription
renewing
Clear, concise
Communicate with focus
App description in app
subscripti
messagee
store
Remove ads,
on
Attrac
tion

Point
of
Purch
ase
Endur
ance

Need/Desire full game Be relevant

unlock,
Advantage
unlimited hintsBe better

Compensate what's missing

with attractive strategy
Influence download/buying
decision
Message to the point = high
retention

Newspaper
Cluster
analysis to
magazine
know
the need

Blue ocean strategy

Competitor landscape

You compare before the

customer does

subscription

Credibility

Give enough reason to

believe

Colours,
communication
strategy

Build customers Trust

Acceptable
downside

Limit the battles

SWOT analysis

Identify before customer to

handle critics better

Findability

Be in the right places

Put in line of sight,

metatags, key words

Better findability=more
downloads

Acceptable
Costs

Win the value equation

Set comfortable cost of

purchasing

Too High, Too Low

Loss of revenue

Product
delivery

Deliver on product
promises

100% what you say

If not done will take you back

to conceptualization

Product Loyalty

Be strong in the long run

Staying ahead of

LOYALTY

Source:Steps to consumer adoption designed byNielsen

User acquisition
Cost per loyal
user
Rose to an alltime high of
$4.04 in August,
representing a
36 % increase
month-overmonth and 117
% rise year-overyear
Awareness

Word of mouth
Multi player
Freemeium app
Engaging
interface
Technology
expertise

Re-engagement
A very important
factor to increase
the regular use of
app, which in turn
will increase
revenue

Industry Challenges
How do people discover apps and what
influences download?
Make early
adopter your
first priority

Invite option &

reward for it

Colleagues
Multi-player,
social media
integration

Family

1. FACTORS INFLUENCING IN-APP

PURCHASE

Friends

Word of
Mouth

Multi-player,
social media
integration

Word of mouth plays a very important role in discovering

the app
Multi-Player Games with social interaction & social
Industry
Impac
Mitigation
media
integration
Challenge
t
Competitors

Innovate & target , differentiation

Customer
reluctant to pay

Freemium app, App starting at Rs. 6

on android with in app purchase
option

Audience
Awareness

Marketing & consumer adoption

Maintaining the
app

Technical Expertise

Seasonal activity

Improvements & re-engagement

Demogra
phic

Online
wallets

Higher
Spending
on
mobile
phones

Higher
disposab
le
income

Internet
penetrati
on

Smartpho
ne
penetrati
on

*Refer to excel sheet for relevant data of these

factors affect on the industry

PORTERS FIVE FORCES FRAMEWORK

Bargaining power
of suppliers

Threat of entry

Industry
Rivalry
Threat of substitutes

Bargaining Power of
Buyers

Out
Out of
of 100
100 mobile
mobile subscribers,
subscribers, only
only 22 are
are
App security

Technical Expertise

Pricing & Best practices

1. Pricing Strategy with Freemium
games
Freemium=Free+ Premium
Feature

Idea

Rationa
le

Giving away free version of a product or service while

charging for a more advanced version with increased
functionality
Users will love the free version so much, theyll be more than
willing to pony up for an even better, paid version
Split the amount in small payments rather than a big number

Users start at a basic level, develop expertise & then opt

for paid version
Apps are available at as low as Rs.6 on android .i.e.
Monopoly
The average selling price of games in major app stores
declined 28% over the last year
Revenue generated by the most successful freemium
games increased tenfold during this period

Source:Study by app marketing consultantDistimo

Music In-app Purchase

Mobile music industry(In-app) is in its nascent stage in India
Penetration of such services is 1.08%
Apps like gaana, saavn are monetizing through ads and freemium
model
For this market, strategy focusing on ad revenue is more preferred than
in-app
purchase
*For detailed
market analysis refer to the excel sheet

2. Best Practices
o In-app advertisingis a great way to
generate on going revenue for the
application
o Re-enagagement through updates,
offers, flash messages helps in
increasing use
o Social media integration will be a good
strategy
o Multi-player games, also will influence
the future of gaming
o Easy to learn interface e.g. Candy crush,
angry birds, flappy bird
o Consider the price to be paid to the app
store & any other charges while
calculating the price of the app
o Pricing the app too high leads to high
returns of the app, so price judiciously
o Apps price should be a wider revenue
mix of in-app purchases and advertising
o Easy payment options with cards &
mobile wallet
o Key is to find a balance and manage
user expectations for how annoying and