How Amazon Can Become a Force in Freemium Android Games

After reading a few blog posts, like this one on GigaOm about how difficult the Amazon Appstore has been for developers who have paid applications, I wanted to share a few thoughts I had about why Amazon could eventually become a big distribution source for freemium Android games. In the name of full disclosure, Bionic Panda Games (where I work) did launch on the Amazon Appstore and did encounter a few of the vexing issues that were identified in the article. It’s not perfect yet, but I do see a pretty clear path toward relevance.

I think you need three things to really succeed as an app store, based on what we’ve seen from Apple and Google. And to be clear, success means that you as the app store make money and can drive enough distribution to developers that they too can build a big business on the back of your audience.

Payment-enabled customers + device footprint + well-merchandised store experience = Potential to Win as an App Store

1. Payment-Enabled Customers
One of the (many) things that makes the Apple iOS ecosystem so powerful is that Apple has 200 million hard-won credit cards on file. Having had iTunes prior to the app ecosystem meant that they were able to tap into a large audience of users for whom purchasing apps and in-game items is as simple as a single click.

Perhaps the only company more synonymous with one-click purchase experiences than Apple is Amazon – they did for the web what Apple has done for the iOS ecosystem when it comes to ease of transaction. And Amazon has tens of millions of payment-enabled customers by their own admission. I’m not sure why they haven’t gone through the process of making it easier for freemium game developers to integrate some variant of Amazon Flexible Payments Services as a way to charge for in-app purchases. That seems like a no-brainer way to enable freemium game developers to make real revenue through the Amazon Appstore.

2. Amazon’s Distribution Strategy for the Amazon Appstore
I think Amazon has a pretty clear strategy for how they will get their own Appstore deployed to tens of millions of consumers. This is all my speculation – but I think it makes sense:

Phase I: Give away top-tier games that are usually paid for free in order to get consumers to download and install the Amazon Appstore. This is just a simple quid pro quo. The goal is to give customers something of value (a free or greatly reduced install of a game they covet) in exchange for downloading and using the Amazon Appstore on their Android device. Provided Amazon can continue to find developers who want the exposure for their content, this strategy should help seed things.

Phase 2: Work with carriers to get preload deals so that the Amazon Appstore is on many more devices. Doing preload deals is nothing new. If you have relationships with carriers and can afford the economics required to make those deals interesting to them, that’s one way to get the Amazon Appstore in front of more consumers. This might prove to be trickier than it sounds, given that many carriers and handset makers themselves also have designs of building their own app stores. But this is still a strategy worth pursuing.

Phase 3: Launch an Amazon tablet, powered by Android, with the Amazon Appstore front and center as the primary application discovery method. The last thing Amazon can and should do (and is doing) is to build and sell its own Android tablets. This has less to do with games and more to do with the Kindle business. It’s a good hedge in the whole e-reader vs table debate and should allow Amazon to have a larger footprint for its cloud music and cloud video services. I would fully expect that Amazon will integrate its own Android market front-and-center on that product and will put its considerable marketing muscle behind promoting its table to both Kindle users and people who have yet to have settled on a tablet device.

3. Well-merchandised store
No need to belabor this one. Amazon is one of the world’s premier merchandisers when it comes to selling things online. I’d like to think they could bring some creative muscle to app discovery and recommendation.

It’s clear to me that Amazon is still in the early stages of building out their Amazon Appstore and that to count them out based on their current progress seems premature.

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