At Amazon, we love apps—so much, in fact, that we develop many mobile apps ourselves, and even have an in-house game studio. On the heels of the recent press from the Localytics report that the leading Android tablet is Kindle Fire (with 33% of market segment share worldwide and more than half in the US), we wanted to post some best practices for using in-app purchasing from our colleagues at Amazon Game Studios—developers of the recently released game Air Patriots.

This post is from Ernie Ramirez, Executive Producer, Amazon Game Studios:

Air Patriots is a new type of tower defense game where players control a squadron of airplanes by drawing the attack paths they use to engage the enemy. Air Patriots launched on November 1, 2012, on Amazon, iOS, and Google Play. Although our monetization on Amazon has been great (generating 73% higher ARPU than iOS, and both stores generated similar total revenue), we had some key learning during our initial launch. For example, our focus groups indicated that the two things customers would like to buy were more maps & more planes, in that order. This meshed with our goal of providing Air Patriots customers “big value” for in-app purchases. We reasoned that we would emphasize additional maps for purchase because it would give customers significantly more play time and provide a feel that they paid for something really big and worthwhile.

We originally structured Air Patriots to provide gamers 2 of the 7 maps for free, with the remaining 5 requiring an in-app purchase. Additional airplanes were available using the in-game “soft currency” (gears). As a test, we also included a fully-loaded helicopter available via in-app purchase. It turns out that, after launch, the helicopter was our top-selling individual in-app item, and customers were responding negatively to the 5 additional maps. We received feedback that customers were feeling arbitrarily blocked from progressing in the game, which was not our intention!

We updated the game—reduced prices of our in-app items, increased the amount of maps available with the in-game “soft currency” and offered more planes for sale with in-app purchasing. Customers responded immediately—the sales picked up and we started receiving reviews describing the game as “so darn addicting—pay a couple bucks for different planes. So cool!”

To recap, here are a few things that we recommend to other mobile game developers:

• We discovered that selling main-line game content like levels or expansion packs via in-app purchasing in a freemium game risks making customers feel arbitrarily blocked and frustrated

• Customers prefer to buy things that improve their performance and/or give them new abilities to make them feel “stronger”

To learn more about the Amazon In-App Purchasing API and Amazon Mobile App SDK, head to our documentation here. To get started with our program, go to the Amazon Mobile App Distribution Portal, and once your app is submitted, submit a request to get your app marketed.

In a recent study of more than 500 games that utilize in-app purchasing on Amazon, we found that mobile games using Amazon GameCircle’s leaderboards and achievements monetized significantly better than other games.

For the three-month period from November 2012 to January 2013, games using GameCircle produced 38 percent higher conversion rates and 33 percent more in-app orders per paying customer than games that didn’t use GameCircle. Conversion was measured by calculating the percentage of app users that made at least one in-app purchase. Combining the impact of both of these variables, GameCircle-enabled games earned 83 percent more average revenue per user (ARPU) than non-GameCircle games. 

The free-to-play (or freemium)  model, where consumers download and play a game for free, has become one of the most prominent business models in mobile gaming today. However, the biggest challenge for game developers following the freemium model is figuring out how to generate more revenue by converting non-payers into payers and keeping those paying users engaged.

Many of Amazon’s mobile game developers have discovered how GameCircle’s services–Achievements, Leaderboards and Whispersync–have contributed to their success at Amazon. GameCircle lets players connect with other players to compare achievements and compete for higher scores. These social elements get the competitive juices flowing, which may increase a user’s willingness to pay for in-game content, leading to higher conversion rates for developers. “PlayFirst's games on Amazon have performed above and beyond our expectations, and we believe GameCircle has enhanced our ability to connect and engage with Amazon customers, encouraging more play sessions," said Paul Chen, VP of Business Development at PlayFirst.

GameCircle also offers new discovery mechanisms that are an important factor helping drive increased engagement rates. For games that have integrated with GameCircle, players can see their friends, achievements, and leaderboard activity before launching the application, since all of this information is visible right from the user’s game library. Leading games such as Skylanders Cloud Patrol, Diner Dash, and Temple Run 2 have already integrated with GameCircle. The image below showcases how a user’s library is populated with GameCircle meta-data.

This added visibility is a powerful engagement tool. A related study that we conducted in January 2013 found that, on average, games using GameCircle over-indexed on the number of player sessions (defined by the number of times users opened the applications on their device) by 32 percent when compared to the average for the entire games category. For freemium games that monetize by selling in-game content, this enhanced level of engagement is critical to expanding customer lifetime values. "We see superior engagement, retention and monetization from players who download our games from Amazon. The GameCircle integration is helping us achieve 40 percent better per user monetization rates compared to non-Amazon players," said Sean Thompson, Vice President of Mobile Deluxe.

For you, GameCircle represents another opportunity to provide gamers with a more seamless and entertaining in-game experience, which can lead to increased engagement and monetization. Please visit the following links if you would like to learn more about the Amazon GameCircle and In-App Purchasing APIs.

Today we announced the upcoming launch of Amazon Coins, a new virtual currency for U.S. customers to purchase apps, games, and in-app items on Kindle Fire. When Amazon Coins launches in May, we will be giving out tens of millions of dollars worth of Coins to customers to spend on Kindle Fire apps, games, or in-app items.

For customers, it's an easy way to spend money on Kindle Fire apps and games. They'll be able to purchase as they do now, but with the ability to choose to pay with a credit card or using Coins. For you, it's another opportunity to drive traffic, downloads, and increased monetization. Plus, there's no integration required--you'll get paid the same 70% revenue share whether the customer chooses to use Coins or their own money. 

To take advantage of this unique opportunity, you only need to do one thing: make sure your new apps and app updates are submitted and approved by April 25th so they'll have the best chance of being available for Coins purchases at the launch of the program (and when we give customers their free Coins). 

To learn more, visit the Amazon Coins FAQ on the Mobile App Distribution Portal.