Mobile App Development Ecosystem - Lessons from four African countries

Transcription

1 Mobile App Development Ecosystem - Lessons from four African countries - Steve Esselaar & Christoph Stork researchictsolutions 1

2 Scalable Business models for targeting the BOP is about solving a problem profitably & sustainably Decisions on distribution channel, revenue sources and payment facilities are intertwined and combinations have to be chosen either sequentially or simultaneously Distribution Channel Payment Revenue Facilities Sources 2

3 Understanding the BoP: At least twice as many people with mobile than bank account BoP 15+ with bank or post office account BoP 15+ owning a mobile phone 51% 61% 42% 22% 22% 14% Ghana Nigeria Mozambique 3

4 Understanding the BoP: Internet use still low in 2012, more so among the BOP BoP RoP 36% 31% 8% 14% 10% 18% Mozambique Nigeria Ghana 4

5 Understanding the BoP: Entry point to Internet use is the mobile phone Mobile Phone Computer/Laptop 30% 37% 69% 70% 63% 31% Mozambique Nigeria Ghana Internet first on a mobile phone or a computer 5

6 Understanding the BoP: Ghana still stuck in the old Internet age Internet Café Mobile Phone 60% 82% 77% 46% 44% 94% Mozambique Nigeria Ghana Share of adults (15+) from the BoP that use the Internet an Internet Cafe or a mobile phone 6

7 Evolution of app adoption 7

8 (I) Revenue sources - basic models Content may be delivered in the form of downloadable apps and SMSor USSD-delivered information. Payment for the content is usually made by premium SMS. The advantage of this approach is its simplicity. Content is pushed out to subscribers via MNOs. However, while the content provider model is successful, its simplicity is also a disadvantage because MNOs dominate the value chain and earn the majority of revenue. Developer Revenue Share App Store App purchase in-app purchase Customers Businesses Monthly subscription VAS Provider Bulk SMS Premium SMS Customers Content Provider Bulk SMS Customers 8

9 (I) Revenue sources -multi-sided business models Successful multi-sided platforms can tap revenue streams and are partially independent of MNOs. Content can be provided for free or for a lower amount to end users by charging the side that is either interested in the content delivery or that benefits from the interaction In-app advertisement is one of the most potent revenue streams for app developers for Smartphones. Free apps may grow a user base more quickly than paid apps and hence become more attractive to advertisers Businesses Monthly subscription Multi-sided platform Premium SMS or free SMS Bulk SMS Customers Businesses Advertisement Multi-sided platform Free App Customers 9

10 (I) Revenue sources - example for a multi-sided business models Pharmaceutical company Subscription Free SMS with drug code Verification SMS Patient 10

11 (II) Payment Facilities - subscriber reach in millions Bank Based Operator Based Mobile Money Nigeria Ghana Mozambique Zambia 11

12 (II) Payment Facilities - Number of premium SMSes required to raise USD 5,000 (10 US cents SMS) MTN Nigeria Mcel Mozambique Vodacom Mozambique Africonnect Zambia without aggregator Africonnect Zambia with aggregator Vodaphone Ghana based on Rancard Vodaphone Ghana based on SMS GH MTN or Tigo Ghana based on Rancard Airtel Ghana based on Rancard MTN or Tigo Ghana based on SMS GH 50,000 1 US$ airtime: - distribution channel 120,773 - taxes 144, % operator share Rest to be shared by developer 188,964 and 3rd part aggregators 269, , , , , ,450 Airtel Ghana based on SMS GH 1,210,900 12

13 (II) Payment Facilities -Mobile money cash to cash cost from registered user to registered user USD 0.5 USD 10 MTN Ghana 44% MTN Ghana 4% Airtel Ghana 44% Airtel Ghana 4% Tigo Ghana 3.5% Tigo Ghana 3.5% esh Mozambiqe 67% mkesh Mozambiqe 4.37% SA Mozambiqe 20% MPESA Mozambiqe 4.4% Zoona Zambia 181% Zoona Zambia 10% you Go Nigeria 281% PocketMoni Pay as you Go Nigeria 14% Paga Nigeria 102% Paga Nigeria 5.1% 13

14 (II) Payment Facilities Payment Options Nigeria Ghana Zambia Mozambique Operator Based: Operator Based: Operator Based: Operator Based: Operator Based: Premium SMS Developer revenue share: 37% Customer base 15+: 66 million Developer revenue share: 5-15% Customer base 15+: 8.8 million Developer revenue share: 15% Customer base 15+: 7.8 million Developer revenue share: 20-40% Customer base 15+: 5.5 million Airtime transfer Developer revenue share: 85-90% Customer base 15+: 66 million Developer revenue share: 85-90% Customer base 15+: 8.8 million Developer revenue share: 85-90% Customer base 15+: 7.8 million Developer revenue share: 85-90% Customer base 15+: 5.5 million Mobile Money: Mobile Money: Mobile Money: Mobile Money: Mobile Money: Mobile Money Customer base: 1.5 million (active) Customer base: 400,000 Customer base: 417,000 Developer revenue share: > 99% Customer base: 400,000+ Bank Based: Bank Based: Bank Based: Bank Based: Bank Based: EFT/Cheque Customer base 15+: 27.6 million Customer base 15+: 4.3 million Customer base 15+: 2.3 million Developer revenue share: > 95% Customer base 15+: 2.1 million Credit / Debit Card Customer base: unknown Customer base: unknown Customer base: unknown Developer revenue share: > 95% Customer base: unknown Other: Other: Other: Other: Other: Vouchers / Scratch cards Customer base 15+: 66 million Customer base 15+: 8.8 million Customer base 15+: 7.8 million Developer revenue share: > 95% Customer base 15+: 5.5 million Premium SMS: Most viable payment facility for apps targeting the BoP Greatest reach Unfavourable revenue-sharing However, rates are generally negotiable despite operators insisting that premium SMS rates are fixed 14

15 (III) Distribution Channel- Smart & feature phones Primary platform usage amongst mobile developers (source: Visionmobile, 2013) Platform % of developers Android 34.4% ios 32.7% HTML5 mobile 17.3% Windows Phone 4.5% BlackBerry 4.2% Other 7% Which platform? OS App store features (source: App store websites & Wikipedia) Total # of apps Name Established Revenue share (approximate) Apple App Store /30 >1 million BlackBerry World /30 235,000 GetJar 2004 Free 750,000 Nokia Ovi Store /30 120,000 Samsung App Store /30 Unknown Windows Phone Store /30 125,000 How to gain visibility? 15

16 (III)Distribution Channel: Operator app store vs global app store Global app stores, such as Google Play, don t cater for local conditions or populations Google does not allow African companies to register as merchant. Operator store able to market apps with local content more easily Operator app stores also provide the only way for app developers to sell their apps directly If app developers have a viable business model, then MNOs will offer good terms. From a developer perspective if MNOs offer good terms, then app developers will develop apps.the net result is a dearth of local, commercial apps. Operator app stores may charge a larger revenue share that global stores Operator app stores may require exclusivity 16

17 Policy Recommendations Payment facilities are crucial for local app development - Mobile money implementation in Ghana and Nigeria is far from ideal - Revenue share for developers may be regulated based on market power that mobile operators - subscriber monopoly Distribution channels - Pressure on Google to allow African companies to register as merchants 17