Like movie merchandise, IAPs prove consumers will pay extra for mobile brands they love, says ZeptoLab's Misha Lyalin

Cut the Rope studio will testing freemium model next

Like movie merchandise, IAPs prove consumers will pay extra for mobile brands they love, says ZeptoLab's Misha Lyalin
The problem with statistics is they can force shades of grey to black or white.

The release of Distimo's latest research, which suggest apps equipped with in-app purchases (IAPs) are generating 72 percent of all App Store revenue, inevitably leads you to draw a contrasting conclusion: the traditional, paid model is on the wane.

However, according to Misha Lyalin, chairperson of Russian studio ZeptoLab, the rise of IAPs doesn't necessarily mean paid apps are done for, or even that freemium is the be-all-and-end-all.

Instead, Lyalin brands such in-play investments as what they are - an additional revenue stream, and one that serves to prove the strong connection between mobile games and their audience. 

We caught up with Lyalin to see what steps ZeptoLab is taking, if any, to expand its IAP prowess in response.

Pocket Gamer: Do Distimo's latest figures about IAP tie in with your own experiences on the App Store?

Misha Lyalin: We currently make most of our money from straight purchases of the app as opposed to IAP, but we have added that feature into Cut the Rope recently and already see some positive dynamics there.

What kind of bearing do reports like this have on your output?

Though interesting and informative, these types of reports don't dictate our strategy.

Our strategy is to build the Cut the Rope brand and to bring more entertaining and challenging content based on that brand to market. That hasn't changed. Currently, having a game in the top paid apps category makes the most sense for us.

IAP serves as just one of several ways to monetise our content and we will utilise it more in the future.

The report also suggests the majority of these IAP-equipped games are free releases. Do you think freemium is likely to dominate iOS in the future?

The freemium trend is very clear and it has certainly changed the way people do business on the App Store.

I think the idea of freemium content, in general, will dominate a lot of markets, not just the App Store.

Is the relevance of the paid model falling away?

Almost all paid apps offer IAP, so I think we need to look at the numbers more carefully.

To me, this report indicates that, firstly, developers have succeeded in earning revenue from people who weren't paying for apps before and, secondly, if people like the app, whether it’s free or paid, they will spend additional money to get more great content from that app.

Let me make an analogy: as a parent, it doesn't matter if you buy the new Pixar movie or somehow get it for free, you will still spend enormous amounts of cash to buy all sorts of merchandise for your kids, as well as take them to the movies to see the sequel when it inevitably hits the theatres.

Regardless of how you get great content, if it's truly great, people are willing to spend money to get more of it.

What are your own IAP plans?

As I mentioned before, we already have IAP in the current version of Cut the Rope. We've had it for a long time in our first game, Parachute Ninja, and it is working well for us.

We will be releasing new content with the IAP/freemium model, and from there we expect IAP to become a bigger part of our revenue.

Additionally, what does it say about the App Store as a whole that just 4 percent of apps are generating 72 percent of the revenue?

It's the standard 80/20 rule you find in almost any business. Sometimes it's 90/10 or in the case of the app store, it is 72/4. I don’t think that finding is necessarily unusual.
Thanks to Misha for his time.

You can find out more about ZeptoLab on the studio's website.

With a fine eye for detail, Keith Andrew is fuelled by strong coffee, Kylie Minogue and the shapely curve of a san serif font.


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