What is Appstore Subscription Model?
Appstore’s subscription model is not a new thing. Previously, only video and music streaming apps could use this model. Not anymore, Apple has made the announcement in last June that any app can use this model now. In this model, A user will pay to enjoy the service for a period instead of lifetime buying. For a developer with loyal users, it is an excellent opportunity to increase their revenue margin. How? When a user uses your service more than one year and continues the service next year, you as a developer will receive 85% of income from the second year and onward generated by that user minus applicable taxes instead of well known 70% minus taxes. The actual amount is a bit lower because Apple charges apply on your income. Let’s see how subscription model will work. For detail information, you can visit Apple’s subscription model page.
How will it work?
As an app developer, you will offer your user a service for a particular duration, and you will charge for it. But you are not selling the service for the lifetime. The length of your service can be seven days, one or two months, three months, six months or one year. In the subscription model, there is an option called auto-renewable, to enjoy this option, your product must have a group of services. And all the services in that group should be mutually exclusive. A user can only use one service at a time from the group. Well, You can allow your user to purchase more than one service. For this instance, you have to put the next purchases into another subscription groups.
Now a question may arise, How auto-renewable works? Well, when a user buy an auto-renewable product unless the user stops the service or moved to another service in the service group before ending the life cycle, the service will be automatically renewed. Of course, the user will get a notification about that. And before making a buying decision, a user can enjoy the free trial of the service for a particular period. Free trial time should not exceed three months, which is the maximum limit. For details information about free trial duration, please visit Apple’s In-App Purchase Configuration Guide for iTunes Connect.
We already know that when a user’s accumulated lifetime in a service exceeds one year, the owner of this service will receive 15% more revenue from the following year on that user. So, How Apple calculate accumulated one year? One year timeline excludes free trial period and
60 days grace period. Now, what is a grace period? Apple allows sixty days flexible time if a user comes back again to the service after leaving it to count accumulated one year. Which means Apple will resume counting one year for 60 days only after that one-year counting will start from zero.
Is it an opportunity or threat for Indie Game Developer?
Big publishers have human capital and time to offer a great variety of services. They will be able to attract users to subscribe to those services. But indie game developer fall short in human resource, time and budget. And they don’t have many games in their list like big players. How they are going to utilize new subscription model? Here increase the challenge for indie developers. They have to work harder to publish a quality game to bring users on board. Well, indies are doing fine. And they will do. Because users will pay for quality content. The subscription model will work as motivation for indies to give their best effort.