Amazon Expands In-Skill Purchasing to UK, Germany, and Japan to Enable Skill Monetization. Here’s How the Story from the U.S.
Amazon announced today that it is expanding In-Skill Purchasing (ISP) features to developers in the UK, Germany, and Japan. This capability presents an opportunity for developers to generate revenue by offering premium features for either one-time sale or as a recurring subscription. In some categories, this revenue can augment developer rewards which Amazon pays to the most popular Alexa skills. Other categories, such as weather, don’t qualify for the rewards program and ISP is the only revenue option. Today’s announcement extends ISP to the three countries that followed the U.S. Amazon Echo launch.
High Conversion Rates, But Selective Promotion
A blog post that revealed the expansion earlier today pointed out that one game, Gal Shenar’s Escape the Airplane, has experienced 34% conversion to the paid ISP. According to an email from an Amazon public relations representative, some of Nick Schwab’s ambient noise skills are seeing a 30% acceptance of a free trial for the premium ISP features and then 90% conversion of those to paid subscribers. That translates into 27% of the users offered the premium feature converting to a paid user. But, not all users are receiving the promotion for the paid premium features. I caught up with Mr. Schwab to ask about Invoked Apps use of ISP in skills like Thunderstorm Sounds. He commented in an online interview:
ISPs are proving to be a viable business model for us, having already attracted thousands of recurring subscriptions.
Steve Arkonvich’s Big Sky weather Alexa skill also has also had success with ISP. He told me recently on the Voicebot Podcast that initially his conversion rate to paid subscribers was about 50% which subsequently fell to about 30% after he raised the annual subscription cost from $2.99 to $9.60 for Amazon Prime Members. However, he did say that the 30% figure is the conversion rate for people that agree to hear about the promotion.
Of all people offered the opportunity to learn about the premium feature about 13% agree to hear more information and 4% (i.e. 30% of 13%) go on to make a purchase. Sales funnel analysis offers a lot of ways to view conversion rates, but it is best to understand that 30% conversion is for the prospective customer that has already taken time to learn about the product. Like Schwab, Arkonovich confirmed that not all customers receive the promotion for premium features. Only Big Sky users that ask about a premium feature explicitly then receive a promotion that leads down the conversion funnel.
Skill Monetization and the Benefits of Early Learning
Amazon also pointed to a recent quote by Mark Cuban about selling through Alexa today regardless of whether current transaction volumes are relatively low, He commented in an interview with Amazon’s Paul Cutsinger:
“You have to be there early because even though you might not get a lot of traction early on, you get the strongest understanding. So, today if you’re not as a brand selling products through voice, you’re at a huge disadvantage because there are over 100 million Alexa-enabled devices right now and this is a big selling opportunity.”
Monetization is an important theme for the Amazon Alexa team recently in the U.S. That emphasis on monetization looks to be heading to Europe and Asia as well very soon. In Skill Purchasing is just the first step.