Amazon Underground: How much money can game developers make?
Will Amazon's new approach of paying developers for the amount of time people spend playing games be profitable?
There are three main ways developers can make money from selling games and other apps.
They can charge for the app up-front, but that makes it tough to compete against free apps, which make up the majority of downloads.
They can include advertising, but that needs a big installed base of users to be profitable and can make the gaming experience less pleasant.
Or they can charge for in-app purchases (IAP) or subscriptions, which can be lucrative but requires constant game development and occasionally leads to complaints from consumers.
Amazon's newly-announced Underground app is an interesting variant on the advertising and in-app purchases approaches. It's aimed at games which are already available and which currently either charge to download or include in-app purchases.
Developers who make their games available through the Underground app can't charge for the game itself or for in-app purchases. Instead, they get paid $0.002 (one-fifth of a US cent) for each minute that someone plays their game.
This means completely free games for consumers, and an income stream from everyone who plays a game, rather than just those who choose to make in-app purchases. Amazon is footing the bill in the hope that Underground will expand the range of developers who use Amazon rather than Google's Play Store.
There are several obvious problems with this model. First, it will take a long time for those fraction-of-a-cent figures to turn into meaningful revenue. If someone plays your game for an hour, that amounts to just 12 cents.
Secondly, it relies on consumers using the Underground app rather than Google Play. Google Play is the default app store for all Android devices, and getting people to switch could prove tricky.
Thirdly, this only works for Android. There's no equivalent platform for iPhones (and given Apple's tight restrictions on developers, there is never likely to be).
Finally, it isn't a worldwide scheme. Right now, Underground is only available in the US, UK, Germany and France. It may well reach other countries eventually, but it doesn't have the global reach of Google Play yet.
For consumers, getting games for free is a definite benefit. Whether that will pay off for developers is less clear.