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Europe’s Tech Hub #1:

Mobile Monetization made in Germany

Julia Oentrich

www.gtai.com

I. Germany Trade and Invest

II. Germany’s Mobile Ecosystem

III. In-App Purchase Behavior in Germany

IV. Contact

Agenda

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Foreign Company

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I. Germany Trade and Invest

II. Germany’s Mobile Ecosystem

III. In-App Purchase Behavior in Germany

IV. Contact

Agenda

Mobile Broadband Networks in Germany

Germany’s LTE Networks are essential for the future growth of the mobile

ecosystem

Source: http://www.lte-anbieter.info/verfuegbarkeit/lte-verfuegbarkeit-testen.php

Covered area 65% 60% 5-10%

Number of Cities ~ 180 ~ 100 ~ 12

Reach in million people

>51 >45 <1

Availability of LTE by Provider

The German Mobile Economy at a Glance

Turnover with mobile apps in

Germany (in EUR million)

Revenues with mobile apps are growing enormously in Germany

Source: MS&C

2010 2013

100

523

12

176

App sales Revenues from ads

112

700

+625 %

Turnover with mobile apps is expected

to have reached 700 million Euro (~ 3.4

bn NIS) in 2013 Most revenues come from direct app

sales followed by income generated by

ads

Mobile Operating Systems in Germany

Market share of mobile OS in

Germany (in percent; 2012)

Android is by far the most popular mobile OS in Germany

Source: Kantar Worldpanel ComTech 2013

Android is by far the most popular OS

for mobile devices in Germany iOS comes second – with a big distance Windows Phone gained market share Blackberry is not expected to recover Alternative OS such as Firefox OS, Bada

and Tizen currently only play a niche

role

Android

iOS

Windows Phone

Blackberry

Other

78%

12%

3%

2%

6%

78%

10%

9%

1%

2%

Summer 2013 Summer 2012

-0.2%

-1.5%

+6%

-3.5%

-0.7%

Mobile Phone Usage in Germany

What web-based functions do you

use your mobile phone for?

Apps are gaining increasing importance

Source: MS&C

Email is still gaining relevance Visiting websites is still more popular

than using apps Trend from paid apps to free apps Free apps are mostly freemium apps VoiP services are rather a niche market

Email

Websites

Free Apps

Paid Apps

VoiP

18.7

22

17.9

11.1

7

23.3

28.3

25.2

9.1

6.6

23.9

30

26.7

8.7

6.2

2013 Q1 2012 Q1 2011 Q1

Motivations to download apps in Germany

What motivates you to download an

app? (in percent)

Usability and added value are key for downloading apps

Source: MS&C ; multiple answers possible

The functionality of an app is the most

important motivation for downloading

apps Pricing is important but only comes

third Recommendations of peers and media

are relevant but less crucial than

functional aspects

Usability

Added Value

Price

Technical specs

Ratings in the app store

Up-to-dateness

Recommendations

Design

Fun factor

Rating on tech websites

Rating in communities

Other

91

88.2

85.3

78.3

71.6

68.3

65.3

58.4

54.1

52.3

39

24.9

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Germany is home to many mobile companies – Want to join them?

Mobile Companies in Germany

Mobile tech companies based in Germany

www.gtai.com

I. Germany Trade and Invest

II. Germany’s Mobile Ecosystem

III. In-App Purchase Behavior in Germany

IV. Contact

Agenda

www.gtai.com

The market for virtual items is

growing steadily

In-game transactions are an

effective way to monetize less

committed players

It is expected that item-selling will

expand its relevance beyond F2P

games in order to expand

monetization possibilities also for

premium games

The market for virtual goods is growing continuously

Source: PWC 2013

In-App Purchases: The Example of Games I

12

www.gtai.com

Revenues with in-game item-selling in Germany (in million Euro)

2011 2012 2013 2014 2015 2016 2017

251 256271

315

353

387

415

www.gtai.com

Extending the game, for example

by additional levels, is the biggest

motivator

A higher fun factor is also a reason

for gamers to buy additional items

Designing an own avatar or

making the game play faster is

less relevant

New game experiences and more fun are the motivations for German

gamers to purchase virtual goods

Source: PWC 2013

In-App Purchases: The Example of Games II

13

www.gtai.com

What factors motivate you to buy virtual items?

Additional levels +++

Additional ressources ++

More fun +++

Faster game play ++

Individual avatar design ++

Advertisement-free version ++

Additional features to be able to continue the game

+++

+++ 30-40% of gamers

++ 20-30% of gamers

+ 10-20% of gamers

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Almost 55% of gamers in Germany

are skeptical about games

financed through in-game item-

selling

Customer friendly payment

solution are expected to bring

higher acceptance of virtual goods

Social media is important for

selling virtual goods in games

Monetization stays a challenge but social aspects and sound payment

solutions can make a difference

Source: PWC 2013

In-App Purchases: The Example of Games III

14

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I post the purchase of virtual goods in my social networks

When I see on social networks that my friends bought a virtual good, I am inclined to buy it as well

I would spend more on virtual goods if the payment systems were easier and safer

I would buy virtual goods in order to pursue a common goal with friends in a game

I think the prices for virtual goods are usually fair

I already made use of a virtual currency

I consider games financed through in-game item-selling unfair

13.2%

13.9%

20.8%

22.6%

23.9%

25.8%

54.6%

In-game item-selling in Germany: Experiences and opinions

www.gtai.com

40% of all young gamers spend

money on virtual goods at least

occasionally

Young gamers are more willing to

purchase virtual goods

A big share of gamers is not yet

considering spend money on

virtual goods: Challenge to

monetize them!

For younger gamers at least occasional spending on virtual goods are

common

Source: PWC 2013

In-App Purchases: The Example of Games IV

15

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Money spent on virtual goods in Germany (in percent)

18-30 yrs. old

31-45 yrs. old

46-65 yrs. old

7 746

94

9 74

18 17

105

9 8

5551

70>5 euro/month

1-5 Euro/month

<1 Euro/month

occasional purchases

no purchase but will-ingness to pay

no purchases, no willingness to pay

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If you would like to grow your tech business internationally:

Come to Germany!

If you want to be part of a great digital ecosystem:

Come to Germany!

If you are looking for serious and reliable business partners:

Come to Germany!

If you need support with coming to Germany:

Contact me!

To make a long story short:

Conclusions

16

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Germany offers sound business opportunities for Israeli tech companies in the field of mobile products and services

www.gtai.com

I. Germany Trade and Invest

II. Germany’s Mobile Ecosystem

III. In-App Purchase Behavior in Germany

IV. Contact

Agenda

Thank you for your attention!

Julia OentrichManager ICT

Germany Trade and Invest GmbHFriedrichstraße 60

10117 Berlin, Germany

Tel. +49 30 200 099 -306Fax +49 30 200 099 111Julia.Oentrich@gtai.com

www.gtai.com/digital-economy

1.© 2013 Germany Trade & Invest

2.

3.All information provided by Germany Trade & Invest has been put together with the utmost care. However we assume no liability for the accuracy of the information provided.

1. Questions?