Breaking down Chinese app store and channel revenue share deals
Mar 12,2014 by Francis Bea
"How do partnerships with mobile channels and app stores in China work and how much revenue should you expect to share?" Following our introduction to the mobile market in China, we’ve been asked this question frequently enough that we're devoting a post to breaking down the math and expectations with promoting your app in China.
Looking at the Android market from the business development perspective
Of the hundreds of Chinese Android app stores to choose from and it’s inherently difficult to identify the app stores that are not only perfect for your app, but more importantly it’s even harder to get your app published. App stores in China demand quality, and by quality they mean high retention and revenue generating. So don’t expect that your app will be welcomed with open arms – especially by the top tier app stores.
If you’re serious and willing to invest in getting your app into the Chinese market, you probably already know to work with local Chinese partners including iDreamSky, Yodo1, and AppFlood.
But as with building any business goes, you should do your homework to grasp a better understanding of the Chinese Android market. At the end of the day, it’s in your best interest.
Cheat sheet of top Chinese Android app stores
To start, you can browse our list of Chinese app stores you need to be on or you can use the following standard list as rough guide that we like to defer to for promoting apps in app stores:
- 360 Mobile Assistant (360手机助手)
- Baidu Mobile Assistant (百度手机助手)
- 91 Assistant (91 助手)
- Xiaomi Game Center (小米游戏中心) via MIUI App Store
- Tencent MyApps (腾讯开放平台)
- Wandoujia (豌豆荚 )
- d.cn (当乐)
- Carriers including China Mobile, China Telecom, China Unicom (运营商)
- OEMs including Huawei, Oppo, and more
The math behind the revenue share
Since information is power, it’s useful to understand the math behind the deals that developers or local Chinese partners on behalf of the developers will strike with any one of the Android app stores in China.
How much revenue is given up to carrier billers or payment services?
To offer any type of in-app transaction, developers or Chinese channel partners will provide their users with a number of payment options whether that means a carrier partner like China Mobile, China Unicom, or China Telecom, Alipay, or others.
In exchange for the billers’ services, billers take a cut of in-app revenue for facilitating the transaction:
Carrier Billers (China Mobile, Unicom, Telecom): 30% of in-app purchase
Alipay: 2.5% of in-app purchase
Others: 2% - 3% of in-app purchase
How much revenue is given up to Chinese App Stores?
An app store partnership is straight forward, and similar to the revenue share you’d expect from the Google Play or Apple App Store. App stores in China will take 30% of all in-app purchase revenues after the billers (more on this later), leaving you with 70%.
How much revenue is given up to Chinese channel partners?
Now here’s where local Chinese partners get to exercise their black book and negotiation skills with the channels. Landing a deal that gets your app published in one of the major Chinese app stores is just half the battle. The reality of the app economy in 2014 is that unless you’re one-in-a-million like Dong Nguyen, your app probably isn’t the next Flappy Bird and it probably won’t hit the top of any chart without self-promotion.
So this is where channel partners might come in… at a cost.
Channel partners like Qihoo, Baidu, Tencent, UC, Kingsoft, and others don’t just offer the opportunity to get your app in their app stores. Many of these companies also act as publishers and media buyers.
Their services might include:
- Cross-promotion in one of the channel partner’s proprietary apps (like Qihoo’s 360 Security app)
- Promotion through social networks like Tencent’s QQ platform
- Display ads through desktop or Web platforms
- Even a physical banner around bus stops in tier-1 cities
- And more…
How much these channels are willing to invest in the promotion of your app varies. And if you talk to any business development manager from these channels, you’ll get the same response. How much revenue you give up depends on a case-by-case basis.
But here’s a general rule of thumb that should help:
- App Store partnerships are “3:7” – 70% of the revenue goes to you, while 30% goes to the app store. That ratio tips when the channels offer additional services to promote your app.
- Additional promotion through other channels might be 4:6 or even 5:5 depending on the services offered.
- Channels like Qihoo may not even take a cut of your revenue if you’re a small or mid-sized developer, depending on your relationship or the quality of your app.
These revenue share ratios might sound steep to you, but as we’ve outlined already, channel partnerships are critical to the success of promoting an app in the Chinese market.
How much is revenue earned after billers and channels?
To understand the relationship amid the billers, channels, and even local partners, taking a piece of your revenue, here’s an example:
Imagine that a user, who downloaded your app from Qihoo’s 360 Mobile Assistant, wants to purchase in-app virtual goods for RMB100.
Your app offers Alipay and carrier billing for the in-app billion option, with which the user decides to add the 100RMB bill to his China Mobile phone bill.
Since the user has paid with China Mobile, the carrier takes 30% of 100RMB from the get-go leaving a total of 70RMB.
And because you’ve agreed to a 3:7 split of revenue with 360, 30% of the remaining 70RMB (RMB 21) goes to 360 leaving you with RMB 49. And of course if you’re partnered with a local Chinese partner, you might end up giving up an agreed upon percentage of that RMB 49.
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Francis Bea is the Content Market Manager at PapayaMobile. Francis writes about the intricacies of the global mobile advertising industry and analyzes industry trends for AppFlood. He hails from the tech blogging world, where he got his start at Digital Trends, and contributed to TheNextWeb, PSFK, CNET Asia, among other tech blogs, and his reporting has been cited in numerous major publications. Francis holds B.A. in English and Art History from The University of Wisconsin-Madison.Google +
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