Brazilian mobile app marketplace developer Bemobi is working with local carriers to handle payments from consumers who don't use or have access to credit cards.
"As mobile technology and smartphones grow in emerging economies, the developers are having issues because they're reaching areas where credit cards aren't adopted as much," says Pedro Ripper, CEO of the Rio de Janeiro-based Bemobi, who likens his company's subscription-based digital content delivery model to Netflix or Spotify.
Bemobi charges a monthly fee of about $2.20 or a weekly fee of about $0.80 for mobile apps that run on smartphones and tablets that run Google's Android operating system. The company's app store in Brazil is offered via Oi, a local mobile carrier. The fee is charged against the subscriber's prepaid balance or added monthly to post-billing statements. Oi's app store is called the Oi Apps Clube, and is accessible from the Google Play Store.
"Android developers have a hard time getting revenue in areas without credit cards," Ripper says. "The subscription model helps developers build revenue over time."
The apps cover categories such as music, games, utilities, children's' products, health, education and entertainment. Bemobi is currently focused on Android because Apple's ecosystem makes it difficult for other app distribution models to co-exist with Apple's own, Ripper says, adding Bemobi is evaluating Microsoft's Windows Phone as a potential future platform. Apple did not return a request for comment by deadline.
The developer chooses apps based on their ratingsthe company ideally looks for apps with ratings of four or five stars, do not have ads, and are mostly different from the other apps. Participating carriers preload the app store in all of their Android devices and promote its use.
Bemobi manages the payments, and also offers alternative payment cycles, trial periods and promotions. The subscription fees are split between Bemobi and its partners.
The model gives consumers an incentive to use new apps without paying for each download, Ripper says. The Bemobi app store is limited to a few hundred apps at any given time, so there's exclusivity and visibility for the developers, Ripper says.
The company plans to partner with other carriers throughout the Americas and Asia. Carrier partnerships are key to mobile payment initiatives in underbanked areas. M-Pesa, which is offered by Safaricom to customers in Kenya, is another example of the vital role a carrier can play but it has a different business model. Unlike M-Pesa, which enables payments for a broad range of uses, Ripper says Bemobi is focused on mobile commerce through its app store model.
"Subscription content is a proven winner; it's enormously popular in music and videos. I see little reason to doubt whether subscription apps and games shouldn't prove similarly popular," says Daniel Van Dyke, a research specialist at Javelin Strategy & Research, who says there are revenue related challenges for the app developers.
"It's a great setup for carriers and for [the mobile commerce company]. Developers, on the other hand, are paying off a lot of middlemen," he says.
Subscription services don't necessarily need to use the carrier billing model, Van Dyke says. "If a consumer is going to shell out $5 or $10 per month, they can stomach the added friction of paying through different channels," particularly in developed markets, he says. "When subscription app and games take off in the U.S., it will be offered by Google, Microsoft or Apple, not through carriers."