1. Habitual Consumption And the Appstore Economy

2. A little history…

3. A global trend… Source: App Annie, May 2012

4. A global trend… Led by Mature Economies… but not exclusively so Source: App Annie, May 2012

5. A global trend… Source: App Annie, May 2012

6. A global trend… Source: App Annie, May 2012

7. A global trend… Source: App Annie, May 2012

8. A global trend… Source: App Annie, May 2012

9. Tis the season… Source: App Annie, May 2012

10. Watered Down by Success? Increased competition + Decreased Discovery = Lower Individual App DLs Source: Distimo, June 2012

11. A New Model Emerges… Phase 2: “The Fall of Angry Birds” Source: Distimo, June 2012 Top 200 Grossing Apps Volume ↑ 16% Avg Price ↓ 13%

12. A New Model Emerges… Shift from pay to download -> In-App Commerce Source: Distimo, June 2012 Top 200 Grossing Apps Volume ↑ 16% Avg Price ↓ 13% Losses in revenue made up for via in- app downloads Phase 2: “The Fall of Angry Birds”

13. A New Model Emerges… People far more likely to pay once they’re “invested” in the experience Source: Distimo, June 2012

14. The Transition is Complete… “Newsstand”, Games & Books Lead… but in-app payment is popular across wide range of content categories Source: Distimo, June 2012

15. In App Purchases of All Sizes Not just $.99 pants for your avatar… Source: Flurry, July 2011

16. In App Purchases of All Sizes Not just $.99 pants for your avatar… Source: Flurry, July 2011 AVERAGE PURCHASE SIZE: $14!

17. In App Purchases of All Sizes Zynga… The master of incentivizing the Habitual Purchase!

18. In App Purchases of All Sizes Zynga… The master of incentivizing the Habitual Purchase!

19. Spendy Young Males 25-34 remains mobile sweet spot Source: Flurry, July 2011

20. Spendy Young Males 25-34 remains mobile sweet spot Source: Flurry, July 2011

21. What to buy? Consumables Non-Consumables Auto-Renewable Subscriptions Non-Renewing Subscriptions Content Functionality ServicesSubscriptions

22. What to buy? Supplies in a game (ammunition, health points, cheats, extra lives, etc) Accelerators used to decrease advancement time within an app Consumables Consumables are In-App Purchases that must be purchased each time the user needs that item

23. What to buy? Additional levels within a game Access to pro-features such as additional camera lenses or audio effects Lifetime subscription to a service Books and individual magazine issues Non-Consumables Non-Consumables are In-App Purchases that only need to be purchased once by the user do not expire

24. What to buy? Recurring delivery of newspapers or magazine issues Monthly subscription to audio streaming feed Weekly membership to a dating service Subscriptions Auto-Renewable Subscriptions allow the user to purchase episodic content or access to content for a set duration time, renewing itself, until a user opts out