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A Distribution and Monetisation Ecosystem for Mobile Applications, Maximising Market Growth through Affiliation

Periodic Reporting for period 2 - Gamesmondo (A Distribution and Monetisation Ecosystem for Mobile Applications, Maximising Market Growththrough Affiliation)

Reporting period: 2017-05-01 to 2018-10-31

Flexion makes it easy for Android developers to maximise the growth potential of their games. Its unique technology has solved a distribution problem for developers. The company offers a platform and service that makes it profitable for game developers to distribute games to many stores.

The Android operating system is open. A multitude of distribution channels exist, including stores run by tech giants such as Samsung, Amazon and Huawei. New forms of distribution such as social networks and chat are emerging. To reach other distribution channels, developers need to rebuild their games and set up individual production lines and relationships for each distribution channel. The absolute and opportunity costs for developers to do this are high. Developers are faced with a dilemma; invest in open market distribution and risk losing position in Google Play or focus on Google Play and forego the opportunity of distribution to other channels.

The Gamesmondo project supported Flexion’s overall value proposition, and by extension, the broadening of an open market for Android games by driving progress in three main areas for Flexion:
1) Customer growth - recruitment and management of additional game developer and distribution channel customers
2) Growth feature development – creation of features which drive additional monetisation, facilitate self-service enabling for customers and ensure platform scalability and technology readiness.
3) IP protection – conclusion of Flexion’s patenting activities

The Gamesmondo project was a key factor in Flexion’s journey to become a leading distribution partner for Android games beyond Google Play. The technology and services developed as part of the project allows Flexion to solve the developer’s dilemma, making distribution to multiple stores profitable for developers.
Gamesmondo has been a very successful project for Flexion. Running between May 2016 and October 2018, the project has achieved:
- A significant increase in the number of developers and games
- Additional supported distribution channels
- A significant number of new end-users
- A suite of growth driving features, including but not limited to: a plugin for Unity, a self service portal for developers, a live subscription service in Samsung’s Galaxy Apps store and enhanced monetisation and distribution features.
- Platform and product maturity and future proofing
- Revised internal workflows and processes tailored to support future growth
- A granted US patent

Indirectly - through supporting the company's overall evolution and growth – the Gamesmondo project contributed to Flexion's successful listing on Nasdaq First North in June 2018.

Activities during the two reporting periods involved feature development, business development, operational undertakings and organisational change management. Exploitation of results have been ongoing throughout the project. The overall duration of the project was extended by a total of 6 months, with the extended timelines primarily being driven by crowding out effects from Flexion’s listing project.

Dissemination has happened throughout the project. In addition to business development activities, Flexion regularly attends trade shows and has been invited to speak at numerous EU, EEN and Innovate UK events. Gamesmondo, the horizon 2020 grant and its benefits are actively promoted throughout.
Without support from services such as those provided by Flexion, the opportunity cost for developers of investing in new distribution and solving fragmentation is prohibitively high. This follows because of: a) new channel support diverting resources from existing stores and b) new channel support having far longer payback times than user acquisition or feature investments in existing distribution.

Most importantly – to be successful with distribution to many stores, developers need to divert resources from their core business - making games. Developers end up with a dilemma: a) invest in long term growth by diversified distribution but risk losing short term momentum in existing stores OR b) defend position in existing stores by foregoing new channel investment. Neither scenario is preferable. Developers struggle to balance the investment case and many end up foregoing investment in diversified distribution.
As a result, many channels are missing out on content. Open market distribution channels could be growing faster with more quality content. With effective ways of eliminating the developers’ dilemma, overall market growth could be even stronger than it is today. The features and services which were developed with the support of the Gamesmondo project allows Flexion to solve the developer’s dilemma.

Fragmentation is surmounted through a three-part value proposition comprising technical enabling, technical enhancement and service management. Flexion’s service platform manages aspects such as integration of 3rd party payments and features, in-application purchase and user license management. Flexion manages relationships with stores, undertakes retailing and promotion and manages revenue conciliation and payment to developers. Developers get a consolidated route to a fragmented ecosystem through a single distribution partner.

All parties in the value chain benefit as a result.
1) Developers can reach distribution channels which they previously did not see as potentially profitable. As a result, they become less dependent on distribution through a single store, can target users more effectively and can maximise the growth potential of their games through increased exposure to end-users.
2) Distribution channels get access to content they were previously unable to attract and can play a significant role in Android games, as well as drive significant revenues from games. This drives employment and profitability but also increases the overall level of competitiveness in the market, ultimately creating better services for end-users.
3) The overall gaming eco-system becomes more open and competitive
4) End-users benefit thanks to more choice and variation, improved game discoverability and the naturally improved value propositions offered by stores and developers as a result of increased competition.
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