Amazon launches virtual currency
Amazon, the world's largest online retailer, plans to introduce virtual currency that can be used for purchases on the Kindle Fire tablet to entice more developers to create programs for the device.
Starting in May, consumers in the US will be able to use Amazon Coins to buy applications and virtual merchandise sold within games, the Seattle-based company said today in a statement.
The company will give customers "tens of millions of dollars" worth of the currency, which will be accepted in the Amazon Appstore.
Amazon has been targeting developers to improve its app store, giving programmers the ability to make more engaging games and help it chase Apple's lead in the tablet market.
Apple's share of the market slipped to 44 per cent from 52 per cent in the fourth quarter, from a year earlier, while Samsung's share more than doubled to 15 per cent, according to research firm IDC. Amazon's market share slipped to 12 per cent from 16 per cent.
"The Kindle Fire user base is simply under-utilising the available apps, and this is an attempt to light a fire under those users and create some momentum in downloads and usage," said Brian Blair, an analyst at Wedge Partners in New York.
Developers will continue to get the 70 per cent revenue share from purchases made with the coins.
After the coin giveaway ends, customers will be able to buy the tokens using Amazon accounts, the company said.
"Amazon Coins is an easy way for Kindle Fire customers to spend money in the Amazon Appstore, offering app and game developers another substantial opportunity to drive traffic, downloads and increase monetisation," the company said.
Amazon has released tools that let developers add more features to games for its tablet, including tracking high scores and monitoring awards won during play.
The company also rolled out in-app purchases in April - enabling programmers to charge for digital content and subscriptions within applications.
In-app features provide extra revenue for developers, which take a 30 per cent commission from every in-app purchase on Amazon's site.
Even with its new features, Amazon is playing catch-up with Apple and Google's Android mobile operating platform.
Amazon currently has more than 68,000 apps in its store, compared with 4000 when the store debuted in March 2011, the company said. Google and Apple have about 700,000 apps apiece in their stores.
"We do not expect Amazon Coins to drive tremendous growth," said Kerry Rice, an analyst at Needham & Co.
The best way for Amazon's Appstore to compete with those of Google and Apple is to have more apps," said Rice.