Amazon launching 'Coins,' virtual currency for Kindle Fire apps, games

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Amazon (NASDAQ:AMZN) is introducing Coins, a new virtual currency designed to drive purchases of Kindle Fire-optimized applications, games and in-app goods available from its Appstore for Android.

Officially launching this May, Amazon Coins will co-exist alongside Appstore for Android credit card purchase options billed to the customer's Amazon account. Each Amazon Coin is worth one cent, so an app priced at $2.99 will cost 299 Amazon Coins. Amazon said it will give away tens of millions of dollars' worth of free Amazon Coins when the effort goes live this spring, adding that consumers can purchase additional Coins using their existing Amazon accounts.

Amazon Appstore developers will earn their standard 70 percent revenue share when customers make purchases using Amazon Coins, and Amazon will continue paying developers in U.S. dollars. (At launch, Amazon Coin transactions will be limited to the U.S. market.) The coins are honored by Amazon's existing in-app purchase flow: "As long as your app or game is available for sale on at least one member of the current Kindle Fire family, no additional work is required on your part to make your digital items purchasable with Amazon Coins," states Amazon's Developer FAQ. Any additional apps submitted and approved by Apr. 25 also will support Amazon Coins transactions.

Potential use case scenarios for Amazon Coins include gifts from one Kindle Fire owner to another. Parents also could award children a Coins allowance to control their spending on apps and in-app purchases.

Amazon offers Kindle Fire owners access to more than 22 million Android applications, games, e-books, movies, TV shows, songs, audiobooks and magazines. In late 2012, Amazon reported that Appstore for Android downloads have increased 500 percent year-over-year, adding that the number of developer partners incorporating in-app purchasing features into their apps more than doubled during the third quarter. In October, 23 of Amazon Appstore's 25 top-grossing apps used Amazon's In-App Purchasing technology.

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