Apps: Revenue from in-game purchases set to to soar

Once your app is ready to be 'sold' do you attach a small price to it or, as many developers are now doing, do you give it away for free and hope users cough up for in-game purchases? Recent research suggests that free apps can generate as much or more revenue than those paid upfront.

by Helen Leggatt

The general consensus amongst gamers I know is that they are more likely to try out a free app than buy one upfront. They want to know if the app is right for them before they commit - a "try before you buy" if you will. After approving the game they are happy to be able to purchase items in-game.

New data from Juniper Research shows that app developers are also treading the freemium track.

"An increasing number of games developers are finding the in-game purchase model attractive simply because it provides easy answers. Their piracy rate will drop and the game will see more downloads," said author of the report Charlotte Miller.

'However, while some games may generate significant revenues from in-game items, the model doesn't work with all games and developers have to tread a fine line between encouraging purchases and appearing to be exploitative.'

Juniper Research's latest figures reveal that $2.1 billion was spent on in-game purchases in 2011. They expect that number to rise to $4.8 billion in 2016.

Data from mobile search firm Chomp's monthly App Search Analytics Report (Sept) showed that a third of searchers on iOS devices apply the "free" filter whereas only 12% of Android searchers do so. Maybe there's some truth in the notion that Android users have an expectation that everything is free.

Tags: Android, game industry, game platforms, in-game purchase, iPhone, mobile apps, mobile marketing, pay-to-play