In-app game purchases on tablets to exceed $3 billion by 2016

UK-based Juniper Research forecasts tablet owners will spend an estimated $3.03 billion on in-app purchases by 2016. That's 10X the $301 million reported for 2012.

The huge increase is a result of the rapid adoption of tablets coupled with growing confidence in in-game and mobile spending. Furthermore, game developers are increasingly using virtual currencies to monetize games instead of a pay-per-download model or in-game item purchases.

"This can increase users' engagement with the game, as once the virtual currency is purchased, it can only be spent within that game," says Juniper research analyst and report author Siân Rowlands. "Developers are now beginning to focus more on the stickiness of their game, as they realize that creating a high-quality game is not enough to guarantee a profit."

According to Rowland, only a small percentage of gamers actually make in-game purchases and, of those that do, the amount spent is typically very low, just a few dollars.

"It becomes apparent that there are a small proportion of consumers spending thousands annually on these virtual currencies, who subsidize the game for everyone else," commented Rowland.

Juniper's "Mobile & Tablet Games ~ Playing & Paying" whitepaper also reveals that even free-to-play casino-style games, where users aren't playing for real money, are seeing a big increase in the number of players buying chips and other in-game items. Some are spending as much as $100 in one transaction.

Tags: game development, game market, in-app purchase, mobile games, virtual currency