Update

In-app Purchases Emerging as the Primary Way to Monetize

By - Oct 19, 2013

Game Development, Market Analysis
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A series of reports from the app-tracking firm Distimo highlight that in-app purchases – that is those payments made after the download of an application – have become the primary way developers can make money off of their products.

The reports targeted the major monetization trends in the first three months of 2013 as well as took a closer look at the differences between Google Play and Apple’s App Store.

Key Findings

  • In-app purchases generated a record 76% of all revenue in the U.S. Apple App Store for iPhone in February 2013.
  • At least 90% of all revenue that was generated in Asian markets came from in-app purchases.
  • Paid apps without in-app purchases generate an average of $2.25 in Apple App Store revenue in the U.S.
  • While only 19% of the combined revenue came from Google Play in November 2012, this share rose to 27% in April 2013.

The Distimo report found that the combination of a paid app with in-app purchases generates the most revenue, indicating, “that users are not put off by the fact that they also have to pay for additional features within the app, in addition to the one-off fee they initially paid for their app.”

Additionally, although Apple continues to dominate the market for app purchases, Google Play has seen its influence in this area increase in recent months and has also seen the number of apps and their profitability increased.

Photo of Google Play. Photo by Javier Domínguez Ferreiro

Photo of Google Play. Photo by Javier Domínguez Ferreiro

The Distimo analytics examined the way in which a variety of app developers were making money and found a growing trend in favor of Google Play.

“Mobage is a good example of a developer who generated more or at least an equal amount of revenue in Google Play compared to the Apple App Store in most countries,” the report from this summer found.

“In April 2013, Mobage generated more than $5.1M in Google Play in April 2013. The Apple App Store total revenue during April 2013 in the U.S. was $5.6M, which was slightly higher.”

These reports focused solely on the most popular apps on the market and few of these would be categorized as an educational game, but the trends of consumer expectations appear clear – in-app purchases appears to be the primary revenue stream for most apps and Google Play has emerged as a viable market alongside Apple’s App Store.