Report: In-app purchase revenues on track to eclipse $5.6B in 2015
In-app purchases are on pace to generate 64 percent of total mobile application revenues in 2015, up from 39 percent in 2011, according to information and analysis provider IHS Screen Digest. The firm adds that in-app purchase revenues will rise to more than $5.6 billion in 2015, compared to $970 million a year ago.
As of the third quarter of 2011, freemium applications--i.e., free downloads that offer premium in-app transactions like virtual currency and virtual goods--represented 45 percent of the top-grossing apps on Apple's (NASDAQ:AAPL) and 31 percent of the highest-earning apps on Google's (NASDAQ:GOOG) rival Android Market, IHS notes. In addition, 68 percent of the top-grossing U.S. applications featured some form of additional content or functionality available as an in-app purchase.
"Smartphone users overwhelmingly prefer free apps to paid apps, as we estimate 96 percent of all smartphone apps were downloaded for free in 2011," said IHS senior analyst for mobile media Jack Kent in a statement. "In 2012, it will become increasingly difficult for app stores and developers to justify charging an upfront fee for their products when faced with competition from a plethora of free content. Instead, the apps industry must fully embrace the freemium model and monetize content through in-app purchases."
Virtual currencies like additional poker chips and redeemable points lead in-app purchase options, accounting for 63 percent of all in-app transactions on Apple's iOS platform during the third quarter. Specific in-game functions or features follow at 22 percent. IHS Screen Digest adds that time-limited navigation services, dating and premium social network access are also popular, as are specific functions or features for photo and video apps. Payments for additional media content made up just 2 percent of the top U.S. in-app purchases.
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