Freemium Applications With In-App Purchases Account for 71% of Revenue From iPhone Apps
Here’s an interesting fact: 71% of revenue from the many App Store iPhone applications comes from the in-app purchases of ‘freemium’ (free-premium) applications. This means that the application is free, but unlocking certain items, levels, or features in the application will cost real money – this freemium application style is a growing trend in the App Store. One of the most notable freemium releases that has come out recently is Real Racing 3
The data comes from Distimo and was recorded during the month of February 2013 – the data shows that not only does 71% of revenue from iPhone applications come from the in-app purchases from free applications, but 5% of revenue comes from the in-app purchases from paid iPhone applications, and the other 24% of revenue comes from the actual sales of paid iPhone applications in the App Store. Distimo also notes that most in-app purchases originate in Japan.
This data suggests that users are much more likely to purchase in-app content from applications that are free, rather than purchase in-app content from applications that cost something in the App Store upon downloading them. One good reason for this might be that some free applications allow users to buy out the advertisements for a small fee, while paid applications rarely have advertisements to buy out and offer in-app purchases much less frequently.
In-app purchases are great for developers; however, they’re becoming an increasingly painful headache for the parents of children that think they’re actually free because the price tag of the application in the App Store says “Free.” Earlier this week, the 13-year old son of a U.K. policeman generated an accidental $5600 iTunes bill
with in-app purchases. At the beginning of the month, a 5-year old U.K. boy managed to generate an accidental $2500 iTunes bill
with in-app purchases.
Because of issues like this, Apple has made an attempt to make it easier
to see when applications have in-app purchases in them by placing a label that says “Offers in-app purchases” under the price tag of the application in the desktop version of iTunes – this feature is expected to hit the mobile App Store soon.