In-app purchases are a big deal in the mobile gaming space. It’s something we’ve heard time and time again, and new research suggests that nothing is changing. In fact, there may be more money to be made by selling in-game items.
As Pocket Gamer reports, new data from market research firm Juniper Research finds that, if things keep going the way they are, mobile game developers could be seeing a total of $4.6 billion in revenue coming from in-app purchases over the next four years. That’s huge, considering what’s being sold: things like the ability to advance through a game more quickly, access to special levels, and power-ups that make the game experience somewhat easier. But in-app purchases are an ever-expanding sphere of the market, and more and more developers are finding ways to make money there.
However, to realize how big a swing that $4.6 billion figure is, it’s important to put it into context. In 2011, in-app purchases generated some $2.1 billion in revenue, not a small number itself. But Juniper Research has that figure more than doubling in four years as the smartphone market grows, the app market deepens, and more developers see the value in the “freemium” model of monetizing their apps. Freemium refers to games that are free to download and include in-app purchases either to keep them going or to make the game easier or more fun for the player.
Juniper blames the popularity of freemium and its momentum as leading to the rise in more freemium titles. Players are becoming accustomed to making purchases in-game, and those purchases average more money than they’d normally pay for the app if they bought it outright. Developers are seeing more momentum from their in-app purchases, and that makes them likely to offer apps for free and get their money from in-game sales. Juniper believes that the continued increase in freemium will mean a lot more casual and social games during the next four years.
If you want a success story of in-app purchases on Apple’s iOS platform, look no further than the biggest game of 2011: Infinity Blade. Publisher Epic Games’ Mark Rein said back in May that 33.5 percent of all the revenue generated by Infinity Blade at the time had been from in-app purchases (and after it had instituted IAP, the number was closer to 43.7 percent). We don’t know just how much money Infinity Blade made in 2011, but as a franchise and not including its sequel, Infinity Blade II, Epic earned $25 million in revenue. Considering that that includes a soundtrack and novella that were only made available in November, it seems fair to assume that a huge portion of that $25 million came from Infinity Blade sales, and a big chunk of that was from IAP.
There’s a lot of money to be made by developers on both Apple’s iOS platform and Google’s Android – more than most thought, in fact, if Juniper’s numbers prove to be correct. We knew freemium and in-app purchases were a big deal in gaming, but just how big they are may lead to some changes in the mobile gaming landscape.