Users average $14 per transaction on game in-app purchases

by Phil Hornshaw

More analysis of mobile users’ habits with “freemium” games shows that on average, gamers who are willing to spend money in freemium games drop $14 per transaction.

The info comes from Flurry Analytics, which posted as much on its blog. Flurry draw its information from 75,000 apps and 3.5 million smartphone owners, and the firm recently found that 65 percent of total game revenue in the mobile space was coming from freemium games, as opposed to 35 percent from games that come pay-for-download apps.

“Freemium” refers to a brand of game or app that’s free to download and play. The apps make money by including in-app purchases for in-game content – things like currency in game that can upgrade the players’ experience or speed up in-game actions.

Most revenue comes from small pool of gamers

Touch Arcade’s story on Flurry’s info breaks down the findings pretty well. The analysis finds that only about 3 percent of users spend money when they play freemium titles – but those users spend quite a bit. Of that 3 percent, 71 percent of the transactions are for $10 or less, while only about 29 percent spend more than $10. But more than half of all freemium revenue, 51 percent of it, comes from transactions that users make for more than $20.

That’s a lot of money spent within games. Here’s a quote from Flurry breaking the numbers down further.

“Let’s spend a moment on the $14 average, which may seem high to you at first blush. There are two reasons the average settles here. First, within the “under $10” bucket, most transactions cluster at the $9.99 level, followed by $4.99, and finally $0.99. In fact, in total, consumers spent $0.99 less than 2% of the time. Why then would so few consumers spend just $1 in freemium games when this price point is so popular among premium games (the pay-before-you-can-play model)? Because freemium games drive a different decision-making mindset for consumers. They simply are deciding whether or not to spend. Our data shows that around 3% of consumers will spend money in freemium games. A deep commitment to the game experience appears to influence their buying habits. The second reason the $14 average seems high is because the high-end of the spending spectrum is very high. Among all purchase price points, over 5% of all purchases are for amounts greater than $50, which rivals the amount paid at retail for top console and PC games.”

Flurry finds that a big chunk of freemium revenue comes from a very small number of users who drop quite a bit in each transaction – better than $50.

Overall, the way users spend money is very likely to affect the way developers make games. Hooking what Flurry calls “whales,” or the users that are willing to spend lots on the game experience, is important for keeping up freemium revenue, and that means designing games to appeal to those kinds of gamers. Whether that’s good or bad for regular players who spend less on freemium titles might be hard to say, but it’s definitely a reality of the mobile sphere.