While in-app purchase revenues are growing substantially on mobile, only heavy gamers are really bringing revenue. Developers need to be offered the right tools on mobile platforms in order for this model to go mainstream.
In-app purchase revenues have shown a tremendous growth in the past years, and as an ABI research recently revealed, in-app purchases should overcome pay-per-download. Mobile revenues are expected to grow from $8.5 billion in 2011 to $46 billion in 2016, with in-app purchase revenues leading the way. This trend reshapes the way developers monetize mobile applications, shifting from a premium to a freemium model that has proven to be successful. However, despite this significant growth, in-app purchase solutions are facing major issues preventing them from becoming truly mainstream. Right now, the majority of in-app purchases are made by “whales” users and in-app purchase won’t truly take off unless all the actors of the mobile gaming ecosystem fully embrace the freemium model.
“Whales” drive in-app purchases on mobile games
Despite a large increase of in-app purchases, revenues show a strong concentration among a small community of hardcore mobile gamers. Mobile developers have focused on those heavy users called “whales” that generate most of the value while representing a small fraction of mobile owners. As this community is not expected to grow significantly, developers are being encouraged to implement in-app purchase solutions not only within mobile games but also in a wide range of applications. But most of all, they need to target a wider audience instead of concentrating on a small yet active community. This mainstreaming of in-app purchases would enable in-app purchase revenues to grow substantially. However, some actors are still making the adoption of freemium difficult.
Developers need to right tools on mobile platforms
In order to reach a wider audience, mobile platforms need to offer their developers the necessary tools to implement these solutions on a very large scale. Google and its mobile operating system Android are said to be the major break to in-app purchase adoption. The company from Mountain View made its solution available to developers on the Android Market just a few months ago in the US and only in December 2011 for 17 more countries. Android being the first mobile platform in the world, this delay prevented developers from integrating those solutions earlier, therefore slowing down the development in-app purchase revenues. To make in-app purchases really mainstream, mobile platforms need to offer proper solutions to their developers and make it easier to implement.