As any mobile
user can attest, there are no shortages of free games
to download from the various app market places, though many of them try to attach their tentacles to your wallet or purse through in-game purchases (some are worse about it than others
). These can range from weapon and armor upgrades, to gems that can be exchanged for more play time, or anything else. If a game is a hit, these in-game purchases become cash cows for the developer, but you might be surprised where the bulk of those dollars are coming from.
According to Swrve, makers of an in-app marketing platform for mobile, just 0.15 percent of gamers account for more than half the monthly revenue generated from in-game purchases. This was one of several interesting findings the company presented in its first-ever Mobile Games Monetization Report, which it's planning to release on a monthly basis.
Believe it or not, the overwhelming majority of gamers never make any purchases. Based on a survey of tens of millions of gamers, only 1.5 percent of players who were active last month made an in-app purchase. By extension, over half of the revenue comes from the top 10 percent of those who do make purchases in any given month.
"What’s interesting is that while many consider that the freemium model to be successful, there is still surprisingly little data relating to exactly how consumers interact with freemium games," said Hugh Reynolds, CEO of Swrve. "With access of ten’s of millions of players, we have aggregated data from across our system to finally lift the lid on what goes on after install - and where the money is made."
In terms of spending, the average value of an in-app purchase is $5.94. Purchases between $1 and $5 make up two-thirds of spending but only contribute to 27 percent of total revenues, while purchases of over $50 make up 0.7 percent of spending, yet contribute 9 percent of all revenues.