Half of Mobile Game Revenue Comes from 0.15% of Gamers
Ask two gamers about in-app purchases, and you'll get three opinions. Whether they're saving the industry, ruining the industry or just a new way of monetizing content, one thing is clear: Most people don't buy them, and those that do, do so in huge quantities.
Swrve, a San Francisco- and Dublin-based analytics company conducted a survey of mobile gamers who play free-to-play titles with in-app purchases (also known as freemium) about their behavior in January 2014. According to the findings, a paltry 0.15 percent of mobile gamers account for 50 percent of all revenue from in-app purchases.
For those not familiar with in-app purchases, they represent content that players can purchase in free-to-play games. Sometimes this content is very cheap and simple, such as dishing out $1 for a new character outfit. Others can top $5, $20 or even $50 for large quantities of optional characters, power boosts or other special privileges that make the game easier.
The overall statistics are equally telling: only 1.5 percent of users bought anything at all, and of that group, almost half of them bought only one thing for the whole month. The vast majority paid between $1 and $5, although the average expenditure per user was $15.27.
The disparity in these numbers comes from the disproportionate amount that the 0.15 percent spend. It's not uncommon for these users to drop more than $50 in in-app purchases over the course of a month.
Heavyweight users get hooked relatively quickly, too. The average paying user makes his or her first purchase within 28 hours, and waits only 1 hour and 40 minutes before shelling out for a second piece of content.
The lesson for consumers here is clear: successful freemium games are designed in such a way that if you spend $1, you become significantly likely to spend another dollar after that, and so on until you become a regular contributor.
This is not necessarily a bad thing: game companies need money in order to produce new content for their titles. Still, be aware of your own spending habits and how each new freemium title might try to coerce you into giving it more money than you intended.
As for developers looking to get into the freemium scene, well higher than 95 percent of the market of freemium customers remains untapped. If you can build a better mousetrap, there may be a lot of money in it for you.