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.

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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.

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Marshall Honorof

Marshall Honorof is a senior editor for Tom's Guide, overseeing the site's coverage of gaming hardware and software. He comes from a science writing background, having studied paleomammalogy, biological anthropology, and the history of science and technology. After hours, you can find him practicing taekwondo or doing deep dives on classic sci-fi. 

  • ivanthechemist
    Well, freemium games have a really nice sweetspot. Huge amount potential customers, no entry fee and no monetary strings attached. It doesn't have an end, as hardcore PC/Console story-driven titles and includes timers, but this is just the way they are. A few minutes of fun, when you need them. As such, the freemium titles outmatch the premiums by a long shot. I like them, pay when I want to and have fun. LoL and Marvel Avengers Alliance have hooked me and give me new things to do for respective 3 and 1 year. Such thing can only be achieved in an endless game like Civ, Heroes or a MMO/FPS. And they still cost me less. But when I want hardcore gaming - hello Batman, Metro, Mass Effect and Witcher. So, all the freemiums do IMO is to enlarge the gaming base.
  • Cali Dude
    Is it .15% or 1.5%? You have both in the article...