In-app purchases

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Information about In-app purchases
Gadgets & Reviews

Published on March 11, 2014

Author: rcastanon



The Web is full of headlines that claim almost all app store revenue now comes from in-app purchases within free apps. But like much of what appears on the Internet, it is necessary to take a closer look at the numbers, to better understand the story.

Page 1 © Copyright 2014 In-App Purchases: Fool’s Gold or Pay Dirt? Raul Castañon-Martinez March 2014

Page 2 © Copyright 2014 Introduction  Recent headlines from tech sites claim almost all app store revenue now comes from in-app purchases within free apps.  It is necessary, however, to take a closer look at the numbers to better understand the story.

Page 3 © Copyright 2014 Methodology  Using our December 2013 US survey data, we created a visual representation to identify users who do in-app purchases.  We asked users who downloaded apps if these were paid or if they downloaded only free apps.  We then identified users that have done in-app purchasing in the last month and how much money they are spending on these.

Page 4 © Copyright 2014 Apps Downloads Source: Yankee Group U.S. survey data, December 2013.

Page 5 © Copyright 2014 Analysis  Two out of three smartphone owners in the U.S. never spend money on app stores.  Users that download only free apps will most likely not spend money on in-app purchases.  Users that download paid apps are more likely to spend money on in-app purchases.

Page 6 © Copyright 2014 Conclusions  Focusing on freemium and in-app purchasing might lead developers to misidentify the user segment that brings in most of the app store revenues.  These users also download free apps; in many cases, they will download a free version as a trial.  These users follow a different app life cycle as other freemium users.

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