In-app purchases now account for a staggering 76% of App Store revenue according to report

In-app purchases now account for a staggering 76% of App Store revenue according to reportLove them or hate them, in-app purchases look here to stay. According to a report from Distimo, in-app purchases now account for a staggering 76% of App Store revenue as of February 2013. This has seen a huge increase since January 2012, where in-app purchases accounted for just 53% of revenue.

In-app purchases (IAP) now generate the majority of the revenue in the app stores. This has been the case for some time now, and it continues to rise. In-app purchases generated only 53% of revenue in the Apple App Store for iPhone in January 2012 in the U.S., but generated a record 76% in February 2013 clearly demonstrating the success of this monetization method.

The report goes on to examine ARP (average revenue per download) and it makes interesting reading too. The average for free apps that offer in-app purchase came in at $0.93 per app, straight forward paid apps came in at $2.25 but taking the prize, paid apps with in-app purchases with an ARP of around $2.40. The average cost of all apps for the iPhone is just $0.99.

Another interesting point to note from the report is that Japan is way out in front when it comes to in-app purchases. The United States, United Kingdom and Germany are all reasonably level but Japan shows more than double the amount of in-app purchases compared to the others.

You can read the full report over at Distimo and also view graphs showing all of the information that it has collated. Love them or hate them, in-app purchases look set to play a major part in apps now and in the future.

How do you feel about the in-app purrchase model?

Source: Distimo

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UK editor at iMore, mobile technology lover and air conditioning design engineer.

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Reader comments

In-app purchases now account for a staggering 76% of App Store revenue according to report


I think theyre doing that to get more money. Not from the price from appstore but directly to them(in-app). By doing that they maybe add many more features that are needed to be bought in the application not from appstore.

If you are thinking that the developer avoids the 30% Apple cut, the same applies to IAPs, so no savings there. It does allow the developer to build one app and give it away but earn money for those willing to pay and get more.

I think the in-app purchases is worth it to the consumer if you're heavily invested into the game. I've been buying stuff in Nimble Quest lately with pleasure. Normally, I avoid ridiculous IAP's. I'll pay an extra dollar or two. I like supporting indie developers who have a passion for their games- not just the consumer's money. Certain apps do IAP's tastefully, resulting in a joyful purchase. Others do not- in which case; you vote with your wallet

I don't mind in app purchases on free to play games. I play castle age and don't buy any of the extras, but could see why someone would.
I also don't mind free productivity apps that have an in app purchase to unlock the full app.
What I don't like is when you buy an app and there are still features you have to pay to unlock. If I buy an app, it should be complete.

Well this is annoying; I miss the days when devs put out quality apps and I'd pay $9.99 to own and enjoy the game.

I prefer they gives us the full price for the app and then it's yours, this way I know I'm not having to pay for anything else with the app.

Same here. Free games aren't really free and I have no desire to download a title and mess around with it for a few hours just to try and decipher what the actual price tag of the game is. Charge me a buck or $10 and let me have your full app.

If in app purchase feels like a rip off then it means the app is no good! It has to be a good app to keep me coming back. Fifa 13 is one such app where I've been happy to pay to play every few weeks or so.

And how many people scream fraud with that? I know I would. Why not just make a good app, charge for it up front and be done? Oh that's right, greed and manipulation.

Although I don't like it, I suppose there are cases where in-app purchases are appropriate. But I sure wish the practice would be barred from games that appeal to kids. At minimum, tighter controls that prevent kids from being able to download paid extras without explicit parental permission each single time. They've made it too easy to buy extras...and as long as Apple takes a cut, there's always going to be a temptation for Apple to make it easier still. Maybe the answer would be for app stores to be barred from taking a cut of the sale, and placing them at odds with the app makers instead of colluding with them!

There are plenty of ways to imply security. Many of them require people not to be unbelievably dumb as a rock. Sure there are now parent controls, but before there weren't you could easily..NOT give your child access to your phone with your iTunes account logged in. It takes only a few minutes to register a new iTunes account with a cheap one time gift card. That way whenever your child logs onto THEIR gift card account. Money is limited, and also teaches your child the important of money and how fast it could disappear.

It's not just IAPs. People who do this shit can also have their children rack up costs just by buying regular apps. I'm tired of people blaming Apple when it isn't there fault.

So no, tighter controls aren't needed; smarter parents are needed.

A lot of games I've played that use IAPs are great with no real need to buy anything unless you just want a ton of "money" or whatever else the game uses. I have bought some stuff for games such as Real Racing 3 using IAPs. I think it's a fine system and if you don't like it don't get a game with them or just block IAPs from being usable for you. They are just a simple way to add more to a game and still allow the developers to get paid for their hard work.

Software, whether an app or full application, will always have ways to up-sell to the customer. If one uses the app one should show it by paying the minimal fee. I always check the in-app purchase before downloading to see what I am getting in the long run. My advice is buyer beware.

Personally I don't like it at all. I would rather pay a higher price in the beginning for a quality game than be constantly pushed in game to buy stuff. I understand that most games are FREE or cost a minimal amount and I know they have to offset that somehow. I just feel it is a sneaky way to do business. I play games for the entertainment not to be sold every second. I am not the least bit surprised that this is a profitable business model but the developers need to look in the mirror and say why am I making these great games...for profit? for the gamers? I hope this changes but it probably won't anytime soon unless the gamers unite and stop buying these types of games.

Has anyone here been playing Clash of Clans? I have been good and have not spent any money since Christmas. My daughter gave me a $25 gift card and I put around $75 with that to play that free game! It's kind of embarrassing to admit. It is interesting, standing back and studying all the physiological triggers being pulled to get that next dollar from you. I have had fun and have learned that I'm not exempt from the competitive temptations these games hold. One tip that helped me was to mentally buy everything, mentally, upgrade everything to push to the end using money and then explore those feelings. I felt that getting to the end without the use of money was a much richer, harder fought challenge. It's all a state of mind.

LOL I love that game. Has me hooked along with some of my friends. I have spent about $25 so far in the game. And I think I plan on spending a few more lol. I know a few people who have spent hundreds on it. There were talks in their forums too about some even spending $4000 on it! Thats insane!

How about an analogy. Buy this book for $10, cool here's the cover, oh you want the first chapter? Each chapter is another $3 or you can buy all the chapters for $15. Or how about when the buy the book(app) I get the whole thing.

Poor analogy! I've used "try a sample" on kindle, and sometimes purchased the book, and sometimes haven't. If I'm enjoying the book, I don't feel "ripped off" to drop $9.99 to read the rest of it. What would make me feel ripped off is to purchase the book up front and discover its trash. Similarly, just because I bought "Game of Thrones", I didn't feel entitled to "free upgrades" when the next books in the series came out, even though they were a continuation of the same story.

Try a sample is different, as are separate things. The analogy is of freemium and paid apps required in app purchases for all the features. In the analogy of the book, the full features are the chapters.

It would be interesting to see how much people typically spend on in app purchases. I, for one, have spent plenty on apps themselves but not a cent on IAPs

I didn't like in-app purchasing when it was introduced, but I've seen advantages to it. As a developer myself, I see it beneficial to create a great application and provide it for free and include additional functionality for specific pricing structure. This way, you ensure that your app is accessible by most easily and the Free price tag ensures they can get in on your app experience and then decide on buying add-ons as necessary.

The only thing I hate is when a Free app doesn't have much to offer and forces you to make in-app purchases prior to actually being slightly useful - though i have to admit, I haven't crossed paths with too many apps like that.

Sure do wish I could figure out the next big app and build it with in app purchases. It good to know that iTunes and apple won't be going anywhere or developers either for a long while

im not to surprised by this, micro transactions are all the rage. you always read stories in the news where kids make hundreds of dollar purchases on their parents devices

There are also apps/games where there is only one version: it's free to try but to get the full version you have to use an in-app purchase. This is the model that is good because you don't have free lite and full versions. The freemium model is a toss-up depending on the app. What can help is a restore purchases for when you are forced to re-install the app/game anew. I know some have this feature but from experience: Infinity Blade does not. Another problem with Freemium is when you have games like Real Racing 3 and it is hard to tell the difference between the Cards and Gold stacks and the advantages without going on their website/forum before purchasing, which people sometimes do not do beforehand.

Must by Smurfberries - Anon