Is the Era of Microtransactions in Free-to-Play Mobile Games Over?

W3i, the in-app offer exchange provider, released a report on December 6th showcasing recent trends in mobile app monetization. The W3iNSIDER Report breaks down data from its hundreds of game developer partners and 66 million monthly active users across iOS and Android.

The data shows that smaller microtransactions ($0.99-$1.99), long thought to be the backbone of the freemium model, actually contribute significantly less revenue to mobile games than more expensive in-app purchases that range from $9.99 to $19.99.

When surveying the in-app purchase price points and how they contribute to the overall revenue of a sample of games, W3i found that, on average, 47 percent of total revenue comes from purchases costing $9.99 to $19.99. Smaller purchases from $0.99 to $1.99 only contribute an average of six percent to total game revenue.

The freemium model emerged as the foremost business model in mobile gaming with premium and subscription business models declining. The freemium model is built on the back of microtransactions with gamers spending a dollar or two to unlock virtual goods.

W3i is also reporting in-app purchasing trends from around the world:

  • The highest-spending region in the world is the United Arab Emirates- with 77 percent of revenue of revenue coming from $19.99 (55 percent) and $9.99 (22 percent) IAPs (as of Oct 2012)
  • The UK has the highest number of whale spenders- with eight percent of revenue coming from $49.99 IAPs sizes as of Oct 2012
  • $.99 IAPs sell the largest volume in China and Canada where they each make up about three percent of purchases

“Although the U.S. learned about freemium gaming from Asia, it’s apparent that Americans are taking their own approach to it,” says Robert Weber, co-founder of W3i. “Where mobile games in Asia still depend on microstransactions, U.S. gamers play more like whales- spending larger amounts of money in mobile games.”


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Stijn Schuermans

As a Senior Business Analyst, Stijn focuses on understanding how technology becomes value-creating innovation, how business models affect market dynamics, and the consequences of this for corporate strategy. He is the lead Internet of Things researcher in the VisionMobile team. He has been writing about IoT since 2012.

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