In App Purchasing Data for iOS & Android Games & Apps

Here’s some interesting market data on iPhone, iPad and Android games:

Market Data:

iOS & Android’s share of the U.S. portable game market revenue exploded from 1% in 2008 to 34% in 2010.

Nintendo’s U.S. share contracted to 57% from 75% from 2008 to 2010.

Games drive 75% of revenue generated among the top 100 grossing iOS apps, of which 65% were generated from freemium games.

In App Purchasing (2012):

• 71% of all In App Purchase transactions are under $10
  • These generate 31% of Revenue
  • 16% of all In App Purchase transactions are from $10 to $20
    • These generate 18% of Revenue
    • 13% of all In App Purchase transactions are great than $20
      • These generate 51% of Revenue
      • 30% of the revenue is generated from transaction over $50
      • The Whales are driving Revenue
      • The average amount spent per transaction is $14
      • Within the “under $10” bucket, most transactions cluster at the $9.99 level, followed by $4.99, and finally $0.99.
      • Surprisingly, consumers spent $0.99 less than 2% of the time
      • Why then would so few consumers spend just $1 in freemium games?  Because freemium games drive a different decision-making mindset for consumers. If they love the game, they don’t mind spending a lot.
      • Around 3% of consumers will spend money in freemium games.  A deep commitment to the game experience appears to influence their buying habits.
      • The second reason the $14 average seems high is because the high-end of the spending spectrum is very high.  Among all purchase price points, over 5% of all purchases are for amounts greater than $50, which rivals the amount paid at retail for top console and PC games.

Cost of User Acquisition (2012):

• On iOS, the cost of user acquisition is going up.
• On Android, the cost of user acquisition has been dropping.
• Tapjoy took its incentivized installs to Android as well. And while Android’s user count has been on a tear, monetization has been weaker than on iOS.
• You don’t have control over the marketing costs, but you do have control over the Lifetime Value of your users.
• If your lifetime value is high, you don’t care as much about your cost-per-install (CPI) or the cost of each new user.
• If CPI is getting too expensive, the focus needs to move to engagement, retention, and monetization of your product to drive LTV up above CPI costs.