Discover the latest in-app purchase (IAP) trends in the 3 major app stores: Apple’s App Store, Google’s Google Play store and the Windows Phone Store
When it comes to monetizing mobile apps, the trends are always changing. Major app stores are still competing to find the best methods to increase app downloads and in-app purchases (IAP), or micropayments. IAP generally functions best within a Freemium structure where the user downloads an app, free of cost and with an option to make small purchases within an app to unlock features or buy extra lives or levels on mobile games.
IAPs has proven to be a great option for app developers who want to monetize, given that that in-app payments have started generating more revenues than in-app advertising, according to Mobile World Market Barcelona. Let’s take a look at the latest IAP trends to hit the 3 main app stores: App Store de Apple, Google Play de Google and Windows Phone Store.
Google Play Store: app downloads skyrocket but IAP revenues fail to follow
In April 2015, an article by Tech Crunch investigated the latest Google Play in-app purchase news. Many interesting facts and figures came to light. While Google continues to be a leader in term of number of app downloads, they still haven’t been able to generate significant revenues with the IAP monetization method – a goal that other app stores such as Apple and Windows have recently been able to reach (more information below).
App downloads on Google Play saw an increase of 70% in Q1 2015 thanks to emerging market regions such as Mexico, Turkey, and Brazil. This increase is also due to the increase in smartphone sales in these countries. When it comes to IAP revenues in Q1 2015, Google Play’s app store fell behind its main competitor, Apple, whose global IAP revenues were 70% higher. According to Tech Crunch, this number is a significant increase compared to Q3 2014 when Apple was ahead by 60%.
But these numbers aren’t new for Google. In August 2014, Héctor Balasch, Senior Strategic Partner Manager at Google spoke about the mobile payment environment at the Google Play Store, offering important facts and figures about the uprising trend in in-app purchases. In his statement in an article by newspaper, EL Mundo, Balasch highlights:
“The idea of paying to download an app is becoming obsolete. And 92% of the apps downloaded from Google Play are free. The other 8% are paid for through direct payments or micro-payments offered within the app. This last option (undergoing a boom) means the user is able to try the product without having to buy it. Once they get to know it better, they offer the possibility to make purchases so they can unlock wanted features.
But these alternatives are not perfect. Only 15% of users end up making a micropayment, while 85% are not currently making any purchases at all. Of this 15% that makes in-app purchases, between 2% to 6% make up the total IAP value. Few users generate a large revenue share. The problem is that if we lose these users, we lose everything.”
Apple’s App Store – IAP revenues hit record high thanks to China; criticized for how it presented free apps
According to a press release by Apple, the first week of January 2015 broke billing revenue records at the App Store with almost 500 million in applications and in app purchases. New Year’s Day 2015 marked the most important day of sales in App Store history.
This follows a prosperous year in 2014, where Apple saw an IAP revenue increase of 50%, where app saw $10 billion in revenue. This is especially surprising given that the total amount of revenue that developers saw in the App Store’s first 5 years was $15 billion.
One explanation for the increase in revenue experienced by these successful iOS developers is the triumphant Freemium business model. Another more visible reason is that Apple has successfully entered the Chinese market. China’s importance in the app industry shouldn’t be under estimated. China recently surpassed U.S. numbers in iOS downloads during the Q1 2015. This news isn’t so shocking if you read the latest news about record iPhone sales in China. In urban areas, Apple represented 25% of Smartphone sales during Q1 2015, according to data by Kantar.
Apple still has much to improve when it comes to its IAP flow. The Company recently received criticism for its use of the Word “free” in relationship with apps actually Freemium. In February 2015, Apple had to pay a settlement of $100 million to the FTC for the way they presented freemium apps with in-app purchases, especially those targeting children. Their first response was to include the words “Offers In-App Purchases” under the App’s name and the name of the developer on the app pages. They also decided to add a confirmation message to apps that appeared with every purchase activated.
Windows Phone Store – IAP revenues surpass in-app advertising revenues
One important decision that app developers need to make is choosing which monetization Business model to adopt: payment apps, in-app purchases, or in-app advertising (usually ads that pop up within an app). On the Windows platform, paid apps continue to diminish in terms of percentage of total revenues, however paid app still offer important revenues when it comes to specialized apps.
According to the official Windows Blog, in April 2015 in-app purchases are generating the main revenues for developers. This represents more than 50% of total revenues compared to other categories of app monetization. While IAP revenues continue to increase each month, Windows has seen a significant rise in the last quarter, thanks to the addition of the following apps on their store that use a Freemium model: Age of Empires: Castle Siege, Age of Sparta, Asphalt 8: Airborne, Saga Candy Crush, Dragon Mania Legends, My Talking Angela, y The Sims FreePlay. Between January and March of 2015, in-app purchases generated 55% of total revenues for app developers.
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