Mobile Games: The Economics of Freemium [Infographic]

Who creates a game only to give it away for free? Where’s the $$ in that?

The freemium business model is taking over — an estimated 65% of revenue generated by the 100 top grossing apps in the App Store, and an estimated 72% of total App Store revenue comes from freemium mobile games. In-game purchases like extra lives, special powers, virtual goods and personalizations are driving the revenue.

This week’s Infographic Friday is homegrown, featuring snippets of findings from our latest research report Cashing in on the Smartphone Gaming Boom that examine avid and causal mobile gamers’ in-app spending habits.

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Thank you for tweeting and sharing! And don’t forget to check out the report, with more juicy facts on avid and casual gamers.

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3 Responses to “Mobile Games: The Economics of Freemium [Infographic]”

  1. The concept of giving something away for free is not new or even a recent innovation.

    In the early days of photocopiers (back in the late 70/80s) it was common practice to offer or contract to provide free use with the only proviso that supplies were either purchased from the supplier or an agreed cost/copy/click paid on agreed usage or a combination of both.

    It’s more to do with LTV (life-time value). Free use invariably encouraged higher usage and higher returns for the provider over a longer period.

    • True, but with mobile games and other types of software and apps, there’s no guarantee you are going to monetize everyone who downloads your free game. It’s completely optional. The onus is on you to “convert” these free users to premium or in-app purchases. There will be many with an LTV of zero.

      • Agree, but obviously, it’s a numbers game and with the level of uptake of smartphone mobile use there is little of no overhead in attracting each additional user.

        The quality or engagement inherent in the game will encourage in-game purchase and the the stats appear to support that hypothesis. There is an inbuilt squeeze ‘page’ in the game format.

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