In-App Purchase Revenue Hits Record High

Last January, 53% of all iPhone App Store revenue in the U.S. was generated through in-app purchases (IAP); this month though, that number has reached a whopping 76%. By region, the numbers tell a slightly different story: in Germany it’s only 61%, but in Asia, at least 90% of all Apple app-store revenue is derived from in-app purchases. In the United States, 71% of these in-app purchases came from apps that were free to download but contained virtual goods within them, indicating that putting a price tag on an app is even more of a hinderance to getting curious users to install an app when there are over 800,000 iOS apps to choose from. Even more telling is that the average revenue per app downloaded, even amidst free apps, was $0.99, the base price for all apps. Indeed, the top grossing apps from February 2013 were all “freemium,” indicating that the market share of IAP, particularly free apps, is booming, and that freemium apps are pushing the conventional app business model out of the spotlight.