If you’re planning on getting into the mobile gaming business thinking that in-app purchases (or IAPs) are the meal ticket to riches, you may need to think twice. According to an infograph by Swrve (via VentureBeat) that details mobile app monetisation for January 2014, only 0.15 per cent of mobile gamers contribute 50 per cent of all in-app purchases for free-to-play titles.
The majority of users on the survey, which consists of data from 10 million mobile users, do not spend money on these games. Among the people who pay, 49 per cent only made a single purchase during a month while 13 per cent made five or more purchases. The IAP transactions usually happen within the first 24 hours when a player logs into a game.
About 53 per cent of the players who make the purchases will make repeated purchases within 14 days, while the other 47 per cent do not; 13.7 per cent of new players make four or more transactions within the same period. In that time frame, 60 per cent of that revenue is acquired from the first day of play.
From all of this, game publishers and developers will need to find a way to retain big spenders in the mobile gaming space, or “whales”. According to Swrve Chief Executive Hugh Reynolds, they account for a huge amount of purchases in mobile games so that companies can keep afloat to make more titles for non-paying customers. “When you see companies turning players into purchasers effectively,” he said, “that’s a special thing. [However] people are very mobile, and they have a lot of options. Trying to capture them is becoming more and more difficult.” So far, the one effective way to monetise these players is through advertising or getting non-payers to influence others to shell out for IAPs.
Swrve uses the collected data to help companies create in-app marketing campaigns. Reynolds said that the main strategy for a company to use from all of this data is to make users engaged and invested in a title. “You should have very easy first purchases. Then the odds of them going on to make a higher purchase is so much better. You also have to be really timely in communicating with users.”
While Swrve and VentureBeat have yet to get back to us on whether the 10 million players are based worldwide or just in the US, the stats are a good benchmark to make the free-to-play mobile market rethink its strategy if it wishes to be profitable. Despite titles such as Path of Exile, Killer Instinct and Hearthstone doing free-to-play right, most gamers are already biased by the freemium model due to mobile “games” like Dungeon Keeper giving the model a bad name.