Mobile App Store Analysis Finds Hopeful Revenue Stream From In-App Purchases

By January 19, 2011
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A recent report shows increase of developer popularity for free or less expensive mobile applications with additional features available for purchase within the app.

Mobile application download numbers are growing strong, especially for free apps. Because of the enormous growth in the free app category, developers are looking for more ways to monetize than charging customers to download their product. Findings from a Distimo report show a particular interest in in-app purchases.

All major app stores are showing enormous growth, as the report tracked covered from January to December 2010.The Nokia Ovi Store had 899 percent more free app downloads and 258 percent more of their total apps. Google's Android Market free apps increased 587 percent and 544 percent total. The BlackBerry App World free apps increased 274 percent, 268 percent total. With the largest total volume but the lowest growth, the Apple App Store increased 174 percent for free apps, 111 percent total.

In all stores, free outpaced total growth. Additionally, the proportion of free apps grew, and the average price for apps declined. Across all stores, prices dropped between twelve and 37 percent, except for Android, whose general average increased one percent. For top 100 applications, their average price dropped between eight and 41 percent.

In Apple's store, the trend is towards business-oriented apps, and in BlackBerry's App World, entertainment apps are more popular. Google's and Nokia's stores are more balanced between these categories. Developers have already succeeded in increasing revenue from in-app purchases, proportionally.

In Distimo's breakdown of iPad and iPhone revenue, these purchases provided more of total revenue in December than at the launch of the iPad in June. The iPhone's in-app purchases from free apps increased from fourteen to 34 percent, while those of the iPad increased from seven to fifteen percent.

The free download and paid feature model is another version of the "freemium" model, as eMarketer explains today. This model has become popular with social media gaming, blogging tools and other Web services. As Apple's App Store is more developed than the others, and this model has become popular within this store, commentary suggests this may be a successful strategy for developers.

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