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Report: Free-to-Play Developers Need to Go Big or Go Home

W3i has a particularly intriguing revelation: microtransactions are not that important to free-to-play games. It’s actually the expensive transactions, starting at $9.99, that represent the majority of a game’s generated revenue. Using data compiled from the apps that use their monetization and user acquisition tools, their W3iNSIDER Report shows how developers need to go big or go home.

These microtransactions, in the $0.99 to $1.99 range, only represented about 6% of total game revenue. This is despite $1.99 purchases representing 17% of individual transactions. $9.99 purchases represented 16%. The number one most common transaction? $2.99 purchases represented 35% of transactions, and 15% of revenue, which was third among price points for revenue generation. Number one and two were $19.99 (24% of revenue) and $9.99 (23% of revenue). For extremely expensive transactions, the sweet spot may be $49.99: it generated more revenue than any other price point above $24.99.

In a way, this data makes sense: ‘whales’ have traditionally made up the dominant portion of in-app purchase revenue. Now we’re seeing that it’s true for purchase sizes too: purchases totaling $9.99 to $19.99 make up 47% of total in-app purchase revenue. The whales aren’t just making repeated small purchases, they’re making repeated medium-to-big purchases in these apps.

Robert Weber, co-founder of W3i, says “Although the U.S. learned about freemium gaming from Asia, it’s apparent that Americans are taking their own approach to it. Where mobile games in Asia still depend on microstransactions, U.S. gamers play more like whales- spending larger amounts of money in mobile games.” Data varied around the world: the United Arab Emirates had 77% of its transactions be $9.99 and $19.99 ones. The UK had 8% of its revenue come from $49.99 transactions. China and Canada each were the biggest source of $0.99 transactions, representing 3% of transactions.

The lesson for developers to take from this is to prepare accordingly. Focus may need to be led away from entry-level pricepoints: customers generally avoid them and they don’t make that much money. Enticing people to spend more money, to get value out of bigger transactions, is the key to success, and W3i’s info shows why those small purchases are not worth focusing on as revenue drivers at all.

Carter Dotson
Connect with Carter Dotson // email // twitter

  • Ace Daddy

    This is news? Thanks for the article Capt. Obvious… the other thing you fail to realize is that the smaller transactions may not represent the majority of revenue but is psychologically and strategically important. What I mean is that the biggest barrier even for whales is the very first payment, providing a low/easy barrier to the first payment opens up the larger payments.

    Let me know when you guys actually provide something insightful…

  • john34582

    Great read

  • nadavbk

    thanks a lot … this could be very expensive info!

  • Scott Prock

    Wow, somebody better not tell King (developers of Candy Crush Saga) about this. I believe their top in app purchase is $3.99 and what number are they on “EVERY” platform?! Oh yea, #1 LOL …

    I don’t see how these analyst companies can make blanket claims on data alone. It’s just like pundits claiming the top developers are skewing revenue to the point where indie devs don’t stand a chance.

    Study the market, LEARN what the top companies are doing and emulate their success. Candy Crush is a prime example of a simple concept that has hit it big.

    … and, I just realized this article is over a year OLD HA! I wonder where those “Go Big” developers are now?