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.