In-app purchases to top $3bn by 2016

Tablet users will generate $3bn in revenue each year via in-app purchases by 2016 with much of this being spent in the gaming sector according to a study from Juniper Research.

Tablet

In 2012 the in-app purchase market was worth $300m however the gradual migration of video game players from handheld devices like the PSP to tablets will result in a ten-fold increase in the value of this market by 2016.

Gamers in the Far East and North America will generate the bulk (86 per cent) of this revenue with titles such as Poker by Zynga, and Texas Poker seeing sharp increases in both the number and value of in-app purchases.

Juniper’s findings come in a study released this week which advises publishers to adopt a “freemium” pricing model, i.e. making an app free to download then monetise it by charging users for additional content or functions, to further sustain their apps.

Siân Rowlands, a Juniper Research analyst, says: “The freemium model cannot be implemented as easily on portable gaming devices, as games have to be purchased upfront plus the devices themselves often do not allow for a 3G or 4G connection.

“When we consider that only a small amount of gamers actually make in-game purchases, and those that do typically only spend a few dollars, it becomes apparent there are a small proportion of consumers spending thousands on these virtual currencies, who subsidise the game for everyone else.”

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