8 Comments

Summary:

Freemium app revenue is now dominating premium for developers on both iOS and Android, said App Annie. The analytics firm said that freemium apps generate 69 percent of the worldwide iOS app revenue and 75 percent of global Android app revenues.

The mobile app world took to the freemium model with a passion last year, as revenue from freemium iOS apps eclipsed 50 percent mark in the US about a year ago. But in the last year, the momentum behind freemium apps has only grown stronger, according to new data from app analytics firm App Annie.

App Annie Intelligence, which tracks more than 700,000 apps, found that global revenues for freemium apps on iOS have quadrupled over the last 24 months. And for Google Play, worldwide freemium revenues have grown 3.5x in 2012. Now, freemium apps generate 69 percent of the worldwide iOS app revenue and 75 percent of global Android app revenues. Meanwhile, premium app revenue from paid download apps have remained relatively flat over the same periods.

The numbers confirm the trend we’ve been noticing but the fact that there’s been no let up shows just how app developers continue to embrace the freemium model and how those apps continue to bring in more money. We reported two years ago that the 1/3 of the top grossing apps on iOS in the US had moved to the freemium model. By the end of 2011, Distimo reported that about half of the revenue from the 200 top grossing iPhone apps came from freemium app while 65 percent of the revenue from top apps in the Android Market came from freemium apps. Here’s a look at some of the charts worked up by App Annie Intelligence: AppAnnie, freemium

In January, IHS said that in-app purchase in freemium apps brought in $970 million in worldwide sale last year, or 39 percent compared to paid downloads. And freemium app revenue was expected to grow to $5.6 billion by 2015, representing 64 percent of the total market. The App Annie data, which is limited to iOS and Android, suggests we may be on a faster pace than IHS predicted.

It’s not just in the US, where the figures generally mirror the world stats. App Annie said countries like China and Japan have rapidly adopted the freemium model in the last year. Japanese freemium revenues grew by 24x in the last year on Google Play and Chinese freemium revenue grew by nearly 25x on iOS since January 2011.

AppAnnie, Freemium

Not every app needs to go freemium. As Flurry recently pointed out, some apps are better suited to that model. For example, apps with high intensity of usage in a short window creates an opportunity for developers to make money though in-app purchases that users can binge on. And for users who come back repeatedly over a long period of time, there’s also a chance to keep selling them on more content and add-on functions. Apps that don’t necessarily hold on to users over a long period of time might monetize better through one-time paid downloads, said Flurry.

I suspect we’ll see paid downloads remain as a viable option for some developers. Instapaper’s success, for example, has shown that consumers will pay up front for a good product. But increasingly, the bigger money seems to be found in letting people in for free and then monetizing a smaller group of users over time through in-app purchases, subscriptions and other added features.

Image courtesy for Flickr user 401 (K) 2012

You’re subscribed! If you like, you can update your settings

  1. Mindbendingpuzzles Friday, October 26, 2012

    What is going on with Google Play? That chart suggests that Google play revenues have tripled in just 9 months while IOS sales have stagnated over the same period. I know Google Play is newer and therefore probably has a higher growth rate but that seems too big a difference to believe.

    1. Google Play has been experiencing tremendous growth in markets like Japan and Korea. Revenues in the USA are fairly stagnant so a large part of the revenue growth is coming from overseas regions. If you click through the blog post in the first paragraph you’ll see more data.

      Google Play revenues in Japan have grown 7x this year alone:
      http://appannie.com/blog/freemium-apps-ios-google-play-japan-china-leaders

      Also, Google Play Korea revenues have grown by 6x:
      http://appannie.com/blog/korea-google-play-revenues-growth-2012

    2. google play has lots of room to grow. apple is already grown.

  2. Does freemium include subscription-based apps like magazines? This could explain in part, the revenue bump?

    1. Yes, freemium includes subscription-based apps. Subscriptions are counted as in-app purchases.

      The growth of Apple Newsstand has been impressive, check out our deep dive on the revenue impact of Newsstand here:
      http://appannie.com/blog/commercial-opportunities-on-apples-newsstand

  3. Seems as though Chris Anderson’s book “Free” was correct.

  4. Reblogged this on Media_Biz and commented:
    Freemium apps continue to take the lionshare of revenue, but the real driver to whether an app should be paid or freemium is usage driven and how unique the content truly is

  5. I wonder what share of the market freemium has for productivity apps. Freemium is the predominant model with many of the top grossing game apps, but I wonder how relevant that is for non-game apps, such as health and fitness where you see very few freemium apps in the top grossing charts.

Comments have been disabled for this post