The freemium mobile app movement is now a full-fledged trend among consumers. For developers, it’s a lucrative one. As I wrote about recently, one-third of the top-grossing iPhone apps are freemium programs that cost nothing to play but make their money primarily through in-app purchases of additional content or functionality.
Remco van den Elzen, co-founder of analytics firm Distimo, said he believes in-app purchases now represent about 30 percent of all iPhone App Store revenue. Juniper Research, meanwhile, predicts that mobile game revenue will hit $11 billion by 2015 and that revenue from in-app purchases in games will eclipse traditional download sales by 2013. And Parks Associates last month reported that one in five gamers spends money on virtual items and microtransactions, which are expected to garner $6 billion in revenue by 2015.
So it’s clear that the larger trend of virtual goods and free-to-play products are growing in popularity, and that momentum is now trickling down to mobile apps. And the boost developers get from going freemium is substantial. Megajump, for example, a game that uses OpenFeint OFX, a tool for implementing in-app purchases, experienced a 400 percent increase in revenue after it went free-to-play.
Should All Apps Go Freemium?
So if this is where the market is going, shouldn’t all app developers look at freemium models? Not so fast. As I discuss GigaOM Pro Report, (subscription required) while the strategy has worked, it requires thought, planning and a willingness to keep tinkering to ensure a good payoff. The bottom line is that freemium may not be right for every app but it is a very viable revenue model for app developers. Here’s a partial list of things to keep in mind for developers wanting to employ in-app purchases and freemium apps.
For more tips, read the full post.
Related content from GigaOM Pro (sub. req.):
- Why RIM’s Future (Unfortunately) Hinges on BlackBerry OS 6
- Will Killer Apps Affect Which Handsets Consumers Buy?
- How Carriers Can Crack the App Discoverability Nut
Post and thumbnail photos courtesy of Flickr user Ninja M