It makes sense that many mobile game developers release their titles using the freemium model. The idea is that more people will download the app since it's free, while some will get suckered into in-app purchases.
However, according to a new report, only 1.9 percent of mobile gamers actually make in-app purchases.
The mobile marketing firm Swrve released its 2016 Mobile Monetization Report on Wednesday, which analyzed monetization data from 20 million mobile gamers from over 40 free-to-play games in the month of February.
The study found that 1.9 percent of players for that month used real money while playing freemium games. While this number seems extremely low, it's actually an increase from the 1.5 percent of gamers that were found to make in-app purchases back in January 2014.
This slight increase doesn't take away from the fact that developers are not getting revenue from the majority of players. It appears that developers have to rely on the one percent, as well as advertising, to make money. It's important to note, though, that the report did not take into account revenue made from advertising.
The report found that, on average, players spend $24.66 on in-app purchases. This number is also up from the $22 monthly average reported two years ago. The average player who typically opens their wallet while mobile gaming only makes 1.8 purchases, which averages to $13.82.
Further breaking down this in-app purchase average of $13.82 reveals some interesting findings. Purchases between $0 and $5 represent 39 percent of purchases and 14.5 percent of revenue. This makes sense since people are often willing to make a $0.99 purchase.
What's even more interesting is the fact that purchases that cost over $50 account for 2.5 percent of purchases, and over 17 percent of all game revenue.
This reveals that those paying gamers are spending more in games when they do decide to splurge while playing.
It may be easier for mobile gamers to decide to make an in-app purchase if they haven't done so in the game before. It makes sense that someone would be wiling to buy something in a game they are addicted to if they tell themselves this is the only purchase they will make. Plus, the fact that the game was free to download may also help them feel better about tapping on the buy button.
The report found that, out of its sample of playing gamers, 64 percent made one purchase and only 6.5 percent made five or more.
The firm concluded that 48 percent of revenue still comes from the top 10 percent of mobile gamers, a statistic that has decreased a bit from the previous years.
These findings suggest that maybe the freemium model is not the best way for developers to make a healthy source of revenue.