In-App Purchases: What Impact Do They Have On The Developers Income, And The Success Of The Game?

In-app-coin-purchases

When you download an app to your phone, whether it is free or paid for, you may find that there are further options to buy additional content or services within it. These are in-app purchases.  So, what impact do they have on the developer’s income?

Let’s take the most downloaded game ever, Candy Crush, as an example. This simple yet addictive game in which you match coloured sweets, debuted in November 2012. The free app is estimated to be worth $7.1 billion and is played by 93 million people every day – which amasses the company $800,000 daily through players purchasing new lives and boosters that help to conquer new levels.

This game attracts players through its simplicity and the fact it is free. It then starts to earn money, by making the game harder and the wins happen less often. People are already addicted and as a result will start spending money on the in-app purchases in order to continue playing. You know the sort of games – the ones that have you throwing your phone at the wall and smashing the screen in frustration that you can’t progress to the next level – then rushing down to Lovefone, where you know you will get a speedy but high quality service, so you can carry on trying to advance within the game!

Free apps with in-app purchases are dominating the market and generate the highest revenue, reaching 76% of all revenue in the Apple App Store. These in-app purchases can cost anywhere from 69p to £349! Ultimately they are the way that free apps make money for developers.

Do they have an impact on the success of the game?

These in-app purchase won’t necessarily impact the success of the game, as players have already become so addicted during the free period of the game, they are willing to pay to continue playing. This is fine if you are an adult and the bill payer. However, not every one is happy about in–app purchases, particularly parents of kid’s spending money on the extra features within children’s games.

In 2009 Harry Wallop, a journalist at the Daily Telegraph, received a call from his bank believing that there had been fraudulent activity on his account after £68.35 was spent on the iTunes store in one day. It turned out that when his nine-year-old son had asked to spend 69p on his FIFA game, that seemingly small amount had been far from a one off and his son had been buying players thanks to extra FIFA points, which amounted to hundreds of pounds – including a single purchase of 2000 points which cost £19.48 alone.  A purchase, which started as 69p, quickly became £370.

Apple also refunded £4,000 to the father of an eight-year-old, who did not realise she was using real money in games such as Campus Life, My Horse, Hay Day and Smurfs Village.

Even Kanye West has had his say on the subject, despite the fact his wife is making $200 million due to in-app purchases on her game Kim Kardashian: Hollywood. He took to Twitter to complain about the corporate evil of in-app purchases after his daughter North kept spending his money playing games.

He believes that if a game is created for two year olds they should be able to just have fun. The most popular in-app purchase available on Kim’s app, designed for two year olds, costs $39.99, and is required to progress through the story.

The games are obviously successful as they are earning the developers hundreds of thousands through in-app purchases, but the debate will no doubt continue as to whether these are fair or not.

Benjamin Campbell

Benjamin Campbell is an accomplished and experienced freelance writer who has featured in a number of high profile publications and Web sites. If he’s not reading the financial times you’ll find him listening to live music or at the coast surfing.