There is no doubt that the app market is a thriving market. We almost constantly hear of ridiculous amounts of money being passed around due to the app and mobile games industries. Last year was the year in which we saw WhatsApp sold for $19 billion while also the year we heard Glu Mobile took over $43 million (in a single quarter) from the success of Kim Kardashian’s Hollywood game. So yes there is definitely money to be made from the mobile app industry.
That said, one interesting feature that both WhatsApp and Kim Kardashian’s app have in common is not just their unbelievable success. They also have something else in common, they are both free at the point-of-sale to the consumer. In short, you do not have to pay anything to download either of these. That doesn’t mean you won’t pay for them in the long run, as we have learned that IAPs are where the real money is. As a result in 2014 we saw more and more apps moving from the premium spectrum to the ‘freemium’ one. It also seems this is likely to be a continued trend moving forward, with more developers and app companies realizing downloads are what matters first and foremost. Where downloads are, the revenue typically follows.
A new report by eMarketer which predicts the trend of apps sales notes the continued download of free apps will be the preference of app downloaders in the future. According to the report, only 36% of smartphone owners in the U.S. purchased at least one app last year. It seems tablet users were a little more inclined to purchase an app, with as much as 45% of tablet users in the U.S. noted as buying at least one app last year. Either way though, on both platforms the total number was less than half of all users for that platform. On the smartphone side, it was barely more than a third of overall users who were noted as paying for an app. The report further goes on to suggest this will continue with the overall percentage continuing to slide in the next few years. For smartphone users, it is predicted 35.8% will purchase an app in 2015, 35.5% in 2016 and 35.3% in 2017. Likewise, for tablet users, the number predicted drops to 44% in 2015, 43.6% in 2016 and 43.4% in 2017.
Although, these are only predictions, the assumption does seem to fit in with what we are generally seeing by both consumers and developers, with a tendency to edge towards a more pay-as-you-function app era. Apps will be free, with users choosing to opt-in for more advanced features or services, for a specific add-on fee. What do you think of this trend which seems to be developing? Would you prefer to pay an upfront fee for an app or pay IAPs for only what you use? Let us know.