You know the familiar wealth inequality theory that the 400 richest Americans have more wealth than half of the entire U.S. population? Well, it turns out the freemium gaming model follows the same pattern, with half of the revenue generated by the freemium gaming model coming from just 0.19% of mobile gamers.
With in-app gaming purchases expect to top $1.9 billion by the end of 2016, this means that roughly half of that figure – around $900 million – will come from less than one-fifth of a percent of the number of mobile gamers in the world. The figures come from Swrve’s latest gaming monetization report, which was released today.
What a difference a day makes
The report covers a whole host of interesting facts, including the importance of the first day an app is installed for revenue. 59% of first purchases in a freemium app are made on the first day and a massive 55.5% of the app’s total revenue will be made on that very same first day. Swrve notes that 56% of first-time payers go on to make at least one other purchase in the next two weeks.
A massive 55.5% of a freemium app's total revenue is made on the first day and 70% in the first 48 hours.
Contrary to popular belief, the freemium model pulls the vast majority of money out of your pocket on day one, not after months of use. If you haven’t made a purchase on the first day you install a freemium game, the likelihood of you doing so drops by roughly two-thirds per day in the first 72 hours.
With 55.5% of revenue coming on day one, day two revenue drops dramatically to 14% and to just 4.5% on day three. That means a freemium game makes 70% of its money in the first 48 hours. Remember that 48.4% of all game revenue comes from just 10% of paying players (which is only 0.19% of all players) and you start to get a picture of the kind of gamer that pays.
The gamers that pay
The gamers spending the most money are not necessarily the hardcore committed few that repeatedly invest a percentage of their monthly salary, like compulsive gamblers, into a game that has “sucked them in”. No, this tiny fraction of players is just like the rest of us: they install a game and play it a lot in the first day or two before rapidly losing interest. If not in playing it altogether, at least in paying for the privilege.
Not surprisingly, the report shows that only 1.9% of players are likely to make an in-app purchase in a month, proving that the vast majority of players deliver absolutely no revenue to freemium game developers. However, the average monthly spend of that 1.9% of players is $24.66, based on an average of 1.8 purchases per month with an average individual purchase value of $13.82.
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While these figures may seem huge to many of us, the report notes that “high value purchases” – those over $50 – only account for 2.5% of all in-app purchases, but represent 18% of total in-game revenue. But the report also notes that “high value” gamers are spending less they have been. Last year the top 10% represented 60% of freemium gaming revenue. This year that figure is less than 50%.
Do you pay to play? How much are you willing to spend on a good freemium game?