Freemium is the fastest growing business model for mobile app revenue, according to the latest industry report.
The report from analytics provider App Annie in conjunction with IDC showed that in key countries – Brazil, Canada, France, Germany, India, Japan, Russia, South Korea, the UK and the US – freemium revenues went up by 211% between 2012 and 2013. In app advertising money also went up, but not as quickly – 56%.
Paid revenue, by contrast, went down by 29% from 2012 to 2013, while paidmium revenue – paid apps which also offer in-app purchases – decreased by 23%.
Evidently, app developers and publishers are more than aware of this. App Annie’s analytics revealed that more than four in five (83%) apps are freemium, based on the top 1000 apps in the App Store and Google Play. 8% are paid, whilst 9% are paidmium.
In terms of revenue, freemium (92%) is even more dominant, compared to paid (4%) and paidmium (4%). There are more freemium apps in Google Play than in the App Store, according to the research.
The study calls out a couple of interesting case studies. Most interesting to MarketingTech was Electronic Arts, who moved their FIFA 14 app to freemium even though FIFA 13 was the #1 ranked paidmium app on the market. The report urges: “It’s never too late to switch business models.”
But what were the most popular freemium monetisation devices? Functionality, or in other words paying for upgrades, levels and other services, was used by just over half of respondents. This was followed by user experience (40%) – if you pay, we’ll remove these annoying ads – as well as usage and time – either limited usage on free model, or a short trial period with full functionality.
For paidmium apps, nearly two fifths (39%) of revenue came from in-app purchases, with the other 61% of revenue coming from paid downloads.
All interesting figures, yet the report also provided interesting takeaways for future reference. App Annie said that publishers should consider different business model strategies, particularly by geography – India aims more towards in-app advertising, while the Japanese market is more towards app store revenue.
The full, detailed report can be found here. What do you make of the results?
