Mobile Game Revenue Continues to Rise, Thanks to In-App Purchases

If there’s one thing that mobile game developers have gotten right, it’s perfecting the craft of in-app purchases. These virtual goods sold inside apps for as little as 99 cents a pop have played a major role in the mobile gaming becoming a $34 billion industry. Wall Street Journal recently reported that mobile-game revenue is expected to grow 21% to $36.87 billion this year, according to research firm Newzoo BV. By 2019, it is expected to reach $52.5 billion.

In-app purchases are “dramatically changing the mobile-entertainment landscape,” said Andrew Phelps, director of digital media at Rochester Institute of Technology. They “engage people in a longer financial discourse than you would have in an upfront sale.”

SuperData Research Inc. estimates that “Pokemon Go” has grossed about $120.3 million from in-game transactions since its July 6 release, and Finland’s Supercell Oy pulled in revenue of $2 billion in 2015 from “Clash of Clans” and two other mobile games. In May, Electronic Arts said it generated $173 million in revenue from mobile games in its fiscal fourth quarter, up 15% from a year earlier.

One of the most common ways that mobile development companies generate in-game transactions is with the countdown clock-- a frustration tax that forces gamers to idle before they can perform duties and advance in the game. To speed up the action, they pay for extra time or items. Other in-game revenue tactics include tapping into players’ “fear of missing out” through limited-time events, and developing relationships between players.

Have you spent money on in-app purchases? Which game do you spend the most money on, and what do you buy? Let us know in a comment!