Why freemium mobile developers can't succeed without whales

Less than two percent of freemium mobile game players spent any money on in-app purchases in January, according to mobile app analytics platform Swrve's inaugural monetization report. The report purportedly surveys the in-app spending habits of millions of people playing mobile freemium games on Swrve's platform in Jaunary 2014. Of those surveyed, only 1.5 percent spent money on in-app purchases, and the top 10 percent of those spenders accounted for 50 percent of an app's monthly revenue. Swrve reports that people in the top 10 percent of spenders averaged seven purchases during the month, with an average purchase value of just over $11. That suggests that less than one percent of a freemium app's player base -- 0.15 percent, according to Swrve -- generates roughly 50 percent of all IAP revenue. Developers can't give up on the whales, because whales are simply too crucial to the success of these games. The fact that a relatively tiny sliver of the audience is generating the lion's share of a game's revenue isn't surprising -- we've long known that the business of freemium game design is akin to chasing whales. However, the relative sizes of Swrve's numbers are notable; they suggest that top spenders are responsible for an increasingly large portion of a mobile freemium app's total revenue, leaving developers less room to succeed without them. The report is worth reading in full for further insights into the current state of the mobile freemium game market. Notably, Swrve claims that roughly 47 percent of people who started playing a new freemium game went on to make an in-app purchase, and the average time to first purchase was roughly 24 hours. Swrve also reports that 72 percent of all revenue generated by a freemium app player is generated within the first three days of play, suggesting that developers should be able to deduce a player's interest in spending money shortly after they start playing.