The paid download model still has some life in it, but freemium apps with in-app purchases (IAPs) are now dominating the market and accounted for 79 percent of iOS app revenue this past January, according to Distimo. The company compiled its most recent report, "How the Most Successful Apps Monetize Globally," using its own analytics tools as well as those from its partner ChartBoost. The report focuses mainly on data for the Apple App Store from January 2012 through January 2014.
- November 2013 marked an all-time high for free apps with in-app purchases at 81 percent versus only 46 percent in January 2012.
- China and Japan are leading when it comes to the largest revenue share from the freemium business model, with a record of 94 percent in January 2014.
- From a device perspective, iPhone apps represented were 91 percent of revenue in the fourth quarter of last year, compared with only 9 percent for iPad.
- Paid downloads without IAPs had a higher value in Japan of about $18. Overall, the best month for paid app downloads was December.
"Our analysis showed that the paid business models generate a higher average revenue per download (ARPD) and can still be a viable monetization option, despite lower download volumes," the report said. "Even though the overall ARPD for the freemium business model is lower, free apps with in-app purchases are the dominant business model and proved to be the most profitable with the largest revenue shares."
Developers probably don't need more proof that IAPs are the way to go, but Distimo's report offers a lot more granular detail about the way ARPD plays out across countries, devices and other business models. For example, it was interesting to see that in some regions, like France or Russia, the ARPD is fairly close for free apps with IAPs as paid apps with IAPs. In China, revenue from paid apps with IAPs is actually higher, which debunks the notion that people will only make in-app purchases if they haven't had to pay anything else up front.
- download the report here
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