Generating revenue paths for a gratis application
The global mobile app market saw a significant surge last year, generating a staggering $935 billion in revenue. This growth was driven by various monetization strategies, with the freemium model emerging as a dominant force.
One of the most popular examples of the freemium model is "League of Legends", a free-to-play game that generates revenue through in-game purchases for skins and quality-of-life features. The prestige factor associated with these skins entices players to purchase them, contributing to the game's revenue.
Another game that follows the freemium model is Fortnite. Similarly, Marvel Rivals, a free game offering in-app purchases for battle passes, skins, and emotes, is estimated to generate a monthly revenue of $136 million for NetEase Games.
In-app purchases are not limited to gaming apps. Even productivity and fitness apps rely heavily on this revenue channel. For instance, users of sweepstakes casinos, which provide an example of monetization without conventional gambling mechanics, purchase "Gold Coins" for entertainment. It's important to note that in these casinos, users play slots or table games with "Gold Coins", not real money.
The companies behind these sweepstakes casinos are primarily foreign-based firms, mostly from Malta or Curaçao. They acquired most of the German online gambling licenses after the 2021 Glücksspielstaatsvertrag regulation came into effect, allowing licensed online casinos to operate legally in Germany under specific conditions.
Convenience is another area that is being monetized. People value convenience highly, and this is reflected in the revenue generated by apps that offer convenient services. Jumia, for example, expanded its delivery service, demonstrating the importance of logistics for apps with physical goods.
Physical product tie-ins have also emerged in e-commerce-forward apps. Recipe planning apps now link to grocery orders, while design tools let users print and ship their work. Some meditation apps even sell physical merchandise like journals, candles, or calming teas.
Apple also made strides in the mobile app market by launching an official online retail store in Saudi Arabia, catering to its customers in the region.
Interestingly, most people do not pay to download apps. TikTok, for instance, made $6 billion from in-app purchases, demonstrating that while the initial download may be free, the revenue can still be substantial through in-app purchases.
In conclusion, the mobile app market continues to grow, with in-app purchases remaining a dominant revenue channel. The freemium model, offering basic features for free and gating premium content behind subscriptions or one-time upgrades, appears to be a successful strategy for many app developers.
