Google Play: Developers Make More From In-App Purchases Than App Sales

In 2012, developers using Google Play have pulled in more revenue from in-app purchases than from the sales of the apps themselves, a validation of the “freemium” model and digital purchases.

Google Play engineering director Brad Yerga disclosed the news in an afternoon session here at Google I/O, where Google announced it had surpassed 20 billion app downloads in total at its morning keynote. All told, there are more than 600,000 apps on the Play Store, with more than 1.5 billion downloads per month. Those figures still lag Apple, which claims that of the 650,000 separate apps included in its own app store, users have downloaded 30 billion.

But the real moneymaker, Yerga said, has been the “almost magic combination of carrier billing and in-app billing,” Yerga said, that has appealed on an international level and revolutionized the way app developers make money.

“This has been a huge breakout for Google Play, for developers, but users have embraced it as well,” Yerga said of the in-app purchase option.

Google announced the Google Play brand last year, which encompasses its app store, e-books, music and movies. Google’s Android platform is also the world’s largest in terms of smartphone market share, giving Play a proportionally large share of the world’s consumers.

Although the United States still represents the largest market for Google Play app downloads, more and more overseas customers are downloading apps as Android aggressively expands overseas. About 67% of Google Play revenue comes from overseas markets, Yerga said; besides the United States, the largest Play markets are Japan, Korea, Germany and then France, he said. 

From April 2011 through April 2012, app revenue from Japan and Korea increased fourteen-fold, he said. To drive this further, Google announced a new version of its app development console, which taps into Google Translate to automatically translate the description and name of an app into a foreign language, such as Korean.

Part of the reason for Google Play’s international success has been embracing foreign purchasing customs. For example, customers in Japan and Korea virtually demand the ability to purchase real-world items from their phones, Yerga said.

Simply adding in-app purchases to the API has allowed developers to develop creative ways of monetizing their games, Yerga said, allowing so-called “freemium” and “paymium” models to succeed. For example, developer TinyCo., developer of “Tiny Village,” said that Android delivered the most revenue per user of any app store, as users downloaded the free app, then purchased virtual items. 

Another developer has begun offering a one-time, discounted upgrade to the full version of the app after the user plays a demonstration version for 30 minutes or so.  And developers such as FarSight Studios have released “DLC packs” of new pinball tables for their app, Pinball Arcade.

The next chapter of Google Play’s app monetization story will be subscriptions, allowing users to automatically charge their credit card for additional or supplemental content. “No matter what the game, you can still get the benefits of a subscription,” Yerga said.

Apple has offered in-app subscriptions since February 2011. 

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