Juniper Sees Big Upside for In-Game Purchase Revenues from Smartphones

Juniper has raised the bar on expectations for in-game purchase revenues via smartphones during the next four years.

A new report from the venerable research firm finds that a growing user acceptance of in-game purchases and a sharp rise in smartphone adoption will push sales of in-game items from $2.1 billion in 2011 to $4.8 billion in 2016.

The report also shows that as users became accustomed to the freemium model, particularly purchasing in-game items, the proportion of gamers who purchase these items will increase. This will be most apparent in the Social & Casual genre in which users are increasingly expecting entertaining and immersive gameplay from free or low cost games.

According to the findings and projections presented in the report, another driver for this increase is the growth in the number of game developers adopting the freemium model rather than the pay-per-download model.

Why does this help? As it turns out, free games – naturally – are being downloaded in greater volume. That makes the paying user base much larger.

Other key findings presented in the whitepaper:

  • Social & Casual games will account for the lion’s share of mobile games downloads.
  • Mobile games downloads on tablets will increase dramatically, accounting for over a third of mobile games revenues by 2016.
  • Mobile games revenues on featurephones will halve over the next five years.

“An increasing number of games developers are finding the in-game purchase model attractive simply because it provides easy answers,” writes report author Charlotte Miller. “Their piracy rate will drop and the game will see more downloads. However, while some games may generate significant revenues from in-game items, the model doesn’t work with all games and developers have to tread a fine line between encouraging purchases and appearing to be exploitative.”

To learn more about the report, click here.