It's no secret that free downloads dominate the app markets of both
Among the most interesting findings of Apsalar is that paid app sessions are growing faster than free app sessions - by 44% vs. 33% between March -12 and March -13. When it comes to monetization, free apps dominate the Apple and Google Play revenue charts; but consumer engagement in paid apps continues growing robustly. As a matter of fact, the difference between revenue growth rates of these categories may not be as vast as many imagine, either. According to Apsalar, average revenue per user of free apps increased by 38% between March 2012 and March 2013. The ARPU of paid apps increased by 15% over the same time period. There is a substantial growth rate gap here, of course - but paid apps still generate robust, double-digit annualized sales growth. If too many developers flock to the free app category simultaneously, they may actually be ignoring a category that still generates healthy growth and might actually be less competitive at the moment.
Apsalar reports that in March 2013, overall ARPU of free apps was 12% higher than the ARPU of paid apps, as measured across both iOS and Android platforms. That is an undeniable demonstration of free app revenue power. But interestingly, paid apps are also now generating heady in-app purchase sales growth; IAP's in paid apps delivered 280% revenue increase in just one year.
This is a somewhat controversial topic; some app vendors such as Mojang feel that charging consumers first for downloads and then for extra content is double-dipping. But most app vendors focusing on paid apps have jumped at the chance of maximizing in-app revenue in addition to charging a sometimes stiff download price. One notable recent example is "Kingdom Rush Frontiers", which includes a fairly aggressive paid Champion element considering the $5 download price. This game also demonstrates that making the in-app purchase strategy work in premium games is not a trivial challenge. Despite possessing a high media profile and becoming the #1 paid iPad download in America in early June, "Kingdom Rush Frontiers" has dropped to #31 on iPad download chart and #74 on iPad revenue chart by July 2.
Similarly, Disney's "Temple Run: Oz", a $1 download that features a notably aggressive in-app purchase element, is currently at #16 on iPad download chart and #137 on iPad revenue chart. The hybrid approach is becoming popular, but it is a tricky combo to pull off even for seasoned developers.
