There are three basic ways to monetise an app: through paid, in-app purchases and advertising.
Research suggests that in-app purchase revenues are set to grow far faster than revenues from paid-for applications.
In a gaming context, in-app purchases may allow players to buy new lives or power-ups to make the levels on the game easier. A non-gaming alternative might involve offering a basic version of a useful service and then expanding the functionality if the user chooses to pay.
CBR rounds up some of the biggest players in the in-app space and how they make their money.
1. King
Founded in 2003 and originally headquarted in Sweden, the publisher is best known for the popular mobile phone games Candy Crush and Candy Crush Saga.
King saw the largest ever IPO for a mobile or social gaming company in the US (listing in 2014 on the New York Stock Exchange) and an acquisition in February 2016 by Activision Blizzard.
Candy Crush Saga is free as a download, but the in-app purchases are the real money source for King. A Guardian analysis in February 2015 found that players spent £865m on in-app purchases in 2014.
The same report found that only 2.3 percent of players of the game pay.
2. Kim Kardashian
The daughter of O.J. Simpson’s defence lawyer, famous for being friends with Paris Hilton amongst her other activities, launched the ‘Kim Kardashian: Hollywood’ app in June 2014.
Within the game, the player must control a vacuous socialite living in Los Angeles and trying to increase their fame and reputation.
It is free to download, but in-game money and "K coins" can be bought in the game and used to buy clothing, accessories, or refill your energy.
Thinkgaming.com estimates that the app makes $35,892 in daily revenue.
Her husband Kanye West, the self-styled "abomination of Obama’s nation", attracted mockery from Twitter users after he slammed games companies for allowing in-app purhcases.
3. Tinder
The dating application, which allows users to scroll through images of prospective partners and approve or reject them with a swipe on the touch screen, added a premium version which is offered as an in-app purchase.
The ‘premium’ version includes two new key features, based on requests by users. One of these was Passport, which allows users to change their locations to connect with users anywhere in the world.
Meanwhile, the Rewind function lets the user take back their last swipe. If they accidentally swiped left on someone, they remain cached so that the user can get back in touch.
Up-to-date figures are not available for Tinder itself, although Barclays predicted that IAC would start monetising a projected $180m in revenue in 2015.
4. Machine Zone
Based in Palo Alto and founded in 2008, Machine Zone is a privately held company which created the game ‘Game of War: Fire Age’.
It was founded by Gabriel Leydon, Mike Sherrill and Halbert Nakagawa.
The firm spent large amounts on marketing, with expensive television adverts involving model Kate Upton originally and later Mariah Carey.
In 2014 a Belgian teen spent $46,000 on in-app purchases. Players can buy packs of 20,000 ‘gold’ for $100, resources which are used within the game.
It is one of the highest grossing freemium games, with thinkgaming.com estimated its daily revenue at $1,185,089.
5. LinkedIn
LinkedIn has predominantly been accessed through the website, but has made an increased effort to bring more users onto the smartphone app recently.
For avid users of LinkedIn, a one-month or one-year subscription can be purchased via the app.
This allows users to send InMail messages, as well as see a full list of who’s viewed their profile in the last 90 days. This does respect this member’s viewing preferences and the privacy settings they have.
Users can also see full profiles of everyone in their network, whether 1st, 2nd or 3rd degree connection.
LinkedIn’s total revenue for premium subscriptions increased 22 percent year-over-year in 2015 to $532 million, although it does not break down to how much of this was through mobile.
6. Snapchat
Snapchat, the photo and video messaging app which erases received messages after a certain amount of time, launched in 2011.
It launched its first in-app purchases in September 2015.
Some of these allow users to augment or alter the messages that they send, perhaps superimposing a bizarre image on top or distorting facial features.
Bizarrely, one of the in-app purchases on Snapchat essentially makes Snapchat like any other messaging service. You can buy ‘replays’, which allow users to view already-seen pictures and videos.
A report by the Financial Times said that Snapchat was on track to generate $100 million in revenue on an annualised basis.
