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April 3, 2012updated 23 Aug 2016 3:00pm

In-app purchases becoming dominant in mobile commerce

In-app purchases are proving a boon for app developers, boosting revenues for both developers and app store owners such as Google and Apple.

By Allan Swann

Purchases made inside apps on smartphone and tablet devices now account for 60 percent of all revenue among the 200 highest-grossing applications in Apple’s App Store and Google’s Android Marketplace (now renamed Google Play).

The research was commissioned by analyst firms CCS Insight and Distimo, as part of its joint report App VU Global.

The iPhone and iPad app stores generated daily revenue of $3.3 million and $2.1 million respectively in January 2012. Google Play saw a 31% rise in daily revenue across the same period, to $679,000.

"The strong growth in downloads and revenue for Apple and Android comes at a time when consumers typically rein back their spending after Christmas", said Paolo Pescatore, Director of Applications and Content at CCS Insight.

Apple announced last month that more than 25 billion apps have been downloaded from its App Store. Apple claims its store has 585,000 apps available to more than 315 million ‘i-devices’ worldwide. By comparison, Android has 450,000 apps available to the estimated 300 million devices worldwide.

A surge of in-app purchases was behind much of the growth. Buying extra levels or features within a game or application is rapidly becoming the principal form of spending in this area. More companies are releasing locked, or ‘free’ versions of their apps for users to trial. Once payment has been received, the app unlocks fully.

The revenue generated in-app increased to 73 percent for the top 200 highest-grossing apps, and a staggering 79 percent for the top 200 iPhone apps.

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Other platforms are racing to secure third position behind the two leaders, with Amazon and Microsoft recording the biggest growth in catalogue size.

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