While this number is impressive, the even bigger story behind the numbers is an impending shift away from the current, near-total reliance upon initial app download purchases as the primary focus of app monetisation to a rapidly growing focus on in-app purchasing to fund business models.
This shift is most evident in the free app category, where in-app purchases allow users to buy a more functional version of the app or to turn on additional features. In this instance, the Mobile Apps space is largely emulating the success of mobile games that have long incorporated in-game purchases of additional levels, features, and functionalities as a key revenue source. This shift became very evident in January with the Appcelerator/IDC 1Q11 Mobile App Developer Survey Report, in which developers reported dramatically increased plans to incorporate in-app purchasing, mobile advertising, and mobile commerce in their apps.
“App developers are not only focusing on ways to ‘appify’ just about every interaction you can think of in your physical and digital worlds, they are now focusing on longer term sustainability issues,” noted Scott Ellison, vice president, Mobile and Connected Consumer Platforms. “The user sustainability trifecta of social networking, location, and the cloud are now increasingly being supported by the business model financial trifecta of application store purchases, in-app purchasing, and in-app advertising.”
Business models that seek to include in-app purchasing and in-app advertising must, by definition, further engage users, both within the app itself and over time. Together these dynamics are driving significant shifts in how apps are conceptualized, the integration of additional services and features like social networking and location to more deeply engage users, and how apps are actually developed in terms of incorporating in-app purchasing.