In-game purchases to sky-rocket to US$4.8 billion by 2016

The smartphone game market, ever the beacon of success, is expected to rocket from US$2.1 billion to US$4.8 billion by 2016. Freemium, paid content, episodic titles, casual and hardcore games, the list of smartphone games is overwhelming by nature and offers something for every audience.

A report by Charlotte Miller, Analyst with Juniper Research and author of the whitepaper, details more, and outlines how the mobile games market has blossomed.

The rise of social gaming

Farmville, a model of accomplishment, is the touchstone of freemium titles. Alongside Smurfs Village and Crime City, the option of purchasing content with actual money draws users into a hypnotic spiral of give and take. The game takes the money, the user gets rewards and an experience far richer than an unpaid user.

The social aspect and connecting with users within the gaming environment drives sales. For instance, one user recommends a gaming item via Facebook, a friend picks it up, passes it onto their friends, until the game developers can practically feel their purses bulging in their slim-fit jeans.

Low cost, high returns

Angry Birds, Words With Friends, and Tetris, all have something in common: each game is premium content (paid for), costs less than a dollar, is a top-ten download on the iTunes store, and most importantly, has a pick-up-and-play control system. The combined power of paid-for content, addictive casual gaming and in-app purchases are a knockout blow and guaranteed money-spinner for developers.

An attractive purchase

Miller explains further, “An increasing number of games developers are finding the in-game purchase model attractive simply because it provides easy answers. 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.”

2016 and beyond

The reports states that casual and social games will continue to dominate the gaming market, with the largest percentage of downloads coming from these titles. By 2016, over a third of all revenue generated by mobile games will fall into the social or casual market. By comparison, feature phones, the likes which support basic Java or Flash games, will see their revenue halve in the coming five years.

Download the full whitepaper here (at a hefty cost) to sink into the meat of social gaming revenue.