If you're into following the business side of the mobile gaming industry, the Flurry Analytics blog just simply needs to either be in your RSS reader, or the daily rotation of sites you read. It's a fantastic information overload of charts, data points, and analysis which is the product of having their analytics package included in over 75,000 different iOS and Android apps. Not long ago we posted about some recent findings of theirs that showed that free to play was accounting for 65% of the total revenue that games are raking in compared to "premium" games which went from 61% of the total revenue in January all the way down to 35% a mere six months later.

Today Flurry expanded on these numbers, and revealed that of the 3.5m consumers they're tracking, the average transaction inside of a free to play game is $14. The breakdown of what makes up this $14 average is incredibly interesting as well. For instance, data shows that around 3% of consumers spend money in free to play games, of that 3%, 71% of the transactions that occur are under $10, but 51% of the total revenue generated from these games come from transactions over $20. Check out the chart:

Flurry gets even more in depth with that $14 average:

Let’s spend a moment on the $14 average, which may seem high to you at first blush. There are two reasons the average settles here. First, within the “under $10” bucket, most transactions cluster at the $9.99 level, followed by $4.99, and finally $0.99. In fact, in total, consumers spent $0.99 less than 2% of the time. Why then would so few consumers spend just $1 in freemium games when this price point is so popular among premium games (the pay-before-you-can-play model)? Because freemium games drive a different decision-making mindset for consumers. They simply are deciding whether or not to spend. Our data shows that around 3% of consumers will spend money in freemium games. A deep commitment to the game experience appears to influence their buying habits. The second reason the $14 average seems high is because the high-end of the spending spectrum is very high. Among all purchase price points, over 5% of all purchases are for amounts greater than $50, which rivals the amount paid at retail for top console and PC games

Also, interestingly enough, 30% of that top-tier $20+ transaction are actually over $50, making it beneficial for freemium developers to actually keep "whales" (as Flurry puts it) in mind when developing their games. Some other shocking figures from the same post include the fact that iOS and Android now make up 34% of the portable gaming revenue share, up from 1% in 2008. What's crazier yet is although Nintendo has taken every opportunity to dismiss smartphones, in that same time frame their revenue share shrank from 75% to 57%, even through the release of the 3DS.

With how quickly both smartphone gaming and the free to play model has taken over in the past six months, I can't wait to see the Flurry reports six months from now. Nintendo's shrinking revenue share also has me wondering just how much longer they're going to remain relevant in the mobile market if they don't produce something that competes with convergence devices, especially as smartphones get cheaper and more widespread.

  • stormer

    ........ snore...

  • Adams Immersive

    Interesting. $14 did sound high to me, but it’s all explained.

  • dennno

    Makes sense. Since most people rationalize less when spending money on in-app purchases. This is from my own experience. :). I feel like turning my game into a freemium model now.

    • Anonymous

      In my experience I rationalize more... then refuse to buy it, put down my iPod Touch and turn on the 360/PS3 for a game I can enjoy without having to consider my income.

  • http://pulse.yahoo.com/_SGBZOZI67JW2CJDAIBZ2PU7WX4 Jason

    Maybe someday Nintendo will get a clue. They could be making millions on the side just selling classic Mario apps (not even their new stuff - that could be saved for the 3DS). If the app store's profitable enough for EA to invest over a billion dollars just for PopCap, then there's certainly plenty of money to be made here. 

  • http://pulse.yahoo.com/_5FLRQI2X2LU3IHMCG7HEAEFD5I Cat Astrophy

    Nintendo hasn't bothered to release a new handheld since the DS. That's why they are losing market share. DS Lite, DSi, 3DS...they are all just a DS. Since the DS smartphones have come a LONG way and Nintendo is satisfied with rehashing everything in the handheld world.

    • http://twitter.com/21tigermike Michael A. Robson

      Next you're gonna tell us NIntendo hasn't done a new handheld since the original Gameboy... all other handhelds are basically a 'refresh' on an old idea. AMIRITE?

  • Steve

    "[Nintendo's] revenue share shrank from 75% to 57%..." This may have more to do with new sales from new customers than what this suggestively worded statistic is proposing. I do not think their sales have 'declined' only that the mobile market is bigger. However, I do agree that Nintendo is imperiling itself by ignoring this demographic.

  • Brian Hobbs

    This is fascinating.  So its seems the primary reason free-to-play is beating premium in revenue is not because more people are spending money in these games, but because there are a handful of people spending big money. 

    • http://pulse.yahoo.com/_5FLRQI2X2LU3IHMCG7HEAEFD5I Cat Astrophy

       Basically. Which is why the mean is always more important than the median on this type of report.

    • http://pulse.yahoo.com/_5FLRQI2X2LU3IHMCG7HEAEFD5I Cat Astrophy

       Basically. Which is why the mean is always more important than the median on this type of report.

    • http://pulse.yahoo.com/_5FLRQI2X2LU3IHMCG7HEAEFD5I Cat Astrophy

       Basically. Which is why the mean is always more important than the median on this type of report.

  • http://twitter.com/21tigermike Michael A. Robson

    Ha.. people don't pay for Android games, but nice try ;)

  • Dave

    Freemium is evil. Only 3% of the rich and addicted people pay money, while 97% playing the game for free. And you can't beat the game no matter how much money you put into it. Free people can't play full content without paying money.
    So no one is happy with this system.

  • Supagoa

    But anything above $.99 is too much for an app!

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