What iOS 8 Means for Mobile App Monetization

Jun 20, 2014   

Posted by Eric Leist

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Apple's upcoming iOS 8, announced earlier this month at WWDC, brings with it many of new opportunities for app developers. Among them, a feature called Family Sharing allows up to 6 family members to share app purchases on the same credit card accross devices and parents to supervise their childrens' purchases.

At first glance, sharing app purchases across family members may seem like a blow to developers looking to monetize their app. But the reality is that many families that will use this feature are already sharing a single iTunes account. Family Sharing simply puts the system in place to make that practice sanctioned by Apple.

The change also indicates Apple embracing another trend: Mobile app developers are moving away from monetizing with a pay-for-download model.

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In the last year, app developers have quickly shifted their monetization strategy toward in-app purchases and in-app advertising. From 2012 to 2013, in-app advertising revenue increased by 56%. And in-app purchase revenue increased by 211% (according to a joint study by AppAnnie and the IDC).

Mobile App Revenue Strategy (2012-2013)

Mobile_app_revenue_strategy_monetization

source: AppAnnie & IDC, 2014

While in-app advertising and purchases are driving more revenue, we're also seeing the share of the apps market comprised of free and $.099 apps trending up over time. Bottom line: More developers are making more money off of free apps compared to paid apps. 

Mobile Apps are Increasingly Free (2010-2013)

Mobile_apps_are_increasingly_free_monetization

source: Flurry Analytics & the Apple App Store (Data is for iOS apps using Flurry Analytics in April of each year, and is weighted by monthly average users.), 2013

Growing mobile app revenue is now a numbers game. For developers, it's not about how many people pay to download an app. It's about getting the app into as many hands as possible and getting those users addicted to the app to maximize ad impressions and purchases for add-ons such as virtual currency or bonus features.

So Apple's decision to allow parents to approve their children's transactions makes sense for both developers (who are lowering the cost to entry for their apps) and consumers (who don't want their children racking up $400/month in in-app purchases). If one family member purchases an app, it's in the best interest of the app developer that other family members download it too. 

Additionally, the Family Sharing plan is incredibly simple for app developers to opt-in to and support. So much so that a simple email went out to apple developers explaining that adding Family Sharing for people who have already purchased the app takes nothing more than ensuring the relevant check box is selected on the agreements page.

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Topics: Apps