In-app purchase is also known as Microtransactions.
now what are In-app Purchase According to wiki:
microtransactions is a business model where users can purchase virtual goods via micropayments. Microtransactions are often used in free-to-play games to provide a revenue source for game developers. While microtransactions are a staple of the mobile app market, they are also available on traditional computer platforms such as Valve’s Steam platform as well as console gaming.
Nexon a game company in Japan reportedly invented both free to play games and microtransactions, it started when Nexon was preparing to remove subscription games due to lack of players. the team decided to give the game away as free and sell some in-game items as an experiment, as a result, it increases the company’s revenue by 16 percent over one year or $ 4.2 billion.
in-app purchase currently gain more tractions when Apple started to offer it to its app developers, there are 5 types of in-app purchases according to apple these are
Consumable (pay every time)
purchased every time the user used the item.
Select Non-Consumable (one-time payment)
purchased only once by the user.
Select Auto-Renewable Subscriptions (will deduct money from your credit card on a cycle complete)
Auto-renewable Subscriptions allow the user to purchase updating and dynamic content for a set duration of time. Subscriptions renew automatically unless the user opts out, such as magazine subscriptions.
Select Free Subscription (no payment and is still visible even you did not submit your account detail to iTunes connect)
Free subscriptions are a way for developers to put free subscription content in Newsstand.
Select Non-Renewing (need to renew manually)
Subscription Non-Renewing Subscriptions allow the sale of services with a limited duration.
characteristics of games that probably has in-app purchase and why they need in-app purchase:
- Free to play games – in-app purchase gives game developers to option to make their game free so that everyone can download and play, but in-app purchase then allows developers to earn money (aside from usual ads) usually in the form of coins or diamonds that allows players to spend on such as removing waiting time, speed up the game or buy limited edition overpowered weapons that give you advantage throughout the game these are called pay to win games.
- Almost endless levels/ new characters or quest – these types of games typically rely on the in-app purchase to allow cash flows during the entire lifetime of the games as this types of games never leave the development stage, this allows developers too to continuously pushed new contents within the games like clash of clans.
- Longer game support – games that are catered to multiple devices tend to have multiple issues and in-app purchase cover these expenses.
- Multiplayer free to play – games like these use game servers and are billed monthly, therefore, cash flows are needed.
so why in-app purchases are becoming the norm :
- Continuous cash flows – aside from single payment games in-app purchase allows game publishers to monetize their games continuously unlike single purchase games once the sales are done it’s done.
- Continuous development – games are usally a non stop development especially wehen it comes to mobile games since they must continually need to support there games on diffirent mobile phones
so what are the cons of in-app purchases:
- Gamers hate in-app purchases – gamers don’t wanna pay for a game in order to just win.
- Parents hate them too – most kids tend to fall in in-app purchase all the times.
so to those saying that no one buys in-app purchases think again this is a multi-billion dollar business.