PYMNTS Exclusive: “Freemium” App Model Rules All, Says Bango

Apps are limiting business models, and the basic “pay to play” model has been challenged, according to recent analysis from Bango, a mobile payments solution for app stores such as Google Play, BlackBerry World, Windows Phone Store and Firefox Marketplace. The results shared exclusively with PYMNTS.com came from data provided by one single app store and included 800,000 payments total.

Smartphone users are now expecting content they get on their devices to be free, and are unlikely to pay for it until they’ve played with and tested it. This is called the “freemium” model, where the core functionality of the app is free, but upgrades with specific features are in the form of in-app purchases.

Here are some interesting key findings from Bango:

• More than 97 percent of payments for digital goods are in-app, a number that has been steadily increasing.
• A small number of successful apps are dominating – of the top 100 sellers, 97 percent are from just three games: Candy Crush Saga, Pet Rescue Saga, and Farm Heroes Saga.
• A tiny minority of payments from the app store analysed – around 1 in 40 – were to buy content up-front. The rest were all in-app purchases.

Mobile monetization still remains a challenge. Developers need to create innovative features, upgrades, and widgets within the freemium model to keep customers engaged. The good news, however, is that mobile payment technology is progressing, and is “now ideally suited to the freemium challenge. “Many app stores around the globe have implemented one-click purchasing to help facilitate micro-payments.

But the question remains: Which industries will be disrupted?

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