Mobile analytics firm Distimo just released a new report showing how the most successful apps monetize around the world. According to it, the five most potentially lucrative markets for gaming apps are Japan, Australia, South Korea, the United Kingdom, and the United States, in that order. In addition, Japan and China were the two countries where the largest amount of revenue was generated from freemium apps.
Along with another Distimo report published last month that showed app revenue in Asia grew a massive 162% in 2013, this is further proof that app developers need to look at international markets while developing a monetization strategy.
Distimo last wrote about how apps generate revenue and make a profit back in March 2013. The firm’s latest report, which also focuses on mobile app revenues in relation to download volumes, looks at global trends that have emerged since then. It drew mainly on data from the Apple App Store and covers the two-year period from Jan. 2012 to Jan. 2014.
Previous reports have found that freemium apps already generate the majority of revenue — but there is still plenty of growth potential for that business model. In the U.S. for example, free apps with in-app purchases generated an all-time high of 81% of revenue in the U.S. on iOS in November 2013, up from just 46% in Jan. 2012 (see chart below). Last month, the revenue share of freemium apps in the U.S. was at 79%.
While the U.S. enjoyed strong growth, China and Japan saw the largest revenue share from the freemium apps, with each taking a record 94% in Jan. 2014. In comparison, just 70% of Germany’s total revenue was generated from freemium apps.
To understand how individual apps monetize, Distimo looked at the average revenue per download (ARPD). By this metric, the most lucrative countries for app developers are concentrated in the Asia-Pacific region. Japan was the leader by far. On average, one app download there is worth $5.32, “validating the enormous potential of the Asia app market,” wrote Distimo analyst Christel Schoger.
Australia and South Korea generated $3.60 and $3.40 ARPD, respectively, which points to their growth potential. The countries with the next highest ARPD — Canada, Germany, the U.S. and the UK — all generated around $2.30 per download.
On the other end of the scale is China, which generated a much lower $0.92 ARPD per download. But that number doesn’t negate China’s potential as a growth market for app developers. Rather, it means that it is especially important for developers to figure out what monetization strategy works best for their app there.
When Distimo compared revenue in different countries between three business models — paid apps without in-app purchases, paid apps with in-app purchases, and freemium apps — it found that in China the ARPD for in-app purchases from paid apps is even higher than ARPD for freemium apps.
“This indicates that Chinese users are less opposed to purchasing further in-app features after they already paid for the initial purchase,” wrote Schoger.
Distimo partnered with Chartboost, a games-only tech platform, to get deeper insight into the profitability and revenue potential of different mobile app markets for game developers.
Distimo’s partnership with Chartboost allowed it to get a better look at the cost of user acquisition in different countries. For this report, it focused only on the revenue and download volumes for the top 250 grossing games in the Apple App Store during Q4 2013. It found that the average cost-per-install (CPI) across all countries was $1.31, with that amount ranging from a low of $0.90 in China to a high of $2.59 in Australia.
When Distimo compared ARPD with average CPI, it concluded that the five markets showing the most revenue potential are currently Japan, Australia, South Korea, the United Kingdom, and the United States. In Japan, where the average CPI is $1.86, it is possible to hit an ARPD of $6.34. This means that game developers can potentially make a plump profit of $4.48 per download.
See the full report here.