It seems that 90% of the games you can find on current app stores are games that have a free price tag, but once you download them you notice that in reality, they have some “hidden costs”. Maybe you need to pay to unlock extra levels, new characters or for items and weapons. Why do mobile games have in-app purchases?
Best Smartphone Game has an entire series of articles regarding the current practices of the mobile gaming industry. We discuss topics such as Why Do Mobile Games Have Fake Ads, Why Do Mobile Games Have an Energy System and How Do Free Mobile Games Make Money. This article ads to the series an explains how we got to having so many games with in-app purchases.
Your answer up front:
Mobile Games use in-app purchases in order to establish a recurrent revenue source. Instead of having users pay $4.99 for a game upfront, they could instead obtain 10’s if not hundreds of dollars from the same user over the course of 1 week up to years of having the player as a customer.
Today we’ll explain how exactly we got to this point; why games transitioned from an upfront cost model to a free + purchases model. We’re going to explain what in-app purchases are, how do they work and answer the most common questions regarding them.
Why are there so little premium games on the app stores?
If you’ve been gaming on a smartphone since the early days you witnessed first hand how the amount of premium mobile games (games that have an upfront cost and no ads or in-app purchases) has declined over the years. Why exactly is that?
We’ve covered this topic before in our article titled How Do Free Mobile Games Make Money, but we’ll go over it here as well: The amount of people that have access to a smartphone in huge. By setting the price of a game to 0 (FREE) you can lower the barrier to entry on your game and everyone can at least try the game. This opens up the game to a possible audience of billions of people.
Think of it this way: If I have 100 people looking at my game’s page on the app store, how many of them would download a game, that they know nothing about, when the price is $1.99 vs how many of them would press the Download button when the price is $0?
The accelerated rise of smartphone adoption over the past 13 years have lead to the switch from premium priced games to games with a 0 up front cost specifically for this reason.
How many premium game releases are there?
How many games did this? Well, SensorTower has data going from 2014 to 2019 on revenue from Premium Games and Free Games and the data if off the charts (pardon my pun).
And that’s not all! Let’s look at the amount of premium games released vs freemium games released in the same time period:
We went from 40K premium games released in 2014 to barely over 3K games in 2019. Who wants to bet that 2021 saw far less than this? I wouldn’t put money against it.\Let’s answer the question asked initially:
Why are there so little premium games available?
Because developers saw that it’s much more profitable to release the game as free in order to attract as much people as possible. Most games are now monetised via ads and in-app purchases. By making the game FREE they can attract more people, who wouldn’t have purchased the game initially at a premium price. The goal is to try to monetise these users at a later date. And even if they don’t monetise people, they ca at least advertise other products to them and gain some money that way.
Now, let’s talk a bit about in-app purchases in order to get a better idea why developers, publishers and, sometimes, users prefer them vs an up-front cost.
What are in-app purchases?
In-App Purchases (or IAP’s) represent any kind of purchase performed in a game or an app from inside of that game or app. They unlock content that’s not initially available with the free/base version of the app and game you downloaded. In-app purchases can take various forms from subscriptions, purchases for extra known content (like levels, characters, weapons), purchases of random, unknown, content (like with lootboxes or gacha games) to purchasing consumables that deplete and need to be purchased again (extra lives, moves) to movies and music (n the case of non-gaming apps).
How do in app purchases work?
The mechanism behind the way in-app purchases work is similar to how normal online purchases work, though the exact implementation differs from platform to platform. On the surface level, both iOS and Android in-app purchases are pretty similar. Let’s break it down into several small parts and go through the steps.
How do in-app purchases know my credit card details?
You have an account tied to each store (a google Account for Android and an apple account for iOS). You can login into this account using your favourite email address and password. Normally when you make an account or when you try to download a game or an app, both app stores require that you add your credit cards details to the account.
When you start a game downloaded from the stores, the game knows of your account (even though they normally don’t see the accounts data). When attempting to purchase in-game items the game makes a “call” or request to the Store and says something like this:
“Game: Hey App Store! I have an amazing player here with the id #13371337! Can you handle this transaction for me and okay it so I can give this amazing player the content he or she wants?”
“App Store: Sure thing Game, let me bring up a window for the player to validate the purchase!”
The app store checks to see if the credits card details are available and then ASKS You to confirm that you indeed want to purchase said content.
Can in-app purchases be done without my consent?
Normally no. There’s a reason why the Store itself acts as a middle man for all these transactions. As long as the GAME or APP itself doesn’t ask you to login to a service like PayPal or doesn’t ask for your credit card detail to be entered manually consider yourself to be safe. If you only use games from the Apple App Store or from Google’s Play Store you are safe.
Can in-app purchases be done without me knowing without an app stealing my credit card details?
In-App purchases could be done without your consent by family members or friends who have access to a device where your account is logged into and they know the pin or account password.
Example: You have a little brother who sneaks into your room from time to time to play a really skillful game on your tablet or phone. He knows your account name, password and/or pin. From inside the game, he can try to purchase an item. The Purchase window (described a few paragraphs above) appears. He enters your password and pin. A in-app purchase is made without your conset.
Can in-app purchases be refunded?
Normally, you can request a refund within 48 hours of making a purchase. There are some differences between the stores though and there are various reasons behind refund request.
On google play, you can request a refund for the following reasons:
- If fraudulent purchase has been made, one that wasn’t authorised by you (made by someone you don’t know)
- A purchase was made by a friend, child or family member without your consent
- it’s been less than 48 hours since the purchase was made. Note: that you can issue refunds for ebooks, movies and other time of google play purchases even if 48 hours have passed.
I recommend taking a look at Google Play Help for more information on this topic!
On the App Store things are a bit different. There’s a list of reasons you can select from when requesting a refund. In order to do this you need to:
- Sign into apple’s “Report a Problem” website.
- In the first selection box, you need to click on “I want to request a refund”.
The list of refund reasons available is the following:
- I did not mean to buy this
- A child/minor made purchase(s) without permission
- I did not mean to sign up for a subscription(s)
- I did not intend to renew a subscription(s)
- My purchase does not work as expected
- In-app purchase not received
- Right of Withdrawal
- Other
For more information on the topic, I suggest you check out Apple’s own topic on the subject!
Can in app purchases be shared?
Depending on the game they can be shared between devices if in-app purchases are tied to account. Else, they can be tied to a device. Or to the platform.
Both Google Play and the App Store have family sharing programs that allow you to share your purchases with various family members or friends. I believe Apple’s limit of people that can share apps is limited to 6 people, while Google’s Family Sharing program allows 5 family members. However: Consumable in-app purchases from games (like Potions, Healths, Energy unlocks) cannot be shared on either platform. This is done in order to avoid having Jack purchase 30 lives in, let’s say Candy Crush, and having Jill, Jane, Joana and Jon be able to to their own 30 lives for free.
So the only in-app purchases you can share are those that are deemed permanent.
Are in-app purchases legal?
In-App purchases are legal across most countries of the world. They are a legal method of performing purchases from inside apps to gain access to most content.
Why do mobile games have in-app purchases?
Mobile Games use in-app purchases in order to establish a recurrent revenue source. Instead of having users pay $4.99 for a game upfront, they could instead obtain 10’s if not hundreds of dollars from the same user over the course of 1 week up to years of having the player as a customer.
Where To Next?
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