One-Third of Top-Grossing iPhone Apps Are Free

Tuesday, November 16th, 2010

One-third of the top-grossing iPhone apps are free — and make their money via in-app purchases:

The ten top-grossing iPhone apps include Restaurant Story (#3), Tap Zoo (#4), NBA Game Time 2010-2011 (#7), Haypi Kingdom (#9) and Kingdoms at War (#8). Restaurant Story, Tap Zoo and Empire Story all launched within the last couple of months, but older games, such as Haypi Kingdom (Jan. 2010) and Kingdoms at War (Sept. 2009), also continue to rake in significant revenue. The free titles are edging out established moneymakers like Plants vs. Zombies, Madden NFL and Doodle Jump.

But it’s not just gaming apps. The New York Road Runners Marathon App, which allowed real-time tracking of the marathon, went for $3.99, and shot to No. 1 Sunday during the race. The NBA Game Time app also hit No. 1 on Nov. 1, with its ability to receive videos, highlights, radio feeds advertising free. Distimo said the largest portion of in-app purchases are in games (3.8 percent) and social networking apps (4.3 percent).

Meanwhile, the iPad, with its generally higher price points for paid apps, isn’t as lucrative for freemium apps compared to paid apps. None of the top 100 apps on the top-grossing list are free though there are free iPad apps with in-app purchases.

The growth of the freemium model on the iPhone shouldn’t be a surprise. Freemium has been popular in Asia for years with pioneers like Nexon leading the way, and has also been the model of choice for Facebook games, helping Zynga achieve a $5.5 billion valuation. IPhone games publisher Ngmoco switched early to a freemium model and hit No. 1 on the top-grossing chart with Eliminate Pro, a shooter game. Now success is becoming much more common for app developers as the pace of freemium app adoption picks up.

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