Global In-App Purchase Market Size Analysis Report - Market Share, Forecast Trends and Outlook (2024-2032)

In-App Purchase Market Analysis

The demand for in-app purchases is increasing globally. In developing countries, the growth in the middle-class population, increasing urbanisation, rise in literacy level, and an increase in the tech-savvy younger consumer are increasing the consumption rate of in-app purchases in these regions. Moreover, the increase in smartphone users across the globe and the rise in technological advancements in smartphones are further leading to the growth of the in-app purchase market. The development of digital wallets has also accelerated the pace of development of the in-app purchase industry as the evolution of technology and innovations has made the payment process smoother.

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In-App Purchase Market Trends

Rise of Online Traffic

The growing online traffic is expected to attract investors and clients for advertisements and the promotion of products and services. As per the data from the World Economic Forum, the use of smartphones for shopping increased more than twice from 2018 to 2021, which further fuelled online traffic as well as in-app purchase market opportunities, specifically in streaming and gaming services.

Companies are spending a lot on advertising through digital media. Social media platforms such as Instagram, Facebook, LinkedIn, and WhatsApp are popular among millennials, which serves as an opportunity for investors to promote their business. Thus, the addition of new games and innovation in technology and a surge in expenditure on digital advertisement are expected to provide lucrative opportunities for the market expansion of in-app purchases during the forecast period.

Burgeoning Popularity of In-App Purchases Post Pandemic

Due to the COVID-19 pandemic in 2020, a significant number of businesses are still coping with operational challenges. However, the pandemic had a positive impact on the growth of the in-app purchase industry. During the global lockdowns amidst the pandemic, the number of end users increased, generating traffic through subscriptions to video streaming, gaming, and other health and fitness applications. These mobile applications offer exciting features and functionalities, along with discounts on subscriptions to keep the traffic in place, which is expected to drive the demand for in-app purchases as well in the coming years.

Moreover, major players in the market are introducing new applications to the users and are introducing different strategies to upsurge their revenue and market share, thereby creating further opportunities for market growth. As per the data from Statistics Canada, post-pandemic there has been a rise in in-store shopping again, however mobile and in-app purchases still remain extremely popular among customers.

Industry News

August 2024

Apple announced that from November onwards it has mandated Patreon to use the company’s in-app purchasing system for its iOS app.

May 2024

Google announced that it is introducing a new in-app payment feature for its in-app purchases in the Google Store which will allow users to create a link that they can send to anyone for making payment.

Opportunities in In-App Purchase Market

Mobile games continue to boost in-app purchases with the loyal gamer base, specifically whale users, contributing significantly to revenue generation. Whale users are those who spend significant amounts of money on in-app purchases, especially in free-to-play (F2P) models. These users make up a small percentage of gamers but contribute more than half of revenue to in-app purchases, which can boost the in-app purchase market revenue. For instance, Optimove, a company which targets customer retention tracked around 235 social gamers over 18 months and found that only one per cent of players, which is whales, bring in 30 per cent of social game revenue.

Tapjoy, an app monetisation platform found in its research that the top 10 percent of an app’s spenders contribute around 70 percent to the in-app purchase (IAP) revenue, which can lead several marketers to focus solely on these players by building long-term engagement and offering a rewarding experience to these players.

In-App Purchase Market Restraints

Digital illiteracy and limited digital infrastructure might hamper the growth of the market. For instance, in rural and underserved communities, a lack of digital literacy prevents consumers from using mobile apps to their full potential. It also includes a large number of older working adults who may not be tech-savvy. The World Bank also reported that in sub-Saharan Africa, many regions lack appropriate digital infrastructure, which can prevent access to digital services and affect the in-app purchase market value.

Apple updated its App Store policy in 2024 to allow the use of external payment methods, to comply with a 2021 federal court order. The updated policy allows developers to link additional payment methods along with Apple for in-app purchases, however, the company is still estimated to gain a 27% cut of all transactions. This decision led several developers to push against its new policy and can negatively impact the overall in-app purchases.

Market Dynamics

Short video apps such as TikTok have gained significant popularity in recent years, surpassing 1.04 billion active users across the world in May 2024. Several users are spending greatly on virtual goods and other digital content, which makes it an up-and-coming app for in-app purchases. Out of 3.96 billion monthly active social media users worldwide, around 26.26% used TikTok at least once a month.

As per the in-app purchase industry analysis, more than half of TikTok’s monthly active users are based in Asia-Pacific, the Middle East and Africa, which creates a positive landscape for in-app purchases in these regions. As per the data from AppsFlyer, around 60% of users who make an initial in-app purchase tend to become repeat customers, which is especially prevalent in short content apps that offer superior customer engagement. According to the data from Sensor Tower Store Intelligence, TikTok achieved more than USD 15 billion in lifetime global consumer spending across the iOS App Store and Google Play.

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In-App Purchase Industry Segmentation

“Global In-App Purchase Market Report and Forecast 2024-2032” offers a detailed analysis of the market based on the following segments:

In-app purchase refers to purchasing goods, services, and additional functions or features from an application on a mobile device like smartphones, tablets, etc. The users of in-app purchases have access to additional functions. An in-app purchase is any fee (other than the initial cost of downloading the program, if one exists) that an app may charge. Many in-app purchases are voluntary and provide users with new capabilities; others function as subscriptions and require users to sign up and pay a price to access the app, sometimes after a free trial period.

Based on operating system, the industry can be divided into:

• Android
• iOS
• Others 

The major types of in-app purchase are:

• Consumable
• Non-Consumable
• Subscription

The market can be broadly categorised on the basis of app category into:

• Gaming
• Entertainment and Music 
• Health and Fitness 
• Travel and Hospitality 
• Retail and E-Commerce
• Education and Learning 
• Others 

By region, the market is divided into:

• Europe
• North America
• Latin America
• Asia Pacific
• Middle East and Africa

In-App Purchase Market Share

By Operating System Insights

The iOS segment accounted for a significant market share due to the dominance of iPhones in developed countries as well as its growing popularity in developing countries. Around 52% of Apple’s revenue was from its iPhone sales in 2023 due to its high-end and secure interface, which boosted the in-app purchase demand. iOS also allows the seamless purchase of its products and services through its app store as well as the easy provision of opting out of a service through cancellation. The Android segment is also gaining prominence in the market due to the cost-effective pricing of Android phones as well as the easy integration of Google Play in-app billing with its system.

By Type Insights

Subscription-based purchases account for a major market share as subscriptions create a steady stream of revenue, offering a more reliable and sustainable financial structure for app developers and businesses that can enhance the demand of in-app purchase market. This model has gained significant traction in end-use sectors such as streaming, fitness, and productivity, among others. The shift towards subscription-based models is largely fuelled by consumers' desire for continuous access to premium features, content, or services, which boosts user engagement and promotes regular payments.

By App Category Insights

Gaming applications account for a substantial market share as a large number of users are leveraging smartphones and tablets for playing games. For instance, in 2023, there were around 2.8 billion mobile gamers, constituting 83% of all gamers. People are readily relying on smartphones for their day-to-day tasks as well as entertainment purposes such as streaming shows and playing games. The in-app purchase feature allows mobile phone users to purchase premium or additional content related to games, which can boost their gaming experience.

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In-App Purchase Market Regional Analysis

North America In-App Purchase Market Outlook

Increased penetration of the internet and advanced digital infrastructure in the region are two of the major factors boosting the market growth. Consumers in this region are more inclined to purchase apps with premium content, specifically in the gaming and streaming sectors, which can boost the in-app purchase demand growth. This factor is largely driven by the favourable market of iOS users in the region. In this region, iOS account for around 72% market share which offers ample opportunities for in-app purchases from its App Store.

Additionally, US consumers are also readily spending on digital services which further allows the market players to invest in enhancing their opportunities. Streaming services can benefit from various IAP options, such as subscriptions and pay-per-view content, which cater to varying user preferences.

Europe In-App Purchase Market Drivers

The rising availability of smartphones along with purchasing digital content via mobile apps is boosting the market growth in the region. As per the in-app purchase industry analysis, gaming and health and fitness apps are becoming popular in countries such as Germany, France, and the United Kingdom, which creates new opportunities for monetisation. As per the data from Sensor Tower Store Intelligence data, installation of Health and Fitness apps in Europe reached around 290 million in 2021 in the region. Meditation and Sleep apps, Headspace and Calm were some of the most prominent health and fitness apps in the region.

Asia Pacific In-App Purchase Market Dynamics

The Asia Pacific region is dominating the in-app purchase industry and is expected to grow further in the forecast period. The rapid adoption of the latest technology in mobile applications is one of the major factors affecting the in-app purchase market forecast. Within the Asia Pacific, China is expected to present lucrative growth opportunities for the market as the country is considered a hub for technology due to the prominent presence of key players in the electronics sectors. Further, emerging economies, such as India and China, have a high penetration of smartphones along with increasing 4G and 5G connectivity, which are further projected to aid the market growth of in-app purchases.

Middle East and Africa In-App Purchase Market Trends

Increased internet access and the growth of the young and tech-savvy population in the region are aiding the market growth. The region’s mobile-first approach, along with the popularity of social media and gaming apps is also contributing to app-based spending and eventually the in-app purchase market expansion. As per the latest data, there were around 36.8 million internet users in Saudi Arabia with a steady growth of internet access in the past three years. Around 97.3% of the internet users in the country leverage mobile devices for the internet, which has boosted the opportunities for in-app purchases in the region.

Latin America In-App Purchase Market Growth

Countries such as Brazil and Mexico are leading the market growth in the region. Due to the rise of gaming and streaming culture, there has been a rise in mobile payment systems. In 2022, there were 316 million gamers in the region, accounting for a quarter of the world's gaming population, which has boosted the demand for purchases of in-app premium content and contributed to the in-app purchase market development.  Additionally, there were around 765 active streaming platforms in the region which can increase the overall in-app purchases.

Innovative Startups in In-App Purchase Market

As AR and VR technologies become more accessible, startups are exploring ways to integrate in-app purchases (IAPs) into immersive experiences. For instance, users might purchase virtual items to enhance their avatars or unlock exclusive AR filters. Some startups use this opportunity by offering AR-based games and experiences that include additional purchasable content. Furthermore, some of these startups are investigating the use of non-fungible tokens (NFTs) and blockchain technology to improve digital ownership associated with in-app purchases. This enables users to obtain unique digital assets, such as collectables, which they can own and potentially resell, thus opening up new means of revenue.

Paddle

Paddle is a comprehensive platform in in-app purchase market designed to help software companies manage their subscription billing, payment processing, and in-app purchases. It provides an efficient checkout experience that supports various payment methods, currencies, and localised pricing. By handling complex tasks such as global tax compliance and recurring billing, Paddle enables companies to focus on their growth goals while ensuring a seamless purchasing experience for their customers.

RevenueCat

RevenueCat delivers a powerful infrastructure for managing in-app subscriptions across various platforms such as iOS, Android, and web, among others. The platform integrates smoothly with app stores to streamline the setup of in-app purchases, analytics, and subscription management. Furthermore, the company offers tools for tracking user data and optimising monetisation strategies, allowing developers to focus on producing exceptional app experiences rather than managing backend subscription processes.

Competitive Landscape

The report presents a detailed analysis of the following key players in the global in-app purchase market, looking into their capacity, market shares, and latest developments like capacity expansions, plant turnarounds, and mergers and acquisitions. Companies are leveraging data analytics and AI to provide customised in-app purchase options that align with user behaviour and preferences. By understanding individual user values, these companies can deliver personalised offers that significantly increase the probability of a transaction and can enhance their revenue.

Key Industry Players

Apple Inc.

Founded in 1976, the company is known for its products such as iPhone, iPad, Mac, Apple Watch, and Apple TV, among others. It offers high-quality hardware and software integration as well as high-end security to its users.

Google LLC

Founded in 1998 and based in California, the United States, the company is a technology leader best known for its search engine. Its product portfolio includes YouTube, Google Maps, Gmail, and Google Photos, among others.

Tencent Holdings Ltd.

Founded in 1998 and based in Shenzhen, China, the company offers its products and services in social media, entertainment, gaming, and financial services, among other sectors. The company is also known for investing in gaming companies such as Riot Games and Epic Games, among others.

Other major players in the market are Netflix Inc., Spotify Technology S.A., and Amazon.com, Inc., among others.

The comprehensive report looks into the macro and micro aspects of the in-app purchase market. The EMR report gives an in-depth insight into the market by providing a SWOT analysis as well as an analysis of Porter’s Five Forces model.

Recent Developments

February 2024

PhonePe announced the launch of its own app store, known as Indus Appstore, which can compete with Google PlayStore and Apple App Store.

January 2024

Netflix announced that it plans to introduce in-app purchases as well as ads to its games to offer game creators a form of monetisation.