In-App Purchase Market Size, Share & Trends Analysis Report By Operating System (Android, iOS, Others), By Type (Consumable, Non-Consumable, Subscription), By App Category (Gaming, Entertainment and Music, Health and Fitness, Travel and Hospitality, Retail and E-Commerce, Education and Learning, Others) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2024-2032

Market Overview

The global in-app purchase market size was valued at USD 158.43 billion in 2023. It is expected to reach USD 773.78 billion in 2032, growing at a CAGR of 19.27% over the forecast period (2024-2032). The proliferation of smartphones and mobile devices has led to a significant increase in mobile app usage across various sectors, including gaming, entertainment, education, and e-commerce. This widespread adoption creates a large user base for in-app purchases.

The process of purchasing extra features for programs that have been loaded on several different smart devices, mobile phones, and other gadgets is known as an in-app purchase. Initially, the consumer receives the application free from the program's creator. The market's growth is propelled by increased smartphone users worldwide and technological advancements. Additionally, increased data consumption and internet penetration worldwide, as well as a surge in the use of various promotional methods and offers like loyalty programs, fuel market expansion. The market's growth is hampered by digital illiteracy, a lack of adequate digital infrastructure, and company concern regarding creating their applications.

Market Dynamics

Drivers Factors

Low Data Tariffs Along with Increase in Smartphone Penetration

Growing smartphone penetration among the youth and a surge in smartphone users across the globe serves as the primary growth factor of the global in-app purchase market. This is attributed to an increased dependency on smartphones for daily activities and needs such as billing, money transfer, and business updates. Furthermore, online streaming of movies, web serials, games, and music has increased considerably due to a surge in the number of netizens across the globe, which is anticipated to boost the sale of smartphones globally. In addition, the introduction of applications compatible with smartphones is expected to increase the number of viewers of online entertainment service providers such as YouTube, Spotify, Netflix, and Amazon Prime Video, which significantly fuel the growth of the global market.

Increasing In-App Purchase Payments in Developing Countries

Smartphone penetration is significant in emerging economies like India and China, and the number of people using 3G and 4G connectivity is rising. Additionally, both nations have over one-third of the world's population, offering the largest market for in-app purchases. These emerging economies are estimated to be home to 90% of the world's population under 30. Rapid urbanization, rising levels of literacy, and an increase in the number of tech-savvy young people would all contribute to rising consumption rates in emerging economies, which would fuel growth in in-app purchases. Financial services are still insufficient in emerging nations, and financial institutions' geographic reach in outlying areas is constrained.

However, in recent years, technological advancements and innovations have made it economically feasible for financial institutions to provide under- and unbanked populations in emerging countries services like e-banking and mobile money. About two-thirds of the adult population in Kenya, one of the emerging markets, either receives or makes payments via a mobile device, showing the expansion of the in-app purchase industry in developing nations.

Restraints Factors

Digital Illiteracy and Limited Digital Infrastructure

A high level of digital illiteracy during the projection period is anticipated to restrain the in-app purchase market's expansion. This is explained by the fact that digital illiteracy restricts internet usage and hinders smartphone sales, which negatively affects the development of the online entertainment business. According to government officials, around 6.7 million people in France never connected to the internet owing to digital illiteracy. They have limited digital infrastructure facilities to access the internet further act as a key restraint of the online entertainment market.

Additionally, the lack of access to computers and the internet, particularly in schools and colleges, causes a rise in digital illiteracy, which restrains the market's expansion. For instance, only 21.3% of students in 596 government schools across 619 districts in India have access to computers, according to the country's 2018 Annual Status of Education Report (ASER). As a result, these factors severely impact the overall market growth.

Global In-App Purchase Market Opportunities

Rising Expenditure on Digital Advertisement

Investors and customers will likely be drawn to the growing online traffic as businesses market and promote their goods and services. Influence from social media is crucial in expanding the online or digital advertising business. Most social media sites, such as Instagram, LinkedIn, Telegram, and WhatsApp, have seen significant growth in millennial usage. This is a lucrative potential for investors to market their brands on these sites. The benefits of digital media advertising, including higher customer conversion rates, lower marketing costs, segmented and targeted customer bases, improved search engine rankings, increased inbound traffic, and higher customer satisfaction, are also anticipated to open new growth potential for the market shortly.

Regional Analysis

Asia-Pacific Dominates the Global Market

By region, the global in-app purchase market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.

Asia-Pacific is the highest revenue contributor to the global in-app purchase market and is expected to grow at a CAGR of 21.5% during the forecast period. The Asia-Pacific in-app purchase market is analyzed across countries such as China, Japan, India, South Korea, Singapore, Australia, and others. China and Japan, two of the largest Asian economies, are increasing their in-app purchases, and the cost of mobile apps like Liftoff, AppsFlyer, Clickky, and AppLift is falling. According to a 2019 poll by mobile marketers in Asia-Pacific, in-app purchase income rose 11% in 2018 compared to 2017 due to a 50% drop in cost to USD 41.87. Furthermore, many mobile game developers in South East Asia countries such as Indonesia, Malaysia, and Singapore produce qualitative and attractive game products with in-app purchase features. Such development in the gaming industry is propelling the growth of the in-app purchases market in this region.

North America is expected to grow at a CAGR of 16.9%, generating USD 125 billion during the forecast period. North America has been one of the leading regions for mobile applications in recent times and is expected to lead the mobile application market during the forecast period. This is owing to the large IT industry base and the higher number of mobile app developers within this region. Furthermore, according to a survey conducted in North America, revenue earned by mobile application developers in this region was USD 19 million in 2017.

Moreover, vendors in this market have developed innovative in-app purchases to cater to various operational and development demands among the end-user segment, propelling the market's growth. Additionally, the consumer-oriented professional culture and presence of some leading market players boost the market growth in this region. In addition, the rise in the number of gaming and increase in the development of gaming application fuel the market's growth.

The European market is witnessing rapid growth due to an increase in internet connectivity and the number of smartphone users in this region. In addition, the growing gaming and entertainment application usage among users in countries like UK, Germany, and France propels the market's growth. In addition, an increase in revenue of the most popular paid apps like Minecraft or Facetune owing to the use of in-app purchase features among the end users is expected to boost the market growth over the forecast period.

Additionally, European adults spend more money on smartphone games to boost their emotions and cognitive abilities. For instance, according to a mobile consumer survey in 2019, UK's adult male mobile gamers between 25 and 34 years are paying USD 138.99 (£123.72) on average on in-app purchases annually. In addition, the increase in different innovating applications and the rise in penetration of smartphones among end users have led to a high number of app users, propelling the market's growth.

Segmental Analysis

The global in-app purchase market is segmented based on the operating system, type, and app category.

On the Basis of Operating System Analysis

By operating system, the global market is fragmented into Android, iOS, and others.

The iOS segment is the highest contributor to the market and is expected to grow at a CAGR of 18.6% during the forecast period. Apple has created an ecosystem consisting of iTunes, iDevices, and Appstore Apps. The company has also partnered with telecom carriers, giving it a competitive edge. The OS developed by the company not only controls the hardware and operating system but also approves the applications on the AppStore. iOS 6.0 is the current generation of iOS to be introduced with the iPhone and iPad. The company has made Siri available on the iPad and iPod touch devices which acts as a search tool and can communicate in different languages (English, Chinese, French, German, and many more. Such developments drive market growth.

The android OS's rapid growth is supported by its low cost and wide availability. The platform's openness and distribution dominate the Android market through mobile assistant apps. Further enhancing the software, Google is moving to a natural speech recognition feature with "Assistance" that recognizes natural voices in android. With the launch of Android One, Google lowered the price of smartphone development and made it accessible to consumers. Furthermore, android has emerged as one of the most adaptive operating systems because of the efficient working and application appearance in the smartphone and tablet market.

On the Basis of Type Analysis

By type, the global market is segregated into consumable, non-consumable, and subscription.

The subscription segment is the highest contributor to the market and is expected to grow at a CAGR of 20% over the forecast period. Due to its flexibility in billing and payment, ability to change fixed costs into variable costs, simplicity of distribution, and stable and constant revenue stream, the subscription revenue model is gaining popularity. Some examples of subscription-based revenue models are subscriptions for OTT platforms such as Netflix and Amazon Prime and subscriptions for stock images platforms such as shutter stock and image bazaar. Online businesses majorly benefit by choosing subscription-based pricing, as they assure a predictable revenue stream from subscribers for the duration of an agreement. This significantly minimizes uncertainty and frequently gives payment in advance, enabling customers to feel connected to the service and, as a result, increasing the likelihood that they will continue to be loyal to the business. Such factors contribute to segment growth.

Non-consumable in-app purchase mobile application unlocks the application's full potential and gives the user the ability to utilize all the functions of the application. In addition, a non-consumable application provides the ability to remove the advertising pooping while the user is using the application. Most users get frustrated due to advertising banner pooping every time the user is willing to use the application. Thus, many users buy in-app purchases to avoid this advertising banner and enjoy most of the application, driving the market's growth.

On the Basis of App Category Analysis

By app category, the global market is divided into gaming, health and fitness, entertainment and music, travel and hospitality, retail and e-commerce, education and learning, and others.

The gaming segment is the highest contributor to the market and is expected to grow at a CAGR of 18.1% during the forecast period. Gaming is one of the fastest growing segments in the in-app purchase market, owing to the enormous increase in mobile devices and growing addiction to new mobile games across emerging economies. In addition, the rise in mobile gaming applications in developing nations such as China and India drives the market's growth. Mobile games have become one of the significant factors in increasing the development of the in-app purchase market, owing to the rise in the number of mobile gaming applications in developing nations such as China and India. Thus, providing lucrative opportunities for the market.

Impact of covid-19

COVID-19 has positive and negative market consequences, as carbon emissions have decreased globally due to the lockout. COVID-19's reduction in emissions is a short-term benefit. Still, when industries and enterprises attempt to recoup some of their financial losses in the first quarter of the year, carbon emissions will rise dramatically. COVID-19 had a negative impact on global recycling efforts. Countries, notably the United States, have halted or decreased recycling programs to focus on collecting additional domestic waste or because services have been disrupted by the virus.

Also, with industries slowly returning to normalcy following the COVID-19 outbreak, this shift in workplace health and safety is expected to increase due to mandatory social distancing and continuous personal care through sanitization to eliminate even the tiniest possibility of COVID-19 spread. COVID-19 has impacted various companies' revenues, and if the lockdown is lifted, companies will turn their attention to operations to make up for their losses.

Recent Developments

• July 2024 - Apple has given the go-ahead for Fortnite developer Epic Games' third-party app marketplace to open in the EU, following several denials. Epic Games said earlier this year that it intended to bring its main game, Fortnite, back to iOS in Europe, as permitted under the EU's Digital Markets Act (DMA).
• April 2024 - An extra biometric authentication functionality for in-app purchases will be added to the Google Play Store. The new security feature requires the owner to authenticate a purchase both inside an app and on the Google Play Store by using their face or fingerprint impression.