Why Do Games Have In-App Purchases? A Deep Dive

The simple answer is that games have in-app purchases (IAPs) to generate revenue. This allows developers to offer the game itself for free (or at a lower initial price), broadening the potential audience and employing various monetization strategies throughout the user’s engagement. This model, prevalent across both mobile and increasingly PC and console gaming, provides a continuous revenue stream beyond the initial sale, supporting ongoing development, updates, and server maintenance. It’s a complex ecosystem that blends accessibility with the potential for sustained profitability.

The Evolution of Game Monetization

For decades, the gaming industry relied on a simple model: you bought a game, and that was it. However, the advent of mobile gaming and digital distribution radically changed the landscape. Suddenly, games could be distributed globally at minimal cost, but the traditional upfront purchase model limited accessibility, especially in markets sensitive to price.

Free-to-play (F2P) emerged as a solution. By offering the core game experience for free, developers could attract a massive player base. The challenge then became how to monetize that player base effectively, leading to the widespread adoption of in-app purchases. This allowed developers to offer the app for free on the App Store (for iOS) and Google Play (for Android). Then, within the application, they can upsell and advertise paid upgrades, locked features, special items, and other premium offers.

Understanding Different Types of In-App Purchases

IAPs aren’t a monolithic entity. They come in several flavors, each designed to appeal to different player motivations and spending habits:

Consumable Purchases

These are items or resources that can be used up and then repurchased. Examples include:

• Virtual currency: Gems, coins, or other in-game currencies used to buy items or speed up progress.
• Health potions: Restores health points in a game.
• Boosts: Temporary enhancements to a character’s abilities or resource production.

The key to consumables is the continuous cycle of depletion and replenishment, encouraging repeated purchases.

Non-Consumable Purchases

These are one-time purchases that permanently unlock features or content. Examples include:

• Ad removal: Eliminates all in-game advertising.
• New levels or chapters: Unlocks additional content beyond the initial game experience.
• Premium characters or items: Offers unique advantages or aesthetic customization.

Non-consumables provide lasting value and often represent a significant commitment from the player. Once a user buys a non-consumable purchase, it’s permanently available to them. It does not expire with time or use. Non-consumable purchases are often premium features.

Subscriptions

This model provides ongoing access to content, services, or features for a recurring fee. Examples include:

• Monthly VIP access: Offers daily bonuses, exclusive items, and other perks.
• Game streaming services: Provides access to a library of games.
• Premium online features: Unlocks advanced multiplayer options or cloud storage.

Subscriptions offer a predictable revenue stream for developers and ongoing value for players. Users are automatically charged every pay period until they cancel the subscription.

Loot Boxes

Loot boxes are controversial items that contain a randomized selection of in-game items. While technically a consumable purchase, the element of chance adds a gambling-like quality, raising ethical concerns.

• Character skins: Alter the appearance of characters.
• Weapon modifications: Enhance weapon performance.
• Rare or powerful items: Provide significant gameplay advantages.

The appeal of loot boxes lies in the potential to acquire rare and valuable items, but the inherent randomness can lead to frustration and excessive spending.

The Psychology Behind In-App Purchases

The success of IAPs hinges on understanding player psychology. Developers employ various techniques to encourage spending:

• Scarcity: Limited-time offers or rare items create a sense of urgency and FOMO (fear of missing out).
• Convenience: IAPs can bypass grind or waiting times, providing instant gratification.
• Progression: Players may feel compelled to purchase items to overcome difficult challenges or reach the next level. Some games specifically wait for a turning point in a game when players are in need of assistance to move on to the next level.
• Social pressure: Seeing other players with premium items can create a desire to emulate their success or style.
• Loss aversion: Preventing the loss of a winning streak or valuable item can be a powerful motivator for spending.

Understanding these psychological triggers is crucial for both developers and players to navigate the IAP landscape responsibly.

Ethical Considerations and Best Practices

While IAPs can be a legitimate revenue model, they also raise ethical concerns, particularly regarding:

• Predatory monetization: Designing games to be deliberately frustrating or exploitative to encourage spending.
• Gambling mechanics: Loot boxes and other randomized rewards can be addictive.
• Children and vulnerable players: Protecting minors from excessive spending is paramount.

Responsible developers adopt best practices such as:

• Transparency: Clearly communicating the cost and odds of IAPs.
• Fair pricing: Offering reasonable value for purchased items.
• Balancing gameplay: Ensuring that paying players don’t have an unfair advantage over free players.
• Parental controls: Providing tools to limit spending by children.

The Future of Game Monetization

The debate surrounding IAPs is ongoing. Alternative models are emerging, such as:

• Subscription services: Offering access to a library of games for a monthly fee.
• Cosmetic-only IAPs: Focusing on aesthetic customization without affecting gameplay balance.
• Hybrid models: Combining upfront purchases with optional IAPs.

The future of game monetization will likely involve a mix of approaches, driven by evolving player preferences and regulatory pressures. As research from organizations like the Games Learning Society continues to inform game design and educational practices, the future of monetization may also incorporate innovative approaches linked to learning and engagement. You can find more about this at GamesLearningSociety.org.

Ultimately, the key to successful and sustainable game monetization is to create a system that is both profitable for developers and fair to players. In-app purchases generate revenue for the publishers, and players get additional value from their app or game.

Frequently Asked Questions (FAQs)

1. Do I have to pay when it says “In-App Purchases”?

Yes, if you choose to buy something within the app. The “In-App Purchases” label simply indicates that the app offers additional items or features for purchase, but using the core app itself might be free. For both platforms, purchases are charged to the user’s linked account – their Apple ID or Google Play account.

2. Are in-app purchases worth it?

It depends on your individual needs and preferences. If you value the benefits they provide, such as convenience, enhanced features, or faster progression, then they can be worth the cost. In a way, in-app purchases’ innate ability to allow users to customize their app experience to match their preferences and style means that they are even better than subscriptions, where users pay for a big bundle of premium content and/or services, which, however, is not always needed or wanted in its entirety.

3. Are in-app purchases permanent?

It depends on the type of purchase. Non-consumable purchases are typically permanent, while consumable purchases are used up and need to be repurchased.

4. What does turning off in-app purchases do?

It prevents you or others using your device from making any purchases within apps. This is a useful feature for managing spending or preventing accidental purchases, especially for kids. Turning off in-app purchases can help you resist the temptation to spend money while using apps, and it can keep kids from buying fictional things with real-life money.

5. Are free apps really free?

Not always. Just because an app is free to download doesn’t mean it will not cost you. Remember the small line of text next to the app listing that says “In-app purchases”. Apps in all categories on the App Store and Google Play have in-app purchases. These could be game add-ons, subscriptions, premium features, and more.

6. How do I avoid Apple in-app purchases?

You can disable in-app purchases in your device settings. Tap Content & Privacy Restrictions. If asked, enter your passcode, then turn on Content & Privacy Restrictions. Tap iTunes & App Store Purchases. Tap In-app Purchases and set to Don’t Allow.

7. How can I tell if an app is free?

While installing the application from Google Play Store you see a green ‘Install’ button on the app, which means that the app is free, though it might include some in-app purchases, as per the features. On the other hand, when the green button has a cost marked on it, it means that it is a paid app.

8. Why does Apple charge more for in-app purchases in some regions?

Developers in turn set the rate for their apps and their in-app purchases. They look at their costs, including their taxes, fees for distribution (for things like selling in the Apple App Store or the Android Store).

9. Why do I need a payment method for free apps?

Apple requiring a payment method, even for free apps, is not an uncommon observation. Some possible reasons are outlined in the links below such as outstanding balance, an issue with a payment method you have currently entered, or ongoing subscriptions.

10. How much does Apple keep from in-app purchases?

“On the iOS, iPadOS, watchOS, and macOS App Store, Apple charges a 30% fee for apps and in-app purchases.

11. Is it safe to buy in-game apps?

It’s generally safe if you’re using a secure network and a trusted payment method. However, be cautious about using unsecured Wi-Fi networks, and be aware of the potential for accidental or unauthorized purchases. If you press purchase while on an unsecure Wi-Fi network, you could be unknowingly making your information easier for hackers to access.

12. Will I lose my in-app purchases if I delete an app?

Not necessarily. Tip: If you delete a Play app, your purchases don’t go away. You can add the app back to your phone later. Most platforms allow you to restore purchases associated with your account. However, this can vary depending on the app and platform.

13. Why can’t I use my Apple account for in-app purchases?

Make sure that you’re signed in with the same Apple ID that you used to make the purchase. Make sure that in-app purchases are allowed on your device. Restart your device: Restart your iPhone.

14. Can you get money back from in-app purchases?

If it’s been less than 48 hours since you bought an app or made an in-app purchase: You can request a refund through Google Play. If you bought movies, books, or other content: You may be able to request a refund more than 48 hours after your purchase.

15. Are paid apps safer than free apps?

Paid apps can be more secure. Many free apps — that is, those that aren’t free trial versions of premium apps — are developed by individuals or small teams working in their spare time. They may not have the resources or expertise to properly test their app for security vulnerabilities. However, safety depends on the developer’s practices and security measures, regardless of whether the app is free or paid.