In-application purchases to surpass pay-per-download revenue

Mobile application revenues from in-app purchases will pass pay-per-download revenues in the year 2012, but the growth could soon end if applications developers fail to develop creative applications.

The total mobile app revenues from pay-per-download, in-app purchase, subscriptions, and in-app advertising will soar over the next five years, growing from $8.5 billion in 2011 to $46 billion in 2016.

In-app purchase revenue growth has been hampered by Google. The company did not introduce in-app purchase to Android Market until July 2011 and only recently added 17 mostly-European countries in December 2011. Also the Pay-per-download is not an option in all markets for Android ,and subscription billing is not offered at all.

''The vast majority of current in-app revenue is being generated by a tiny percentage of people who are highly-committed mobile game players. Google is literally holding back the growth of mobile application monetization and we are keying many of our mobile app revenue forecasts around our guess of Google's plans,'' said Mark Beccue, senior analyst, mobile services.