Smartphone users on the top five app platforms are spending more on paid apps but tough competition means that average revenue per paid app is declining, according to a report from research2guidance.
Users of Apple’s App Store, Google Play, BlackBerry App World, Windows Phone Store and Nokia Ovi Store spent $8 billion on paid apps in 2012, a 27 percent increase compared to 2011.
However, the company’s Global Smartphone Apps Market study found that average revenue for paid apps has fallen from $26,720 in 2011 to $19,560 in 2012, a 27 percent drop.
The main driver behind the development of paid mobile apps is the growing number of smartphone users with stores pre-installed on devices.
But research2guidance suggested that supply of apps is now exceeding demand, meaning revenue is spread more thinly between developers.
The analyst group said this trend may ultimately see paid content become an unprofitable business model, as has happened on the internet, where “in general, paid content has proved to be not anymore a lucrative business model”.
Developers are moving away from paid apps, preferring to monetise their products with in-app advertising and purchases, m-commerce and bundling free apps with other paid hardware or services.