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In-App Purchases See Germany's Smartphone Games Sector Soar

While sales of paid-for games have declined, free game 'virtual merchandise' micro-payments have rocketed.

Photo: Pokémon Go: A games-changer for smartphone entertainment.
Pokémon Go: A games-changer for smartphone entertainment.
Photo: Pokémon Go: A games-changer for smartphone entertainment.
Pokémon Go: A games-changer for smartphone entertainment.

The value of Germany's smartphones and tablets' games market soared by some 27% over the first six months of the year. The total value of the sector, combining all of the revenue from the variety of apps concerned, was some €208 million (US$233 million).

By comparison, the total spend on game apps during the first six months of 2015 was €164 million. The growth in the value of the sector has largely been attributed to the sharp rise on spend on 'virtual merchandise'.

With purchases taking place through a series of micro-transactions (in-app purchases), the turnover of this segment grew by 20% year-on-year, reaching a total of €317 million. This growth was particularly notable with regard to the supposedly free-to-play apps.

Typically, while players can access such games free-of-charge, payments are required when looking to play additional game levels, customising personal icons or when enhancing the game character's abilities or attributes. In sharp contrast, actual payments to play games per se actually decreased, falling from €11 million to €9 million.

Increasingly, games apps are seen as an important means of highlighting the technical advances of new smartphones or tablets, with their fast-rendering graphics often used as a demonstration of improved performance. At the same time, the success of such games as Pokémon Go has seen smartphones and tablets clearly established as the primary gaming platforms on a global basis and, in particular, within Germany. It is now anticipated that the imminent arrival of virtual reality as a mainstream element in game playing will further cement the key role of smartphones in the sector.

For the first time last year, figures for the amount spent by gamers on subscriptions to online networks – notably PlayStation Plus and Xbox Live Gold – were recorded. In the first six months of 2015, the value of such subscriptions was €21 million. This year, the total January-June spend was €51 million, an increase of some 144%.

Elisabeth Steinacher, Frankfurt Office

Content provided by Picture: HKTDC Research
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