Juniper Research: App Developers Should Focus on the Freemium Model

A report by Juniper Research said global income from mobile in-game purchases totaled $2.1 billion in 2011 and is predicted to grow to $4.8 billion by 2016. This suggests that the freemium model (free versions of an app) will become even more important as developers use it to generate revenue.

Users are more likely to download a free app over one they have to buy. Then app makers can lure users to pay up for extra currency or items. Charlotte Miller, author of the Juniper report, said freemium developers don’t have to be concerned about losing revenue to piracy.  They can still verify purchases for goods on their own servers.

The Juniper report also predicts that by 2016, social and casual games will account for most of mobile downloads. Mobile game downloads on tablets will represent one-third of mobile gaming revenues and mobile games revenues on feature phones will be reduced by half.

Here’s how popular mobile gaming stocks are reacting to the report:

Zynga, Inc. (NASDAQ:ZNGA): ZNGA shares recently traded at $8.31, up $0.31, or 3.88%. They have traded in a 52-week range of $7.97 to $11.50. Volume today was 1,813,245 shares versus a 3-month average volume of 13,603,900 shares. The company’s trailing P/E is 112.28, while trailing earnings are $0.07 per share.

Apple Inc. (NASDAQ:AAPL): AAPL shares recently traded at $424.60, up $2.87, or 0.68%. They have traded in a 52-week range of $310.50 to $427.75. Volume today was 3,639,420 shares versus a 3-month average volume of 14,694,300 shares. The company’s trailing P/E is 15.34, while trailing earnings are $27.68 per share.

Activision Blizzard, Inc. (NASDAQ:ATVI): ATVI shares recently traded at $12.47, up $0.27, or 2.21%. They have traded in a 52-week range of $10.40 to $14.40. Volume today was 2,183,967 shares versus a 3-month average volume of 10,658,800 shares. The company’s trailing P/E is 19.88, while trailing earnings are $0.63 per share.

Electronic Arts Inc. (NASDAQ:ERTS): ERTS shares recently traded at $N/A,. They have traded in a 52-week range of $ to $. Volume today was shares versus a 3-month average volume of shares. The company’s trailing P/E is , while trailing earnings are $ per share.