Definition - What does In-Game Purchases mean?
In-game purchases refer to items or points that a player can buy for use within a virtual world to improve a character or enhance the playing experience. The virtual goods that the player receives in exchange for real-world money are non-physical and are generally created by the game's producers. In-game purchases are the primary means by which free-to-play games produce revenue for their makers.
Techopedia explains In-Game Purchases
Revenue from in-game purchases provides incentive for developers to update a game frequently, expanding play options as well as the products available. This develop-as-you-go approach contrasts with original online games such as massively multiplayer online role-playing games, where a complete virtual world was created by a team and then launched, and players pay a subscription or upfront fee for the client software. An increasing number of online games have been adding in-game purchases because virtual goods from such games are already being sold in a black market that occurs over auction sites. This black market exchange of virtual goods has alerted developers to the considerable demand for such products.