We have nearly 7000 daily downloads, something like a 15% 30-day retention rate that absolutely blows the doors off of our competition, and still make very little of our revenue off of that IAP. Even some of our longest players continue to look at ads, because $1.99 seems too steep to them. The best business advice (and scummiest feeling advice) we get is that we're not milking our "whales" properly.
We survive, basically, because of volume - to make it in our business you have to have at least 50,000 daily users. And that's a minimum.
We'll continue to make games as long as we're profitable and can pay employees, but the 30% to Apple/Google, the incredibly low "ARPU" (avg revenue per user) and high costs of doing business have us constantly looking to where we might be able to leverage some of the tech we've built in other markets.
Source: http://techcrunch.com/2014/07/21/the-majority-of-todays-app-...
Several people (a consultant I hired and a few clients) have encouraged me to develop iOS apps. This was based on anecdata, but I eventually convinced a client to hire me to build a simple one as a proof of concept. We found that interest in the app fizzled out fast and I learned that I didn't enjoy standalone business application development much. I didn't rule it out as a hobby though.
I am sure people will cite a zillion examples of businesses that make their living from iOS apps, but increasingly this appears more like winning the lotto, akin to 'making it' in Hollywood, than as a viable business model for all comers.
The reliable way to make a living as an iOS developer is to develop for a bigger company that needs an app as a side-show.