Have you ever downloaded a free game on your iPhone and wondered how in the world the developer could possibly be making money with it? As it turns out, the so-called “freemium” business model is actually far more lucrative than charging money, at least for mobile.
The New York Times has an interesting article that throws back the curtain on so-called “freemium” games -- the ones you can download free of charge but can ultimately cost users far more in the long run than if they had just paid up front. While free games might come with the stigma “of being low quality or full of annoying ads,” it turns out they’re a great way to hook new users -- and keep them coming back.
“When you tell a friend about it and they go to the App Store and it’s free, they download it without thinking about it,” explains Natalia Luckyanova, half of the husband and wife team that created the iOS game Temple Run. “Then there’s stickiness and the addictiveness and people talking about it.”
Luckyanova and husband Keith Shepherd released Temple Run in the App Store last August as a 99-cent game where “players must stay a step ahead of angry apes while avoiding booby traps and collecting coins.” While the first month of sales were decent, it was nothing compared to what happened in September, when Temple Run was offered as a freebie through the Free App a Day website.
Since going free, the app has topped 40 million downloads, and Luckyanova says upwards of 13 million people play Tempe Run at least once every day. Currently perched at Number 14 on Apple’s top-grossing charts, these “freemium” games bait users who might otherwise not spend even 99 cents on a given title -- and once they’re hooked, they’ll spend money in “a virtual store to buy new characters, different backdrops and power-ups, or special boosters.”
The concept has proven wildly successful for Zynga, the creators of FarmVille who has expanded beyond their former comfort zone with Facebook and into a $1 billion initial public offering -- proving that the drug dealer’s mantra of “the first one’s free” can apply to other types of business as well.
Follow this article’s author, J.R. Bookwalter on Twitter
(Image courtesy of The New York Times)
Jamie
March 19, 2012 at 4:17pm
I disagree - it's actually a way to artificially inflate the price of games, and I think it's irritating as hell; in the days of level or time limited demos, at least what was presented was feature complete. Add up how much money you've spent to get a 'complete' version of a lot of freemium titles compared to what the average game costs outright and you'll quickly see that you are being gouged. I am really tired of crippled games and would love the option to pay a one time price with freemium titles instead of being nickled and dimed to death.
Godzdude
March 19, 2012 at 4:51pm
@Jamie This wasn't saying that Freemium games were good for consumers. It is saying they are good for the developers, who make money from them...
ebrainer1
March 19, 2012 at 9:12am
What's interesting is the changing tone of the freemium business model. It used to be all about paying to avoid restrictions, limits, or blandness. Now developers are just putting out decent to good products, and you can pay to "sweeten" them. I think this is better for both developers and consumers since the developers can focus on a single product instead of "lite" and "full" while the consumers get products that start out being great for free.
