Saving Gaming From the Freemium Tyranny

It seems like every time there is a story about gaming monetization, more and more mobile games go the free-to-play, in-game purchase route. Still, when an entire episode of a satirical adult cartoon South Park is dedicated to exploring the…

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Vlad Solodovnyk
25 Sep, 2015

Saving Gaming From the Freemium Tyranny

It seems like every time there is a story about gaming monetization, more and more mobile games go the free-to-play, in-game purchase route. Still, when an entire episode of a satirical adult cartoon South Park is dedicated to exploring the darker side of free-to-play game monetization strategy, you know not all is well in the world of gaming.

Read our related post on: How to Monetize Casual Games

Why Freemium Model Will Not Save Gaming

Gamers have a love-and-hate relationship with freemium games. Everybody loves free stuff, so game developers are yielding to the siren call, giving away their games for “free”. Yet studios do need to pay the bills and earn a living somehow, so they create unnecessary barriers that spoil the game experience with all flavors of mandatory and optional in-app purchases.

Little wonder then that South Park protagonists portray the freemium monetization model as a greedy money grab pushing gamers to pay during every step of playing the mobile game:

South Park new freemium game model

But in the end, doesn’t everybody win, you might think: game developers get paid, while only the diehard gamers spending real money, with the remaining casual gamers reaping the benefits of genuinely free entertainment?

But that’s simply not true when you consider that half of a game’s in-app purchase revenue comes from just 0.15% of players according to Swerve, an app analytics company. Hunting for the most invested gamers (pun intended) might seem like a viable strategy, but with rising competition and game marketing costs, attracting approximately 667 mildly dissatisfied players to get that one big spender is hardly a wise financial decision.

Freemium Avoidance Insights Gleaned from Elsewhere

Can this gaming industry trend of seemingly free and subpar games be avoided? After all, there seems to be no use resisting the freemium-ization trend. Yet some categories have been quite successful at avoiding the freemium trap. Consider this slightly outdated chart:

Infographic: Freemium is the No.1 Pricing Strategy in Most App Categories | Statista

Apps in the Navigation, Productivity and Education categories have been successfully avoiding the advance of both Free-to-Download and In-App Purchases – compared with Games, that is. While monetizing mobile games will likely remain an ongoing industry challenge, strategies to reduce the potential for abuse while building a sustainable revenue model have already been emerging unnoticed.

Consider the segment of mobile apps and games geared towards children.

What Children Teach Us About App Monetization

When it comes to games for children, monetizing with the free-to-play model is an ethical minefield, making other options relatively more appealing.

“Kids apps don’t have to be free to be successful.”
– Clark Stacey, CEO, Wildworks

In fact, most of the top-grossing apps geared towards children are paid and don’t offer in-app purchases. As parents are often the main decision makers for children’s apps, they mostly avoid apps where in-app purchases can be identified (to remove the risk of children accidentally spending large sums of real money on virtual items), often paying over $2 for a mobile app for their child, while never paying more than 99 cents for apps they use themselves.

Tips for Non-Freemium Monetization

The one case where developers should not be afraid to charge for their app is when their studio is aligned with a well-known brand. Getting there requires having a long-term strategy.

One option is to create an initial free and hassle-free app to serve as a hub, or a storefront for your future games. It’s much easier to suggest new apps or content within an existing app than to start from scratch with every title.

Another option could be explored through alliances with game developers, offering cooperation on paid follow-up titles to well known, but not commercially successful titles.

Takeaways on Ethical Monetization

Customers don’t have to be young in order for game developers to treat them ethically. Considering the following insights from the world of financially successful game apps for children that you can explore applying to gaming apps targeted for all ages:

    1. Most successful apps in the Kids section are paid and don’t offer in-app purchases
    2. Consider a hub-app strategy with game expansions that allows for better discovery than the App Store only
    3. Communicate values in addition to fun: education, development, collaboration

The state when neither the players nor the developers are happy with the dead end direction the game industry is moving to isn’t sustainable in the long run. Adopting creative approaches from other verticals is not just welcome, but urgent. Feel free to share additional ways on how the gaming industry can evolve away from the mediocrity in the comments below.

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About the Author

Vlad is a writer with over 10 years of experience in the IT industry. He thinks of technology as a tool and likes to write about the ways people choose to use different tools, often with unexpected consequences.

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