News & Updates

Freemium Games- At what cost?

By James MacTavish / Oct 19, 2014

Freemium Notreally

From the original Nintendo Entertainment System to today’s Sony Playstation 4, gaming predominantly has been about the singular purchase of a game and the experience of unrestricted content. Now with the proliferation of app stores, games have taken on new types of business models with none being more (in)famous as freemium games.

Utilizing a free price point, freemium games make themselves readily available to the masses while offsetting the free entry with restricted content and in app purchases. Fundamentally changing what consumers come to expect and how they play, freemium games also impact developers in interesting ways. With freemium games becoming a predominant force in app stores one would think that the business model of purchasable add-ons would be widely adopted by gamers. In actuality, mobile analytics firm Swrve reported that a woeful 0.15% of all mobile players account for nearly half of the monthly revenue earned from in-game purchases. Swrve also reported that only 1.5% of active players surveyed made any purchase at all. This data showcases that while freemium games garner more attention from the masses, when it comes to consumers letting go of their valuable dollars, freemium games attract only a fraction of the market.

Outside of garnering more exposure and a very small ROI for developers, difficulties of the freemium model are also present in the distribution and sale of games. Console games for instance according to the LA Times carries a $4 charge per $60 game for distribution to stores and outlets. On the other hand Apple and Google’s App Store model skims a flat 30% off any revenue garnered from free and paid apps. This is incredibly hard for a developer to withstand even for a moderately successful game and with flooding of new games to Google and Apples App Stores each day their chances dwindle.

The freemium model isn’t all bad in the world of apps and gaming, but more so should be used judiciously. Developers need to evaluate whether freemium will be the best approach for meeting consumer expectation and being truly competitive with other apps in the market that are similar.

There is no denying that today app stores have become one of the mass channels available for gaming. Fortunately the industry’s biggest publishers like EA(Origin), Sony (PSN) and Nintendo (eShop) and of course Valve (Steam) continue to define their own game channels providing unique advantages from one another and ultimately maintaining the traditional experiences gamers have come to expect.