Charging for apps is so last year. As of this writing, all of the top 5 top grossing titles in the Apple App Store are free games, and 22 of the top grossing 25 are games. On the Android Market, 4 of the top 5 grossing titles are free games, and 17 of the top grossing 25 are games. Most game revenue is now generated by free games, and this number is only expected to rise. How did this happen?
The new model is free games plus premium content equals "freemium". Apparently the key to making money is in-app purchases of, well, stuff (my editor won't let me use the first word that came to mind) that is quickly used up. At least that's the conclusion of a recent Flurry study that analyzed the data from 57 million in-app purchases from 2 million daily active users over the last year:
Here's what the terms mean:
As in the world of retail goods, the two main categories available for purchase in freemium games are durable and consumable goods. In freemium games, we define durable goods as items that provide a permanent gameplay benefit. Examples include buying armor to increase defense in a role-playing game, or buying a building in a city simulation to increase city revenue. By contrast, a consumable item is something that is depleted when used. Examples include a set of grenades in a war game, or fertilizer that helps crops grow faster in a farming simulation. Finally, we define personalization items as those that are durable but do not add any gameplay benefit (i.e., purely decorative).
Personally I stay away from games that require constant purchases. I don't mind the occasional durable item (can you say MIGHTY EAGLE!!), but all the nickel and diming really adds up. I ask my kids not to play them either. After all, my phone bills are high enough without having to worry about Smurfberries. Thankfully for the bottom line of game developers, it appears that I'm in the minority.
Barn image courtesy of Farm Story by TeamLava, LLC.