“Freemium” Games Generate More Revenue in App Store

9 Jul


New business model brings new opportunities, even people might find it uncomfortable to start.

The iPhone gaming platform is a comparatively new business model to many game studios and developers: it allows “Lite” versions and in-app purchases. This happens in many console games and online games before, but it’s just never happened in mobile gaming.

Mobile gaming analytics Flurry explains the great opportunity of the “Freemium” pricing model for iPhone games in its official blog post. The word “Freemium” is a new made up term, which means the game is given away for free, and consumers can purchase virtual currency and/or virtual goods through in-app purchases, while “Premium” means the game is charging for download. By tracking over 90,000 apps with its analytics service, the study measured the amount of revenue generated per ranked position in the “Top Grossing” category of Apple App Store.

According to the study, 65% of revenue in top 100 grossing games in U.S. App Store  were came from “Freemium” games in June. The portion is growing quite fast, given that over 90% of  players will not spend any money on in-app purchase. While only 0.5% – 6% of players are willing to spend money on Freemium games, they might spend much more than US$ 0.99 on a game.

The “Freemium” model is actually not new to the industry. Earlier examples are online games and Facebook games. As long as the game is addictive enough, gamers will spend more then they expected on virtual currencies and goods. Game developers for iOS platform might find the “Freemium” pricing model disturbing, as they are free in the first place. However, like the report suggested, as gamers more likely to try the game, and with more compelling spending opportunities offered , revenue generated could be way over traditional game retail model.

Although the figures only applies in the U.S. App Store, maybe it’s time for game developers to embrace some new business models.

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