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Premium? Freemium? Where is this all going?

08 Oct 2013

The mobile games market has evolved since phones first offered digital purchasing as an option. Content and pricing has also evolved to match the needs of the everyday mobile game player.

In Apple’s App Store and Google Play, the selection of games ranges from the simplest game to full-on, large production titles. Similar to the computer software industry (and really any product industry), prices are set based upon the assumed value that the content holds. It didn’t take long to realize that people aren’t going to spend a ton of money on a mobile game, as the quality and depth of the game were restricted by the constraints of device capabilities and the context in which the game would be played.

Premium (paid) games were not quite capturing the largest chunk of their target market, due to people being unwilling to take risks on games they hadn’t played. Free games saw very large download rates due to the lack of monetary commitment from the potential customer. This caused a mobile app movement known as “The Race To The Bottom,” and urged many many mobile game makers to aim at a “minimum viable product” for the lowest possible cost to the consumer. During this time, we saw a ton of great games at the $0.99 and $1.99 price point, and many more people began to embrace the market of mobile games.

But the industry still had room to grow. Taking a page from history, mobile game makers began offering their product for free alongside the paid version, however, the free versions had advertisements or were lacking the full amount of content. This was done to grab those unwilling to take a risk on their purchase by offering them the ability to experience the product without any commitment, and later decide if they wanted to make the purchase. If not, the mobile game maker will still collect advertising revenue when the free version is played. This “Pro” vs. “Lite” approach worked great until Apple added the ability to work with In-App Purchases (IAPs).

With the introduction of IAPs, monetization strategies started showing up, proving to be even more successful than the “Pro” versions of mobile games. This brought on the “Freemium” model that we currently see with games like Candy Crush Saga. The idea is that your game is free, but it limits you from content or progression throughout the game unless you pay for it through the app. Currently, we are experiencing a wave of monetization models that allow the player to progress, but typically at a slower pace than if they had to pay for the game. For instance, CSR, a Freemium racing game, uses gasoline as a progression gate for players to be held back at intervals if they have raced too many times too quickly. The gas meter will refill, but it takes a while before you can race again — unless you buy a full tank of gas from the game with real money. The Freemium model finds the places in which the player sees value in spending the money. This could be pain points like the end of Candy Crush Saga where, if you just had two more moves, you could complete the level and continue. Or it could be instances where a player can have a calculated leg up on the competition, like buying nitrous in WWE Presents: John Cena’s Fast Lane to ensure a win.

The Freemium model is seemingly evolving, and will eventually die out. We are already seeing Candy Crush Saga add advertisements to its game in order to gain back some of the revenue that they are no longer getting due to players being fatigued by their monetization model. Angry Birds was a Premium game that went Pro and Lite and then added IAPs, so we are continually seeing the market change. Publisher 2K took a huge risk this past year by releasing their full AAA production, XCOM: Enemy Unknown, to iOS for a larger-than-usual price tag of $19.99, and it sold rather successfully. So what’s next?

By now, we’ve learned how to design games people can play on their devices while on the go. But phone and tablet hardware has become technically sound to the point in which games can look and act similar to their console and PC counterparts. My hope is we will see deeper experiences with higher quality visuals start to pop up at a fair price people are willing to pay. This will further legitimize the platform as an able gaming outlet for even the more hardcore gamers.