Two days late and probably more than a few dollars short, we’re back from vacation with a new entry! This time, Peter will elaborate his thoughts around the concept of in-app purchases and the freemium game model.

Most are familiar with freemium games, with the popularity of games like FarmVille, CityVille and other Zynga titles on Facebook (and their related spamming of Facebook statuses) they’re hard to miss. The way these (on the surface) free games generate revenue is by handing out a limited amount of gameplay to get the player interested, then holding back on gameplay to ensure that the players are never truly satisfied. The only way to accelerate the rate of play is to invest real life cash. Compared to traditional
games, this resource system is interesting: it’s in essence a broken system, the resource gain (usually energy or equivalent, the stuff that actually lets you act) is much too slow to give a consistently entertaining experience. However, this is very much the whole point of the system, to hold back resources to intentionally frustrate the player into paying up. The gameplay itself is usually shallow and simplistic and requires little input which makes it very accessible to the casual gamer.

On the other hand, many games, especially on the smartphone market, monetize through in-app purchases but still offer solid gameplay for the more hardcore audience. The concept is to offer the player a lot but dangle the carrot of “more” in their faces. For just a small investment you can progress faster, get stronger and be more competetive! Often such games are free to play to ensure a large player base, knowing that as long as people play, some of them will eventually pay. And pay a lot.

This is where the whales come in. In this context, a whale is a player that invests humongous sums into their game of choice. A recent survey shows that over 5% of all purchases are over $50, a staggering sum considering the “usual” price for smartphone games is $0.99. Over half of the revenue comes from transactions of over $20. For developers this means they need to harpoon themselves a few whales to secure a steady income.

All in all, the freemium, in-app purchase models are intriguing, in stark contrast from the traditional boxed game retail sales. As a more traditionally trained game designer, I feel that the free to play, holding-the-player-back mindset is a step back. Sure, it generates revenue, and quite a lot of it, but it’s based on NOT satisfying the customer. In a sense, they reflect the old school arcade games that were based on making the player feed a small fortune in coins into the machine. Also, I can’t recall seeing this type of game monetized through more traditional methods, that is to say over the counter retail. The closest examples in my mind is SimCity and the likes, but they feel more like simulation games rather than casual click-to-win games. However, more traditional style games with in-app purchases feel more “legit” as they do offer fully fledged gameplay with the option of boosting yourself through payments.

Regardless of my opinion, both types of games are likely here to stay and it’s up to me to adjust to the changing times. As a developer you need to keep an objective view, you
have to understand that your tastes do not necessarily reflect the tastes of your audience. Being a professional includes identifying what the customer wants, if nothing else it
makes your games easier to market. And as any good entertainer knows (and in the end, a game developer is an entertainer, right?), give the audience what they want!

- Peter