The following is a guest editorial from PlayScreen CCO William Volk.
Games have seen an evolution in financial models, from premium (paid for) to 'Free to Play' or 'Freemium' games. On the iPhone eight of the top 10 grossing games are Freemium. Nonetheless, making Freemium work turns out to be a real challenge for a large number of developers.
Case in point:
Mikengreg Games LLC, a two-year-old start-up in Ames, Iowa, launched a freemium iPad game called "Gasketball" earlier this month. Inspired by the basketball game H.O.R.S.E., the free version of the iPad game has already been downloaded more than 420,000 times.
Yet only 1% of users have gone on to pay $2.99 to get the full version of the game. Although the game doesn't sell virtual goods, it does sell additional in-app features that can improve a player's moves. (Source: "When Freemium Fails" / The Wall Street Journal.)
So how did we get here, and how do we fix it? To figure that out, let's look at how and why all of this got started.
Before there was IAP (In App Purchases) there were 'lite' and paid versions of games. Publishers would release a free, but limited version of a game. The idea was to give players a no-cost way of looking at a title before committing to a purchase.
Promoting a free app was always cheaper than a paid app. Players were simply more willing to try a free app.
"Frankly, many players simply do not want to pay for digital goods or content"
Meanwhile, on Facebook Zynga and others were making decent change with free games that featured digital goods that could be purchased. In some cases these items allowed players to progress at a faster clip. In others (PlayScreen Poker, for example) they were 'consumables': poker chips that eventually run out. Even though a small percentage of users participated in these in-app purchases, Facebook's virality enabled these games to be promoted at low cost. Pretty much everything you did in these games ended up being a post on your or your friend's wall.
The concept of 'Freemium' goes back even further. In China, game piracy was so rampant that the Freemium model made sense as a way to effectively monetize games in an extremely challenging market.
Where did Freemium go wrong?
1. Many of the Freemium apps rely on 'whales' to support the non-paying users. For example the reported figure is that only 1.3% of Zynga's monthly players are paying players. That model only works if these 'whales' can be persuaded to spend a great deal. One way that is done is to use psychological techniques that exploit addictive behaviors.
2. Some Freemium games have IAP's to give players advantages (better weapons, stats, etc.) that they can use against other players, unbalancing the game.
3. Frankly, many players simply do not want to pay for digital goods or content.
You can see a swing back to 'normal' paid apps in some cases. For example Zynga's new iOS game Horn is a 'Paymium' $6.99 game with in-app items. More notable is Final Fantasy Dimensions which is offered in a 'Paymium' $2.99 version, with additional chapters for $9.99 apiece - OR - a buy it all for $28.99.
To be fair, these are high production AAA apps. Still there have always been successful paid apps on iOS. Tiny Wings, Angry Birds etc. But even with 30 years in the game business I can tell you that predicting what titles will hit pay dirt is more art than science. It's a gamble.
So what is "Fair to Play" and why should I care?
Fair to Play has its origin in the old arcade model of gaming. Put your quarter(s) in and play the game. But there's more to it than that.
"If you're a social/mobile developer, not depending on whales feels great"
We originally released a free iPhone version of Crickler in 2011. Our business model then was to give players a limited number of "puzzle credits". Starting to solve a puzzle cost one puzzle credit. Although we had a loyal base of users, we still got complaints when players ran out of credits. It turns out some players just didn't want to pay.
One way to deal with that was to add Tapjoy. Watch an ad, earn credits. We also rewarded users who completed puzzles and bragged on Facebook or Twitter. The results were surprisingly positive: the revenue from the in-app purchases and/or ad units covered 90 percent or more of the value of the puzzles users play. That's a huge contrast from the 1.3 percent daily app purchases (DAP) that other Freemium apps often have to deal with.
Fair to Play - By awarding puzzles for social actions (bragging) or watching a commercial we allow users who simply do not want to do an IAP to continue to play the game. We might even give players more credits than they expended to play the puzzle in the first place for bragging on Facebook. Being generous (versus milking players to the last dollar) has resulted in days where 10 percent of the players went for IAP or "Earn a Credit" activities.
If you're a social/mobile developer, not depending on whales feels great. Based on our experience with this peculiar puzzle game, we expect to see many more studios try a Fair to Play approach. Taking down artificial paywalls in favor of a more healthy back-and-forth between players earning and spending in-game currency might be the only way to address the shortcomings of Freemium, saving countless studios (and jobs) in the process.
Volk began his career in 1979, on the launch team of the computer game division of Avalon Hill, now a subsidiary of Hasbro, Inc. Volk also served as the Vice President of Technology at Activision, Inc. in the 1990s-where he was responsible for the development of the first CD-ROM entertainment project, The Manhole, and the tech behind Return to Zork. To learn more about PlayScreen, please visit www.playscreen.com.