Premium mobile games have yet to find breakout success - EEDAR

Last week saw the high profile release of the Take-Two strategy game, X-Com: Enemy Within, at the relatively high price point of $12.99. Despite heavy featuring and strong brands, high-priced premium games have yet to find breakout success on the App Store. While the dominance of free-to-play in the app stores has been heavily reported by other research companies, there has been less focus on the relative success of premium games at different price points.

EEDAR analyzed the top 500 grossing games in the United States in Q3 on iOS to determine the relationship between price point, success, and user rating. The top 500 games were determined by average position and time in the Top Grossing iOS charts from July 1, 2014 to September 30, 2014. For this analysis, price point, average rank, and user rating is from iTunes. Revenue is calculated by applying a revenue estimate to each chart position on a daily basis.

As has been heavily reported, over 90 percent of mobile game revenue on the iOS platform is generated by free apps. However, the significant majority of the remaining mobile game revenue in the United States is from games priced under $10. Of the top 500 iOS games in Q3, EEDAR estimates that games priced over $10 generated only 0.1 percent of the total revenue, or 2 percent of premium game revenue. Only 3 higher priced games (>$10) made the top 500 games in Q3, BioShock, Civilizaton Revolution 2, and Monster Hunter Freedom.

The average user rating on the App Store is lower for these high-priced titles than for apps at other price points. The price range with the highest average user score is $0.99 to $1.99. This may suggest that users have higher quality expectations for games at higher price points that are not being met.

The data suggests that the sweet spot for premium app pricing is $1.99 to $4.99. This is in-line with psychological research suggesting that consumers show less discretion between spending $0.99 or $2.99 than they do when deciding whether to spend $0.99 or nothing.

It will be interesting to see if Apple's new change from "Free" to "Get" has any influence on the distribution of premium games in the Top 500 Apps. This will likely be the topic of a future EEDAR analysis.