Sunday 10 March 2013

Apps: Upfront costs are dead - long live 'freemium'?

Image Credit: Google.
   A couple of years ago you could expect to pony up 69 cents, pence or euros for the latest game or app to land in the app store, it was just how things worked. But, it seems that of late the way people and developers are changing and we're steering very much towards in-app purchasing. What's really interesting that if you have a look at the top ten downloaded apps on iOS you'll find that there is one paid app in the top 10 iPhone chart and the same is true of the iPad stakes too! In both instances that app is Minecraft and that is an exceptional app, which justifies its relatively high up-front cost.

   This is quite the contrast from a few years ago; when the iDevices launched the iPhone saw a plethora of 69p games available and the iPad applications were even more expensive than that, some of them nearing the price you would expect to pay for computer or games console content!

   So why the influx of free games? Well part of this can be attributed to in-app purchases, you might have heard about them, they tend to make the news because children have a horrible habit of spending a thousand or so pounds through this sales avenue! Indeed, BGR reports that:
"Leading app developers have figured out how to decouple download volume from revenue generation by creating free games that seduce their fans into paying steadily for in-app features. The types of of games that require a $0.99 or a $2.99 fee per download are turning into something resembling nostalgia items. For a stark example of how badly the revenue generation power of paid apps has faded, consider that the current #1 paid app on iPhone, Wood Camera, is 46th on the iPhone chart that lists top-grossing apps."
That compares very unfavourably with things like Clash of Clans which was one of the top grossing apps through January this year, but it was ranked a lowly 53rd on the iPad download chart for the same month!

   The way to consumers hearts, it appears, is to offer them something for free and then slowly, but steadily, require them to purchase things in-app! This was so successful through 2012 that in total nearly 70% of all revenue earned through Apple's App Store arrived through in-app purchases. EA All Play's senior vice president and general manager, Nick Earl has said that:
"One of our predictions for 2013 is that freemium gaming models (and in conjunction, the availability of in app purchases) will become the norm... The majority of our portfolio is now freemium games —they tend to monetize better than one-time-downloads, and allow us to cater to the consumer demand for premium experiences at little to no cost."
   EA are the biggest earners on both Android and iOS so it's no surprise that where they lead other smaller developers will follow.

   One stark example of how successful this model is Rovio's star game 'Angry Birds'. For the last few years Angry Birds has been a 69p app on the App Store, but very recently the app and its HD cousin became free! We're not sure if that's a permanent move or not, but we would suggest that it is and here's why. If you point your browser to the website link to Angry Birds on the App Store on the left-hand side about half way down you see this, right. If you just have a little look at the pricing of the in-app add-ons you'll see that the cheapest options are 69p and the most expensive are £3! So Angry Birds is now free, more people will download it, if anyone buys two in-app add-on Rovio ends up making more money then they would with the one time purchase model! Add to this the fact that Rovio charged 69p for Angry Birds for three or so years beforehand, securing the title as the most downloaded app of all time and it's easy to see why this game has been so successful for the company, and it's clear that now is as good a time as any to shift to the in-app purchasing model.

   So whether we like it or not it seems that 'freemium' apps with their in-app buying options are here to stay! But, what do you think? You now know it's cheaper to pay for the app in one go up-front, but do you prefer the in-app purchases? Would you rather apps were ad-supported? Let us know in the comments below!

Via Phones4U, ITWorld and BGR.


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