A new blog post at mobile apps analytics firm Flurry underscores the importance of so-called “freemium” apps at generating revenue for developers.
[ad#Google Adsense 300×250 in story]Jeferson Valadares, GM Games at Flurry, writes that his company compared the revenue generated among the top 100 grossing iOS games in January and June. The company compared “premium”-priced games – games that cost something to download, even as little as 99 cents – with “freemium” games – games that cost nothing to download, but generate revenue through in-app purchases.
In January, revenue generated from premium games made up 61 percent, while 39 percent of the revenue came from freemium games. The study revealed that between January and June, the trend had reversed itself: 65 percent of the revenue from those top selling games is from freemium titles.
Valadares called freemium “the single most dominating business model in the mobile apps industry today,” and said the trend is “undeniable and growing fast.”
Flurry’s analysis shows that the number of people who spend money in freemium games is a scant 0.5 to 6 percent of the overall user base, depending on the game. So it’s up to freemium game developers to try to get as many players as possible to download their titles to hedge their bets.
(Hat tip to GigaOM for posting about this study.)
I don’t get it – it is the most dominant business model in mobile apps yet it engages at most 6% of user base?
Even worse; only 6% of those who play freemium games.
Whenever I see a fermium game something in my gut starts churning.
Even though it might not be the case, I get the feeling that at some point I will hit a road block and will have to buy some kind of nifty thing in order to continue.
I’d rather pay €10,- upfront for a good game and not deal with in-app purchases.
There are exceptions of course, like “Galaxy on Fire 2: Valkyrie”, but most of the time it just gives me a bad feeling.
“Engages” in the sense of making people pay money. Many people play and get enough out of the free experience not to pay, or decide against paying for whatever reason. But the point is that despite the relatively small conversion rate, there’s a much *larger* revenue base than software that actually costs something to download.
As a model, freemium with inapp purchase works better than a
straight sale. It enables the user to try-before-you-buy and pay upon seeing
value – much lower hurdles to cross than what a straight sale (buy-before-you-use)
brings.