How Freemium Games Antagonise The Mainstream

Photo of Karol Severin
by Karol Severin

In 2014 the freemium model accounted for 98% of Google Play revenue. The success of a few hit releases brought the freemium model into mainstream. But freemium apps often heavily rely on a small amount of large spenders. The industry’s over dependence on this niche audience puts the app economy at a risk of volatility.

One of the most common ways of encouraging In-App Purchase (IAP) in freemium games is time delay of in-game progress. Publishers try to communicate a positive message that says: We are giving you all this for free, but if you pay a little you can progress within the game immediately and enjoy exclusive content. However, the message that non-paying gamers are receiving is: You cannot play the game for the next 2 hours because you are not paying us. This carries a number of negative implications:

  1. Consumers are likely to feel a little short of what the original ‘free app’ proposition was advertising. While no promises are broken legally, non-paying consumers quickly realize that that they will never be able to enjoy the game to its full extent, let alone compete in leaderboards with those who pay.
  2. Some non-payers remain patient. They stick through the hard times of waiting and saving coin by coin to progress in a game. In a sense, those users are the most engaged fans. They are prepared to overcome the most annoying obstacles to stick with the game they grew to like so much. Such loyal fandom clearly deserves a reward. But the only ‘reward’ is that time delays get longer and the game itself becomes even harder to enjoy without paying. Mistreating your biggest fans in this way sends a negative brand message.
  3. When gamers have to stop playing involuntarily, it can lead to frustration. The time delays then encourage consumers to explore other entertainment possibilities while they wait. Consumers often look for direct substitutes at this point. They might be looking to re-live the exciting ‘free’ experience of early game levels again. They might shop around to see whether another game will allow them to go further for free. This often engenders short lifecycles for freemium game apps outside of the core, paying, user base.

If freemium games antagonize most non-payers instead of encouraging them to spend, IAP is not heading towards the mass market any time soon. Little wonder most freemium gaming companies have a free-to-paid conversion ration of just 1.5%.

While the industry is fully embracing the freemium model, effective paid download propositions as well as ‘prepaid in-app purchases’ can unlock a larger pool of spenders. This in turn would help solidify the foundations of app economy as a whole.

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