Have you ever downloaded a free game on your iPhone and wondered how in the world the developer could possibly be making money with it? As it turns out, the so-called “freemium” business model is actually far more lucrative than charging money, at least for mobile.
The New York Times has an interesting article that throws back the curtain on so-called “freemium” games — the ones you can download free of charge but can ultimately cost users far more in the long run than if they had just paid up front. While free games might come with the stigma “of being low quality or full of annoying ads,” it turns out they’re a great way to hook new users — and keep them coming back.
“When you tell a friend about it and they go to the App Store and it’s free, they download it without thinking about it,” explains Natalia Luckyanova, half of the husband and wife team that created the iOS game Temple Run. “Then there’s stickiness and the addictiveness and people talking about it.”
Luckyanova and husband Keith Shepherd released Temple Run in the App Store last August as a 99-cent game where “players must stay a step ahead of angry apes while avoiding booby traps and collecting coins.” While the first month of sales were decent, it was nothing compared to what happened in September, when Temple Run was offered as a freebie through the Free App a Day website.
Since going free, the app has topped 40 million downloads, and Luckyanova says upwards of 13 million people play Tempe Run at least once every day. Currently perched at Number 14 on Apple’s top-grossing charts, these “freemium” games bait users who might otherwise not spend even 99 cents on a given title — and once they’re hooked, they’ll spend money in “a virtual store to buy new characters, different backdrops and power-ups, or special boosters.”
The concept has proven wildly successful for Zynga, the creators of FarmVille who has expanded beyond their former comfort zone with Facebook and into a billion initial public offering — proving that the drug dealer’s mantra of “the first one’s free” can apply to other types of business as well.
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(Image courtesy of The New York Times)