November 25, 2015

Premium on Mobile Today

Premium is making a comeback! Or at least some people hope so..

There are a few companies with an interest in keeping premium alive. That might be good for indie developers.

As everyone knows, the mobile market shifted to free-to-play (F2P) games a few years ago. Back in the Angry Birds era, people seemed happy to pay $0.99 for hours upon hours of entertainment in their phone. Then, a few years later, everyone collectively realised that paying such princely sums for mere entertainment is clearly unreasonable – at least before they thoroughly get to test play the game before being asked to pay. During 2011-2013, the market shifted so quickly that by the end of 2013 between 90% (iOS) and 98% (Google Play) of the revenue was from F2P games.

Since then, there have at times been talk about the comeback of premium. Unfortunately, the data does not support that claim. When looking at the top charts, things have moved even more clearly in the direction of F2P dominance. The current top-100 grossing chart on iOS is 99 F2P games, and Minecraft. It has been pretty consistently like that for the past 2 years. Some hit games that have an existing brand outside of mobile (Console titles, Steam titles, etc.) can briefly make it to the top-100 list – think 5 Nights at Freddy’s or Grand Theft Auto. But the only one that has stayed there is Minecraft.

On Google Play, it’s even more clear. The top grossing game without IAPs today is This War of Mine at position 269. The next is GTA San Andreas at position 363, Geometry Dash at 416 and Star Wars: KOTOR at 431. Of these 4 that are in the top-500, only Geometry Dash was a mobile-first game. That is, one single pure premium mobile first game in the entire top-500 grossing list. the others who got there without using IAPs all had brands from outside mobile.

The best premium games today can make revenue of some millions of dollars. This is for games that get selected by Apple as Game of the Year, such as Monument Valley and Badland. While that is by no means bad, these games also required a lot of talented people to develop. For instance, Monument Valley cost $1.4 million to develop, and generated $5.9 million.

That’s a bit more than 4X return on investment. And that’s the best that you can hope for with this model. In practise, it means that every 4th game that you make needs to be Apple’s Game of the Year.

No investor who can count is going to put their money on such a business. Which means that if your company has VC money, you make F2P games. No discussion! Which in turn might open up some opportunity for indie companies.

You see, there are some companies who would still like to see premium succeed. Apple for one. They are a very premium company and the pay-once-up-front model appeals to them. Premium apps also have the upside that they increase the cost of switching between iOS and Android phones. Your F2P game can be downloaded for free on the other platform, and often you can just keep on playing as if nothing happened. With a premium game, you have to pay again – thus raising the barrier to switching.

Closely allied with Apple in the quest to rescue premium on mobile is the games media. The people who write for games media are often hard core gamers themselves (otherwise, how would they have ended up in that job?). And hard core gamers usually don’t have warm and fuzzy feelings about F2P monetization. In addition, it’s just in their self interest to promote premium games. After all, if I’m required to pay up-front with real money for a game, I want to at least read a review before paying. Which gives games media an audience and a revenue stream. If, on the other hand, I am curious about a F2P game, I will just try out the game instead of reading a review. Goes a long way towards explaining why lots of the top grossing F2P games are completely ignored by the likes of TouchArcade.com. And also why TouchArcade is in financial difficulties as a result of the rise of F2P: https://www.patreon.com/toucharcade

For a large game company, the strategy is clear: develop only F2P games. For a small indie, there might still be a niche for premium. You know you won’t be competing with the big budget companies, and you also know that you have a few good allies if you do premium. A tradeoff of a way smaller best case revenue (by a factor of almost a thousand) versus much less competition could still make it worthwhile. Just remember to keep your budget reasonable. And you might still end up like Zombie Match Defence, if you don’t get a good featuring by Apple.

Or, you might have tremendous success, like the guys who did The Room. They’re another game of the year, though.

dialogue_4

Even more reading about the topic:

http://toucharcade.com/2015/10/16/carter-crater-indiepocalypse-editorial/

http://toucharcade.com/2015/11/13/paid-games-dont-work-for-developers-heres-why-the-carter-crater/

http://www.gamesbrief.com/2015/09/taking-your-f2p-game-and-making-it-paidthe-story-of-jagged-alliance-online/

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Category

Uncategorized