For those new to the mobile market this is a quick synopsis of what’s going on.
Traditional marketing campaigns had companies spending millions of dollars to create a buzz for their pre-emptive game release in hopes it gains enough traction that exceeds sales expectation. These numbers were based on extensive market research and data from past initiatives or current market conditions. This model has been a tried and true model that worked for decades and is still something that is evident in certain industries. E3 ( Electronics Entertainment Expo) is held every year in Los Angeles, California where console developers and publishers spend millions of dollars to showcase what their studio has been developing for the last 3- 5 years in hopes that the gaming market gets excited enough to spend $40 – $60 on their masterpiece.
With the rise of freemium games, this marketing model proved difficult. For the console market, Arpu (Average Revenue Per User) started at the price of the product ($40 – $60).
Whereas, for freemium games, Arpu starts at $0. This means that spending millions of dollars on marketing for a freemium game to generate Millions of downloads does not reflect the bottom line one bit (your revenue will still be $0).
The freemium industry has become more of a user experience industry than a product experience.
This user experience will determine if the they want to continue playing the game, the next step will be if he or she actually wants to spend money on the game. Although the hurdles sound extremely difficult, the mobile gaming market has shifted towards this model as the revenue generated with freemium games far exceeds the premium game model. This has to do mostly with the long tail for freemium games to be substantially fatter than premium games. Ideally premium games are 1 and done games where developers release their game and provide limited updates and community support, whereas “good” freemium games usually see bi weekly update and excellent community support that provides the users a better user experience. This usually leads to users spending money on the application in the long run.
Because of this shift in business model, KPI (Key Performance Metric) has been the catch ‘acronym’ for the past 5 years. As this website delves further into mobile metrics, designs, and analysis, the freemium model can be interpreted in several different ways. As the freemium market matures, winners and losers are determined based on whether studios can find a niche in the market and choose to develop games for a specific genre.