Freemium games could make up 95% of iOS downloads in one year's time, reckons PopCap's Giordano Contestabile
Distimo's report claiming 72 percent of all App Store revenue is generated by apps sporting IAPs was significant, he claims, but simply mirrored what most publishers and developers operating on iOS already know: consumers invest in games they love.
Like Chillingo's Joe Wee, however, Contestabile doesn't believe strapping IAPs on to each and every game will mysteriously generate cash out of thin air.
Instead, operating a successful business on iOS means being able to deduce how to best monetise your library, game by game.
We caught up with Contestabile to ask how PopCap plans to employ IAPs moving forward.
Pocket Gamer: Distimo's latest figures suggest apps with in-app purchases make up 72% of all iOS revenue. Does this tie in with your own experiences on the App Store?
Giordano Contestabile: It's indisputable that in-app purchases, and the freemium model in general, now constitute the majority of revenues on the App Store.
We are seeing it with Bejeweled 2 + Blitz, where revenue for in-app transactions - to purchase boosts which can be used in the Blitz game mode - have recently surpassed revenues for purchases of the game. Furthermore, all data points to the fact that the trend looks set to continue and increase.
What kind of bearing, in any, do reports like this have on your output?
This kind of reports are useful to get a general overview of the market but, if you are a game developer, they generally either confirm or reinforce what you already know, as the most important feedback is the one that you get every day from your players.
At PopCap, we dont make decisions based on what a report might tell us, but we listen to our customers and try to provide as many of them as possible with the best possible game experience.
I'd say that if you find yourself in the position of changing your strategy based solely on a report, it might be a sign that you arent in touch with your market.
The report also suggests the majority of these IAP equipped games are free releases. Do you think freemium is likely to dominate iOS in the future?
That's a fair assumption. I think that, one year from now, 95 percent or more of iOS game downloads might come from freemium games, and 80 percent or more of the revenue could be associated with them.
The freemium model is extremely powerful because it allows developers to reach the biggest possible audience, and it allows players to choose if and how to pay for content, after having tried it out.
In that sense, its not wholly different from our traditional 'try and buy' model, but it allows for greater flexibility and presents customers with more choice.
That said, I also believe that there is still space for premium experiences, especially for games associated with very strong brands that command intense customers loyalty.
Is the relevance of the paid model falling away?
It is for most games, but not for all. If you are an upstart developer trying to launch a new IP, then freemium allows you reach a much wider audience and to improve your product over time by leveraging your reach.
In the same way, freemium is surely the most appropriate model for specific game categories, such as social games.
On the other hand, there's always going to be a market for high-quality branded game experiences that can command a premium price, but it's going to be an increasingly difficult to attain such status: mega-hits like Plants vs. Zombies, Bejeweled or Angry Birds are one in a million, to say the least.
What are your own IAP plans?
While we typically dont disclose much about our future plans, I can say that you're in for a lot of surprises for us in the coming months, and that in-app transactions and the freemium model are going to feature prominently.
Additionally, we recently launched in-app transaction for Plants vs. Zombies, while at the same time allowing players to earn the same content by playing the game, and the response has been incredibly positive.
At the end, for us is more about creating a great game and delivering in a way that feels right and that provides players with the opportunity to make informed choices, rather than focusing on a specific business model.
Additionally, what does it say about the App Store as a whole that just 4 percent of apps are generating 72 percent of the revenue?
It says that the game business, while having undergone a dramatic shift in the last couple of years, is still a hit-driven model, where really successful games are able to command a much larger share of the audience.
While it's now easier to get your game in front of more people and to generate momentum through early adopters, users are still clustering around popular brands and games experiences they know and trust.
Additionally, the charts-driven nature of app stores is partly responsible for the self-perpetuating nature of a games success.
Thanks to Giordano for his time.
You can find out more about PopCap on the firm's website.