Freeverse has been having iPhone hits since the earliest days of the App Store, and this week announced it had sold one million downloads of its Flick Fishing game.

With more than a decade of Mac games development behind it, it's no surprise that the company hit the ground running when the App Store launched last July, enjoying early success with Moto Chaser.

"We had a fairly large mindshare in the early adopting iPhone community," says president Ian Lynch Smith.

"If you were a long-term Mac user, you knew about us. That provided a critical fanbase at a time when it was a level playing field for everybody else. Since then, we've made some good choices and gotten some good breaks. Everything we've come out with since October has made it into the Top 100 apps, and a good chunk have made it into the Top 10."

Resisting the hype

Freeverse now has just over 20 staff, including three separate development teams. Lynch Smith says that despite the success of games like Flick Fishing and Moto Chaser, the company has resisted the urge to get carried away by iPhone euphoria and expand too fast.

"The rate at which we're making games has been a little breathtaking," he says.

"The collapse of the initial pricing model of $10 and $5 games to 99-cent and $3 games has made everyone very cautious. We're trying to keep our developments to three or four months at most."

He thinks a company like Freeverse is in a good position, because it doesn't have the overheads of the goliaths like EA and Gameloft, but equally has more resources than the "1-4 man teams" who are making the majority of iPhone games at this point in time.

"We're big enough to do a professional marketing and publishing job, which is critical given the competition," he says.

Casual success

However, he also pinpoints another success factor on the App Store, which is for nimble developers and publishers to get ahead of the goldrush by choosing familiar genres or game types, and getting in first with a high-quality version.

Examples from other firms, he says, include iShoot and Fieldrunners. And from Freeverse's perspective Flick Bowling.

"That's why we did a bowling game," he says. "It was the opening of a new environment, so there was a real chance to build a mobile sports brand. Both Flick Bowling and Flick Fishing have got to number one or two."

For now, Freeverse is looking to make the most of the new iPhone 3.0 APIs, having kicked off with a non-game application called Postman.

It's a simple yet elegant app that lets people take a photo, then 'send' it as a postcard to Facebook, Twitter or friends' email addresses. Developed by Taptivate, it quickly became the most popular social networking app on the App Store.

iPhone 3.0 games

How about 3.0 games though? "Bluetooth networking is really sexy, but we're not sure it's going to be critical in terms of the percentage of people using it," he says.

"We can be on the bus and have a fishing competition, but that requires someone else to be there with another copy of the game. Once you've sorted that, you may have eliminated 90 per cent of the time in which to play that game."

However, Freeverse is keen to push iPhone as a platform. One example is with in-app payments, which the company is planning to use in upcoming games Warp Gate and TrackZ. The latter, a model train based game, sounds well suited for the technology.

"TrackZ is perfect for intelligent in-app purchases," says Lynch Smith. "Hardcore players might want engine packs and scenery to build up environments, so for people who want to go that deep, we can sell them the England 1850s pack of scenery and engines for a dollar. But casual players are still getting a great game experience for under five bucks."

No nickel'n'diming

That's a very deliberate strategy, responding to some of the concern that's been expressed by iPhone users (and, indeed, console gamers) that in-app payments may simply be a way for developers to 'nickel'n'dime' players out of more cash for content that should have been in the original game.

Lynch Smith accepts that there's a danger of abuse, promising "we're never going to sell the golden fishing rod for a dollar!". Instead, Freeverse is selling a new fishing location, new fish and an additional game mode based on Blackjack for Flick Fishing.

"It's not so much nickel'n'diming as it is developers trying to get three to four dollars out of someone who's buying their game," he says, pointing out that the average Freeverse game takes four people four months to develop, plus office costs and their share of testing, marketing and accounting.

"It adds up pretty quickly. If you sell a game at 99 cents, don't chart and sell 20,000 units, you get back less than 15 grand. That doesn't even cover salaries. Flick Fishing and a ton of our other games are insanity at a 99-cent price point: the value proposition from our standpoint is crazy. Players are getting a ton of value at this point."

Some iPhone users remain militantly against in-app payments, however, and sometimes against premium-priced games too.

"We've seen user comments on the App Store saying 'Vote 1-star if you want this for 99 cents!', and we got 1-star reviews for offering in-app purchases, even though the update fixed some bugs, supports 3.0 and didn't take anything away," says Lynch Smith. "It's crazy."

Open environment

He also has some interesting thoughts on the open environment of the App Store, which sees comedy farting and Moron Test apps getting the same screen real estate as games like The Sims 3.

"They're put on an equal footing, even though one is ten years of refinement and $2.5 million to build, and the other is a guy taking a website and building an iPhone interface for it in three hours," he says.

"That's why games are having trouble maintaining their price points. Human psychology makes value judgements based on peer groups, which is one of the reasons the competitive landscape is driving prices so low."

In the short-term, Lynch Smith thinks in-app payments will depress prices even more, as developers rush to charge 99 cents for their games and hope to make their money on additional in-app purchases. "It will take six to nine months until that's proven," he says. "People might then become disillusioned."

In the meantime, Freeverse has 12 projects on the boil in an effort to continue its App Store success. The publisher will take advantage of the iPhone 3GS' power, adding shaders and bump maps to certain games. However, the company's apps will ship with both regular and 3GS binaries, rather than targeting the 3GS only.

"We're not going after a subset of the audience," says Lynch Smith. "iTunes would punish us for that, and we'd lose 90 per cent of our customers, wouldn't chart, and so wouldn't even be able to sell the games to people who could take advantage of it."

Getting connected

Connectivity and social aspects will play a larger role in the company's games in the coming months, although Freeverse is weighing up which of the numerous competing platforms to use.

"We're picking who we think is going to be the winner, but long-term, it's a coin-flip whether any of them can win," he says.

"Xbox Live is clearly the model, but it would mostly make sense if Apple builds it. For now, Aurora Feint has a couple of hundred apps, ngmoco is coming, and others are all knocking on our door too. If it fractures, do we really want multiple overlapping achievement-based sub-communities?"

Apple has so far shown little public interest in launching its own games community API, though, preferring to leave developers to integrate whatever platforms they like.

Lynch Smith thinks Apple is doing a good job of spooking its rivals in the handheld gaming market, though.

"When you do a value comparison between iPhone or iPod touch, and DS and PSP, there's no comparison when you compare the cost of ten quality games," he says.

"Right now, Apple is scaring the bejeesus out of the other companies, because of what they've created by letting 50,000 apps get submitted. From the standpoint of a game maker, that's a horrendous competitive environment, but we feel we're in the sweet spot."