Freemium devs need to play with pricing for success, says PapayaMobile's Oscar Clark
It's not a magic wand
Last year we saw a dramatic shift to freemium pricing for mobile games, so much so that it's hard to find developers still willing to defend the premium model.
But going freemium is more than just about giving away the core game, it demands a whole new attitude to game design.
Freemium isn't a magic wand. We can't wave the wand about and expect to make no changes to the gameplay.
What freemium does is provide a new range of tools we can use to make a game more fun and at the same time remove the price barrier for the initial download.
Our job as designers is to maintain each players interest in our game without the commitment inspired by the act of purchasing a premium game.
Its part of the human condition that once we have made a decision, we feel we need to justify why it was right and try to maximise the utility we gain from our purchase.
This instinctive behaviour is something hardcore designers have come to over-rely on and as a result they tend to punish players for not playing perfectly; casual players are put off by that attitude and freemium players have no reason not to churn.
Totting up the techniques
There are lots of techniques we can use to create a compelling game experience but I'll leave that for another column. Instead let's focus on pricing strategy.
The classic tool to explain how freemium works is to looks at 'price elasticity of demand'. This is the idea that the lower the price, the more people will spend. The freemium magic comes from offering lots of virtual goods which are consumed when they are used; so they can be repurchases.
There are lots of examples of consumable goods, but possibly the most generic is energy crystals where we limit how much action the player can take part in during any given session, but allow them to recharge this energy by consuming a crystal.
This model adds friction into a game making it possible to extend the content that the player is using as far as possible.
It also opens up the possibility for everyone to continue to spend as long as they enjoy the game, including those minorities who are willing to spend upwards of $100 per month.
Great theory, but it assumes a number of things, in particular that a player will be motivated to 'cheat' the game mechanic and once they do that, they won't tire of the constant nagging to spend ever-more money.
Start as you mean to go on
We need to remember that players need a reason to make that first purchase, and that experience must be safe and easy to do.
Consumable goods which remove frustration can work and are an important component. However we have seen that where the first virtual good is design to delight a player, we see a greater likelihood that they will continue to spend.
This is especially the case for a player who is likely to become our 'whale', or a true fan.
For this type of player we find that the potential for social recognition plays a key part in their early 'gateway' purchases. It seems to be vital to design the early virtual goods to be something which the player will care about; and that their friends will respect.
As a result we see that often the first purchase includes some elements of customisation, or items linked to an 'unlocked' in-game achievement.
Now our player has made the first step it should be easy to get them to repeat that process, allowing them to buy the same consumable items again and again, right?
Again it's not that simple. A player will evolve their interaction with the game, they will start to synchronize with the rhythm of the play and unless your compulsion loop copes with their increased familiarity they will eventually become bored and tire of your game.
So now we have to add new virtual goods which encourage subtle new strategies, but are still consumable of course and the player will continue to be nagged to spend more and more money.
Part of the reason price elasticity works the way it does is because it reflects the desire and risk faced by the player. As a model it works brilliantly for box-products...but we are dealing with services and we are not just interested in the short-term risks of making a purchase.
Consumables are the lowest risk for a player to make in the short term, generally they are the lowest price, but also they offer clear and specific value.
Durable goods, which don't disappear or get used up, are often less clear in terms of their value, and are generally more expensive, are bigger risks to be your first purchase.
However, when we come to looking at the longer term we realise that consumable goods never stop needing us to spend money and once they are used the utility is gone. Durable goods by their very nature have ongoing value and if designed well can reinforce the value of repeatedly playing the game.
Durable goods shouldn't make up whole sections of the game. We are not talking about some kind of try before you buy; and selling extra levels won't make you profitable. Instead they should add new strategies or mechanics which give a player more reason to return to the game regularly.
Lets return to example but this time introduce the idea of a 'well of energy crystals' designed to complement our standard 10 cent consumable energy crystal by giving them 20 energy crystals a day for $1.99.
This gives the player the choice to reduce the nagging dependency to spend another 10 cents every time they run out of energy. Importantly, it also means they have to return every day to get the most out of their purchase, and if they use these up they may still want to buy top-up crystals as well!
In the end, game developers have to embrace the way they charge for goods and how they can use the emergent effects of these pricing techniques to make the game a better experience for all players.
If we rely on just one technique we will end up missing out on revenue and more importantly letting down our players.
For more on PapayaMobile, you can visit the firm's website or follow Oscar on Twitter.