MGF 2011: Payment panel: On freemium hype, Angry Birds undersell, and attracting whales

The mechanics of monetary extraction

MGF 2011: Payment panel: On freemium hype, Angry Birds undersell, and attracting whales

The last panel talk before lunch was a surprisingly robust discussion entitled Honing in on pricing, payments and currency.

Kicking off the session was Paul Bowen, director of European sales, at Tapjoy.

"If you're making a paid for game, stop. Don't use in-game ads either. Make a freemium games with virtual goods and you'll make five times the money," he stated, boldly.

Another freemium advocate was consultant Nicholas Lovell, of GAMESbrief.

"To make a successful freemium game, you need to provide good gameplay, the ability for players spend a $1 early in the game, as well as a mechanism for them spend up to $100 per month," he said. These high spenders are the so-called Whales or big, fat spenders.

"Keeping up with the Joneses is very important in terms of driving the sales of in-app purchases. You need to ensure you're selling into a social environment," Lovell advised.

Leaving feathers on the table

"There are some casual games where it's not easy to use virtual goods, so advertising works," warned Limvirak Chea, director, business development, EMEA, InMobi.

"One example was Angry Birds on Android which was free with ads. Rovio is relying on paid sales, ad sales and in-app advertising."

Paul Bowen, disagreed.

"Rovio should be selling new levels not giving them away for free. It's not optimising its potential revenue. It could make much more money if it had IAP rather than in-game ads for the Android version."

However, Martin Koppel, CEO, Fortumo, which provides Rovio with in-app operator billing for its IAP, countered.

"It's a marathon, not a sprint. Rovio isn't trying to make a quick buck. It's building its brand," he argued.

Risks of free

"Our background is paid games and we don't see the need to move to freemium," said HeroCraft's UK development director Matt Meads.

"We do IAP for some paid games and we get about 20 percent extra, on average. We're looking at freemium games, but I think it would be very dangerous to shift the company over to a single business model."

At this point, Nicholas Lovell headed into statistics, notably the difference between the mean, mode and the median average.

Connect2Media's Roger Davies isn't a freemium fan.

"Each market is different. In emerging markets you have to look a different models, such as advertising in Indonesia, while in France, you can charge 7 euros for a game sale."

Then an argument broke out between Tapjoy and InMobi over the importance of in-app purchasing and in-app advertising - i.e. their own entrenched business views.

"The best thing you can do in gameplay is have 5-10 minutes of gameplay and then a pause for IAP or an advert, and then design for the player to come back tomorrow," said Nicholas Lovell, pouring oil on troubled waters.

Outside the App Store

"When Apple enables you to sell IAP at different prices in different countries, then freemium with IAP will become more important," said Paul Bowen, continuing to fight his corner.

"IAP is much more complex outside the iOS world however, especially when you consider the number of app stores that are springing up, potentially each with their own in-app billing solutions," replied Flexion's Andreas MacMahon.

"If I was a developer, I would be scratching my head and wondering where the money will be coming from."

"On web, we have over 80 global payment options, as we can bring those over to Android within our SDK if there's a need,” says Bowen. "There's not a business case for us to do those integrations in mobile yet,"

"The freemium thing is a bit of hype for me, because monetisation doesn't work properly at the moment," says MacMahon. "The concept is my consumer isn't able to buy the full price of my game immediately so you slice it up."

Future shock

"I worry that there's only a certain number of Whales out there," says Matt Meads. "We know our sales channels so we know we can release a paid game and make money. You can make a freemium game and not make any money from it if you don't have any Whales playing it."

"You're right and that model works now, but I think that over 3-10 years that market will decline because the audience will be able to get high quality content for free," says Lovell.

Contributing Editor

A Pocket Gamer co-founder, Jon is Contributing Editor at which means he acts like a slightly confused uncle who's forgotten where he's left his glasses. As well as letters and cameras, he likes imaginary numbers and legumes.


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I guess that would be a "no he has never worked on anything successful".
Jon remind me of the titles Nicholas Lovell has produced?