It’s a good time to be writing and selling digital games right now. Revenues direct from games are up 4% across all formats, which includes PCs, consoles and mobile devices, free and paid variants, while advertising spend continues to line app developer pockets. Happy times.
Gaming has diversified to an extraordinary level for manufacturers. For decades it was the same: you sell a console, and then sell some games for it alongside other software houses, and that was it. Player usage insights were from surveys and piracy was rampant. But the internet changed all that. Players don’t buy CDs or DVDs any more; they download games, and this gives makers extremely fine control over who gets what and for how much.
And that’s before we even consider mobile gaming. This has evolved to the new phenomenon of the in-app purchase. You get the app for free, to adopt you as a user, and then an increasing scale of cost options are presented. If you’re one of those users who scoffs at the idea of buying anything, then don’t worry; the app developers saw you coming. You and the 95% of other downloaders. It’s those five-percenters that dig deep and fund the apps we enjoy for free.
But there are varying degrees of success in this approach, and it’s surprisingly easy for even the biggest to get it wrong. A good example is Nintendo’s new Super Mario Chase mobile game. It borrows the best of the Japanese gaming giant’s nostalgic back catalogue, with our plucky New York plumber back at home in his platform adventures but with a modern twist; the screen scrolls automatically and a simple set of screen interactions guide Mario around various obstacles. It’s perfect for mobile.
Yet there is a catch: the first World in the game comes free of charge, and then users are hit with a flat £7.99 fee to open up the rest of the game. This isn’t unreasonable for an app developer – they are obviously looking for a return for the investment in their time – but in today’s world of snack gaming, it’s the fastest way to shut down a user’s interest in an app.
Consider Angry Birds 2 by comparison. Like Mario, the game is rich in detail and graphical quality, but has what I think is the best revenue model of all: a blend of advertising and in-app purchases to cater for all tastes.
This is genius; it means players like myself who seldom ever make an in-app purchase still have to go through the advertising videos in the app to either earn extra lives or transition between levels. And to ensure I don’t burn out and keep coming back for more, those free lives are limited for around 20 minutes, with a countdown to control gameplay activation. That’s the only penalty for me, especially as I play the game intermittently. The fact that I can recall many of the advertising videos presented to me is a bonus to Rovio no doubt, especially as most of them are marketing other mobile games, but it does prove the open approach works.
This model is similar to how YouTube operates its music videos, and Spotify’s freemium pricing model. You consume adverts to access services that would otherwise cost you money. The advertisers are all but guaranteed you’ll see or hear the advert, get some useful analytics and potentially insightful anonymised demographic data too.
For Nintendo, as a console manufacturer and game developer at the same time, the freemium model is perhaps less palatable. It may not fit their wider product and cost strategy, especially with their new Switch console on release. But in the mobile gaming industry, a different approach is required. With such short attention spans to apps in general, and limited time to play them, you’re going to significantly cut down your potential audience.
The moral of the story is not to put up barriers in the way of your user base. Retention will produce a better revenue yield over time as opposed to one-off fees or those 5% who regularly execute in-app purchases. That will continue to help the industry grow as it is.