Tuesday, September 6, 2011

The Way Of The Freemium

 Hello everyone, I am finally back after a little break, I miss one of my earlier Saturday post so was suppose to be back on the waiting list... but then something happen.  Yup @mysterycoconut revamp the whole iDevBlogADay (btw many thanks to Miguel for the great efforts he spend on this and to have continue this wonderful project) so that it follow more the AltDevBlogADay style of publishing, and the rules got a bit more relax.  Which came as a  blessing, so if the day we're suppose to publish we weren't able to do so, they wont be dire consequence as before.  But then you feel less pressure to publish on time... which I am guilty of, as I miss my first time with the new schedule oops ;-).

But fret not, today I didn't forgot and will have my blog post up before the end of the day and it's about a topic that have been on the back of my mind for a while and will definitely have impact on my future projects.  Many people have already have talk about it, but would like to give my opinion about it as my experience as a user.  It's of course about the new craze that is the new freemium model.  But what's is freemium?

According to the definition on Wikipedia it's the combination of the word FREE + Premium, and where the business model is to offer goods or service free of charge, but charge for the extras (hence my reference with the picture above for the famous "There ain't no such thing as a free lunch", but i'll come back on this).  But this model has exist since the early day of software on micro-computer where you were often getting a time or feature limited software as a demo version (sometime it was even the full thing with few restriction beside a nagging screen that was saying if you love this software to send a specific amount to the developer).  Those were the time where it was one of the easiest way for small developer to get their software to be spread around (as being free, everybody was allowed to copy/share them) and get more users in the hope that some of them will be paying customers.

That model then kind of disappear for a while, where it was becoming more common place to pay the full amount up front and be restricted in your right to distribute/use the software (EULA, DRM and other friendly stuff...).  But it then re-appear with the growing of web services, where it's a common business practice to offer a basic service package for free (which most people will took) and then offer extra features at a cost for people that really need them (more storage, bandwidth, no ads, etc...).  This model as also started to become more and more popular for the iOS platforms recently as a way to attract more customers.  And as people know, visibility on the AppStore with now the > 400,000 apps (I lost count, I think it's now over 500k?) is not an easy feat.

But it has evolve quite a lot, as originally on the AppStore they were no way to actually have one apps be limited in such way and have the customer buy a license to unlock the extra features.  You needed to have 2 separate apps, also and which still the case now the apps that have the limited features (can't have a date/time limit) can't show those features as disabled as it was common place on other platform for limited software.  So if the customer really like your "lite" version he needed to go back on the AppStore to buy the version with the extra features.  Also as another point of view, for the devs, this means to deals with 2 separate apps (if you design your thing well, it might just have been a few #ifdef to set, change a few configs and other ressource).  But then Apple introduced the wonderful world of In App Purchase or better known as IAP, with this it was now becoming possible to simply have one apps that is free but then becoming the premium version by paying for the extra contents.

And this is where it get quite interesting on what happened and how people have went different way to implement freemium.  At first what we were mostly seeing was extra contents such as levels, episode, extra character, etc... for game and additional/extra features for utility/apps.  Those could be compare to what we see on console as DLC, where you would buy extra maps for that FPS, new character for that fighting game.  But then we started to see consumable IAP, which is similar to what were seeing on Facebook game such as Farmville or on FREE MMORPG on the PC.  Where you can buy virtual currency with real money.  This is also the way of doing freemium that have been the source of a lot of heated discussion, where some people think this is the source of all evil and other that's the best thing since slice bread.

But why so much love or hate for this?  Well depend what kind of hat you're wearing, if you're more thinking as a consumer protection advocate you might think that those consumable IAP incite you to spend more money.  This could be compare to some addiction like gambling, where you feel you need to get a little bit more and can't stop.  If instead you're a developer thinking of getting a continuous revenue for your effort and getting more financially independent, this can be a great thing.  It's also about perception and how you have balance your game with those consumable IAP, one one side if your player never feel any urge to buy them, then you're doing it wrong.  On the other hand if the player feel force to buy your consumable IAP to enjoy the game, then this is where you will be label as the evil big bully trying to steal your lunch money.  The most difficult task for the developer is to find the right balance where everyone can be happy.  Does such game exist where a developer found the right balance?

I think their is, so far they have been 3 games that I have played/enjoyed and have implemented consumable IAP that have made me buy them and which also didn't annoy me or make feel force to do so.  But I have to admit this a fine line and I know I have to stay in control and not fall into the pattern of continuously buying those consumable IAP as in the long run it really gonna be costing alot.

The first game that I have experience consumable IAP that I like was Flower Garden from @noel_llopis which also provide static extra contents such as new garden and seeds.  In this case the consumable are fertilizer which come in different pack, they also made quite a lot of sense for the theme of the game of growing flowers.  But they are not a necessity for playing and enjoying the game, as several of the flowers can grow and bloom in less then a day if you care them correctly.  Where you start to feel the need for them is when you start to grow those more harder flowers which can take many days if not an entire week.  If you want to get those achievement or unlock more and more seeds this can become quite handy.  This game also have an interesting story as that it didn't any kind of IAP as it was first made/release during the time that no such thing existed.  Luckily it fell well integrated and doesn't look out of place, as I think it's important when adding consumable IAP that the game is design with this in mind and not something you try to tack on to it afterward.  Another interesting note, is that @noel_llopis wrote 2 great articles about the impact of adding those consumable IAP on his revenue stream, highly recommended that you all read them (The Power of In-App Purchases, Making A Living (Comfortably) On The App Store (aka The Numbers Post #2)).

The second one and third one are from one of the successful indie team that's been doing freemium game for a while which is the team at Nimblebit.  Of course I am talking about their game Pocket Frogs and Tiny Tower, which got millions of players around the worlds.  This does in turn increase your chance of getting high revenue from those consumable IAP, I know I bought some for those games and I am sure many others have too.  Here also the consumable aren't a necessity to play the game at his fullest, but it does help to speed the progress in the game.  In the case of Pocket Frogs you can either buy potion to help your frogs to grow faster, or buy stamps to get your delivery in your mailbox faster.  As for the consumable in Tiny Tower, it's a virtual currency that can let you reduce time for delivery or convert it to another currency to be able to buy new floors.  If you're patient enough you will get the same result as the consumable IAP, but why wait when by one click away you can reduce that time to almost nothing and hey it's only 0.99$ (you did get the game for free after all).

After playing those games I came to realize that consumable IAP isn't as bad as some people are saying.  As it does provide a convenient way and I would say even too convenient to spend less time waiting for something and progress more quickly.  But this come at a price, this is not free.  Hence why I say they are no such thing as a free lunch, one way or another we have to pay.  Either by spending more of our time (which we can't alway say is free as we often say time is money) in the game to progress or by going the quicker route by spending real money.  And as those games with consumable IAP in mind usually have good incentive, it's hard to not spend any money at some point.  Good or Evil?  I think it's again go back to the perception that consumer have about it, in some game people might feel cheated and that we're twisting their arm and in other place they will feel that it's a good deal and that they should buy some.  It's up to us to find the right balance between increasing revenue and keeping consummer happy.

I would like to hear more from your own experience/though about this, did you go freemium and if yes which way did you choose (static IAP such as levels, characters, items, etc... or consumable IAP like virtual currency, gaz, etc...)?

This post is part of iDevBlogADay, a group of indie iPhone development blogs featuring two posts per day. You can keep up with iDevBlogADay through the web site, RSS feed, or Twitter.

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