In-App Purchasing falters as Freemium In-App Advertising Rises

“This suggests that – as we have previously noted – the early days of life are absolutely vital when it comes to ‘converting’ Freemium players on mobile. It is imperative to make every effort to put the right experiences and offers in front of players from the very moment they begin play in order to maximize the revenue generated in what can be a very short window.”

Excerpt from a study by Swrve, Game Developer Consultant conducted in the First Quarter of 2014

For those of you aspiring Video Game Developers planning to use the Freemium Gaming Model as described in Smartphones and Apps – Freemium Games are No. 1, be it for Desktop or for Mobile, I have some very bad news.

First Console Gaming is dead and dying thanks to Tablets and UltraBooks i.e. Ultrathin, lightweight Gaming Laptops as explained in How the Apple iPad killed Ultrabooks, Printing and the Mouse as the World Rediscovers Tablets and Apple iPad Air’s the World Thinnest Tablet and Apple iPad Mini 2’s a 3DS and Vita killer.

Now it also dying thanks to a lack of engagement with Mobile Games, with Tablet and smartphone owners showing a tendency to purchase and download a full functional Free Game or Premium Game, with Freemium Game mostly making money from Advertising, if the Stats fromGame Developer Consultant Swrve are to be believed.

Amazon Fire TV – Trend towards 2-in-1 Streaming Set Top Box and Gaming Consoles

It may be eventually revived by the likes of Apple, Google, and now Amazon making their Set Top Streaming Boxes capable of playing Console Games. In fact, Amazon has already launched their Streaming Set Top Box, the US$99 Amazon Fire TV with a US$40 optional Game Controller.


Effectively killing the hopes of Indie Gaming Hardware makers such as Ouya and Playjam via the 2-in-1 Devices gives Amazon Prime buyers the Best of Both Worlds and thus making buying Video Games like buying a book for your Kindle. More on the Amazon Fire TV in a future article!

Freemuim Gaming Model is dying – Full functional Free Game or Premium Game with Ads preferred

Second, some recent Stats fromGame Developer Consultant Swrve conducted in the First Quarter of 2014 suggest that contrary to the study done by Flurry in July 2011, Freemium Apps have a low level of engagement. Almost 2/3 of first time downloader’s eventually removing a Freemium App after downloading and installing it on their mobile Device, be it an Apple iPhone or Apple iPad or other Device.

Back then, the Flurry, which then had suggested that Freemium Apps made more money and sales than Premium Apps, got a lot of press time on the Geezam blog, as I’d done an article touting the virtues of Free in Smartphones and Apps – Freemium Games are No. 1. Now comes the Swrve Stats, Swrve of course being a company that specializes in helping Developers design Strategies to make money from In-Game and In-App Purchases and developing In-Game and In-App Advertising.

With that bias as it relates to Swrve’s Stats being made clear, here’s how it shells down:

  • 66.1% of first time downloaders stop playing Freemium smartphone and Tablet Games
  • within 24 hours of their first session
  • 19% only open their newly installed Freemium Game only once
  • 54.5% open their newly installed Freemium Game five or more times over a 90 day or 3 month period
  • 2.2% playing Freemium Games made In-App purchases over a 90 day or 3 month period
  • 3.3 is the average number of In-App Purchases within Freemium Games
  • US$20.62 spend on In-App Purchases within Freemium Games
  • US$0.45 in Revenue from In-App Purchases per each Freemium Game installed

Flappy Bird and In-App Advertising – Future monetization Model for Freemium Apps

What this means is that Game Developers of Freemium Games make the majority of their profit from Advertising. A fact that would explain the phenomenal success of the Mobile Game Flappy Bird, which according to its Vietnamese Developer Dong Nguyen, head of the DotGears Developer Company, had the following metrics:

  • US$50,000 in earnings per day from ad revenue alone
  • 50 million downloads thus far
  • 47,000 reviews in the App Store

In its heyday earlier in February 2014, Flappy Bird, a 90’s Arcade styled that looked like it borrowed the pipes from Super Mario Brothers played on the Nintendo Super NES have, held pole position on the Apple ITunes App Store charts and actually locked down the No. 2 spot on the Google Play Store locked.

Launched in May 2013 on the Apple iTunes Store, it’s frustrating level of Gameplay for what was obviously a simple task of flying a silly flightless bird through a pipe maze by tapping the screen quickly shot it to superstardom and made Developer Dong Nguyen a rock star overnight.

In his case the majority of the revenue he made from his Game was not from In-App purchases, but from Advertisements that popped up on the screen during Gameplay, confirming the conclusion of Game Developer Consultant Swrve. With those metrics and its popularity, US$50,000 per day wasn’t bad cheddar to make.

But it also meant he was getting a phenomenal amount of attention from the mostly American Mobile App players and even the Press, both Traditional and Social Media, many of whom may have probably been flaming i.e. spamming with insults and curses, his email accounts and Twitter Page with insults. This was most likely because of how deceiving simple yet frustratingly difficult it was to even make a double digit score in the Game.

He couldn’t take it anymore and he eventually took down the Game on Sunday February 9th 2014. Developer Dong Nguyen might return, according to some Media Reports, but until he does, many will herald his Game as genius, based on the number of clones that have popped up before and after the App got pulled, such as Ironpants, currently holding the No. 1 and 2 spot on the Apple iTunes and Google Play Store.

Granted, US$50,000 per day is chickenfeed when compared to Premium Games such as Threes!, PopCap’s Bejeweled and iWin’s JewelQuest, King’s Candy Crush Saga and even Rovio’s Juice Cubes, which still make more revenue per Game but are least popular in terms of total downloads on both Apple iTunes and Google Play Store.

But now that the secret’s out, more Jamaican Developers will realize that they have to shift their focus a bit. The conclusions are as follows:

  • Games launched on Apple iTunes will garner more revenue than Games launched on the Google Play store, as Apple iPhone owners, being more affluent, are more likely to spend
  • Freemium Games, once designed with the highest quality and sold on Apple iTunes, will garner excellent revenue if it incorporates In-App Advertising
  • In-App Purchasing is dying, as Americans are showing a reluctance to spend money if they can’t progress in a Game that keeps asking them to pay ever time they wanna go to a higher level

I say “Genius” as Dong Nguyen’s Flappy Bird revealed what the Swrve Study now puts in numbers: Freemium Games can make more money if the App is of a higher Quality and incorporates In-App Advertising.  It also hints at a way for advertisers to make money by designing Game Apps with Advertising built into the Apps and the ability to win physical and Cash Prizes thrown in. After all, as we Jamaicans say, “encouragement sweeten labour”!


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Lindsworth is a Radio Frequency and Generator Maintenance Technician who has a knack for writing about his work, which is in the Telecoms Engineering Field. An inspired writer on themes as diverse as Autonomous Ants simulations, Power from Lightning and the current Tablet Wars.