Freemium & Premium on iOS

Stuart Hall conducted an interesting App Store Experiment. He created a fitness aid, 7 Minute Workout, and initially put it on the iOS app store without any fanfare. Version 1.1 added social sharing, and Hall sent out e-mails to ten top review sites – none of which even bothered to install the app. Version 1.2 added iPad support, and still nothing much changed. For all three versions, daily sales hovered around 20–40 units. Then he released a free version, and downloads instantly jumped to 65–84 thousand units for the next three days.

Naturally, this volume declined quickly but was still around 10,000 after a week. Now Hall added a “Pro” version for $1.99 IAP, achieving a conversion rate of 2–3% of users. However, the total number of downloads was so much higher for the free version than for the initial paid version that revenue tripled, from $22 to $65 per day, later reaching $75 with further updates.

Chris Pruett’s talk Lessons from Wind-up Knight and Rise of the Blobs (transcribed by Gregg Tavares) shows a similar pattern. Wind-up Knight was released for free on Android and did very well after being featured by Google. The iOS version was initially priced at $0.99 and stagnated at a low level, but jumped to a third of Android downloads after going free. Pruett’s experience is notable as a rare Android success story: both (free) games were more popular on Android than iOS, with similar IAP conversion rates on both platforms. The key was apparently Google’s promotion, and a focus on Japan which supplied a large share of profits.

The success of “freemium” games is not new. Much has been written about their extreme manifestations, virtual treadmills hawked by incessant advertising to attract a few highly profitable “whales.” Let’s ignore this sordid subject and instead look at a remarkable and uplifting example from the opposite end of the spectrum.

A Challenger Appears

Slitherine’s Battle Academy for iPad launched at an outrageous $20 – and proceeded to outsell the PC version 5:1, later approaching 10:1. This despite the fact that Slitherine is a wargame publisher with deep PC roots, and despite the PC version being priced at a mere $30 – not much higher in absolute terms, and much lower relative to average platform pricing. Even more intriguingly, Slitherine observed neither a great sales boost from the free trial version on iOS, nor any large detrimental effect from piracy on the PC. Apparently these sales represent iPad users happy to pay a lot for a game that fills an underserved niche, based only on the good reputation of developer and product. Slitherine is convinced, at any rate:

The tablet versions of Slitherine’s games now contribute more than 25 per cent of total revenue, marking it out as a more reliable long-term bet than retail. As such, Slitherine has 19 new tablet games in development.

Granted, when they say “tablet” you should read “iPad.” Slitherine’s store page shows ten iPad titles versus three for Android, and Battle Academy is still iOS exclusive.

That’s understandable. Codito’s board game adaptation Tigris & Euphrates released new IAP only on iOS because “sales of the Android app have yet to even justify the time we spent doing the port, let alone spending more time adding features.” Capybara’s multi-platform game Sword & Sworcery pulled in 55% of its total net revenue on iOS, another 35% on Windows… and all of 9% on Android. That’s for about 8 months presence on Android, versus 14 months on Windows and 26 months on iOS, but Android still generated only half as much revenue per month as iOS and Windows. Significantly, both games are not free to download.

Sweeping Conclusions

Let’s draw some bold sweeping conclusions from this handful of anecdotes!

  • Android users don’t pay upfront for anything but are happy to pay for IAP.
  • Apple iOS users are good “freemium” customers, too, but will sometimes pay premium prices upfront.

The ten thousand dollar question – what’s the definition of “sometimes”? Battle Academy likely represents the optimal case: a distinctive product with a built-in audience of affluent customers who already know the publisher and have been waiting for just that product. The further away you get from that ideal, towards unknown developers and products that don’t stand out as much, the more likely you’ll have to go freemium. The success of a few expensive apps won’t slow the freemium flood, but premium-priced games now look like a sustainable niche on iOS. That’s more than I would have expected a year ago.

2013-08-29: David Dunham said in the latest Game Design Round Table that his King of Dragon Pass is among the iOS app store’s top 10% in terms of revenue. This is another game that fits the Battle Academy pattern: relatively expensive at $10 but highly distinctive and with a built-in audience thanks to its classic PC version. In concrete numbers, KoDP arrived on iOS in September 2011, crossed 30k copies sold by March 2013, and reached 34,567 copies by July 2013. The last period was aided by a temporary price cut, but the game was never free.

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