Freemium has been a business model I’ve mentioned in numerous articles since this site started. Everything from online MMORPGs to iOS games use it and it can be incredibly successful, especially if you have a very popular game. A report came out Thursday, Oct 14, 2010 from Flurry regarding the shift that is currently happening in revenues ads and virtual goods sales.
Virtual goods sales is basically in-game purchasing of virtual products such as boosts, special items, extra levels and more through the actual game instead of outside of it. The game itself is a full version of the game which, if you were not going to use this business model, you would charge for. However offering in-game items for sale allows developers to offer their games for free while still generating income without the need for ads.
One of the next steps in the Android Market evolution needs to be the allowance of in-game purchases. Even with paid apps and games now being in more countries it is still not enough and allowing in-game purchasing will allow people all over the world with the Android Market who can view free games to get the game, play it and decide if they want to buy in-game items or not. This increases the developers exposure and offers more potential customers for them while offering a much wider selection of games and apps for people who do not have access to paid games or applications yet.
How successful can Freemium be? Most MMORPGs online that offer this style of business can full support themselves, staff and pull a healthy profit just by using this business model. iOS games that use this also see a huge drive in downloads and in-game purchases. In fact it is so well receive that the Flurry report shows that in-app item purchasing has now far exceeded profits from ads for developers.
Ads Revenue vs Virtual Goods Sales on iOS
Currently the Android Market (and the platform itself) does not support in-game purchases. Originally it wasn’t even allowed but just like anything else, it changes as time moves on. While still not ‘officially’ supported or ‘officially’ allowed there are some games who do use this model thanks in part to using a 3rd party SDK to integrate this sort of feature into their game. There have been no games taken off the market for offering in-game item purchases either.
With Google buying up social products like Social Gold by Jambool and their rumored entrance into the social networking and gaming arena, in-game item purchases being supported will happen, it is only a matter of time. With Paypal supposedly coming on board this is even more of a possible reality. Rovio even mentioned that you will be able to buy an option in a future update of their game, Angry Birds, which will kill the ads in-game as well as offer the Mighty Eagle. How do they plan on doing this? Either they make their own method or wait for Google to offer something which will quite possibly be Paypal integration into the Android SDK for in-game purchases.
We are seeing a lot of solid games hitting the Android platform now and with hardware advancing on a monthly basis, gaming on Android is only going to get stronger. However to really pull more serious developers, especially from iOS, in-game purchasing will need to be supported.
Website Referenced: Flurry