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Free-To-Play Is Likely Here To Stay For Awhile

Mobile Gaming USA, a two day summit and expo held in San Francisco California, is quickly increasing in relevance, not only because of the burgeoning mobile gaming market, but because the expo has managed to attract some of the most prestigious members of the industry, including the likes of Unity Technologies CEO David Helgason and former CEO of Electronic Arts, John Riccitiello. However, what is most interesting about this expo is not its star studded guest list, but rather the surprising data that has been revealed during the summit.

 According to Mobile Gaming USA, an astonishing 95% of all mobile gaming revenue is derived from the free-to-play business model. To put this to scale, in 2013, mobile gaming generated $13 billion in revenue. In other words, $12.35 billion came from free-to-play titles.

While the revenue data suggests that free-to-play is the safe route to go, Mobile Gaming USA also reports that converting free players to paying players is nothing short of a Herculean effort. Breakout hit, Clash of Clans, only derives revenue from 10% of its user base. Other mobile titles in the freemium category struggle to convert 1% of their user base into paying players.

Despite the obstacle of conversion, freemium titles and the free-to-play business model continue to proliferate and garner controversy. The oft loathed business model has particularly stirred ire among players of popular titles from Electronic Arts, which has released three highly successful freemium titles; Heroes of Dragon Age, Dungeon Keeper and Real Racing 3. The latter two titles experienced no shortage of player outrage as a vocal minority lashed out at what they perceived to be pay-walls (the point in a free-to-play game at which the player may only progress if they spend real world money) that ruined the gaming experience.

With regard to the Real Racing 3 controversy, Nick Earl, senior vice president of EA’s mobile division, told CNET that “There’s no question that going freemium was the right way to go.” Earl further added that “The vocal minority lashed out at freemium. We respect them and understand, but the market has spoken. That’s just where things are going.” Given the information reported by Mobile Gaming USA, Earl’s commentary seems to have been remarkably astute.

The successes of EA’s freemium titles, as well as the runaway success of titles such as Candy Crush Saga and Clash of Clans certainly help support Earl’s comments about the future direction of monetization models in mobile gaming.

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