Mobile games benefit from freemium model

Freemium makes mobile games a booming market

Mobile games have become a very prominant market for the game industry. Games for smartphones and tablets represent a market worth billions of dollars in revenue and this market has begun to attract game developers that had previously been focused exclusively on developing titles for consoles and PCs. Though mobile games generate a massive amount of revenue on a yearly basis, most of these games are entirely free, though boast of a wide variety of in-game transactions. This business model is often referred to as “freemium.”

In-game transactions relatively accepted by gamers

Freemium is a simple concept: Mobile games that are free to obtain and free to play, but provide gamers with the opportunity to purchase in-game items and power-ups that can make the game more enjoyable. This is where the majority of the revenue that is generated by mobile games comes from. The freemium model allows developers to offer services to gamers for a relatively low price and because these prices are so low, consumers tend to participate in in-game transactions on a regular bases.

Freemium opens mobile games to more consumers

Analysts from Index Ventures, a venture capital investment firm, suggest that the freemium model is ideal for the mobile games market. This model allows developers to price-discriminate individual consumers, eliminating the upfront costs that are associated with other business models. A typical console game can cost anywhere from $30 to $60, but most mobile games are offered for free, with additional content being offered for as little as $1. Index Ventures suggests that the freemium model does not exploit consumers, but rather allows for a broader consumer base to participate in mobile games.

Business model not accepted by all gamers

Index Ventures suggests that many consumers are willing to sink money into mobile games in order to gain as much entertainment from these games as possible. The freemium model may be great for developers, but it is not universally accepted among gamers. Many argue that the freemium model encourages developers and publishers to create games that are deliberately restrictive in order to heavily promote in-game transactions.