4 ms·

I think this is a great move. It will probably come as terrible news for manipulative game developers. From first-hand experience working at a company that did

I think this is a great move. It will probably come as terrible news for manipulative game developers. From first-hand experience working at a company that did this and first-hand developer testimonials, IAP in "free" games and its design has long been associated with forcing emotional, heat-of-the-moment-spurred buys from consumers - ie. You were so close to beating the level that time but you lost your last life :( Get an extra life right now and you'll kill it this time around!!!. Sadly, a portion of total players (1-2% from what I've seen) will fall for these emotional tactics and spend the money, often more than once. Even worse is when they later convince themselves that the money was well spent (say, for an extra life in Candy Crush). I hope Apple also follows suit, as some sources allude to.

jrockway 12y ago
What's the expected value over the lifetime of a game from these 1-2% of users? Do they spend thousands of dollars, or do they just spend $10 or $20? I still don't get why mobile games are aimed at "I want a game, but I only have $0.99 to spend." Computer games cost $60+.
- DanielStraight 12y ago
  I think "I want a diversion" is more common than "I want a game". Mobile games compete against Facebook, Twitter, the news, text messaging, anything else someone can do as a diversion on their phone. And none of those things cost anything at all. People who want a game and are willing to pay good money to get one generally expect a better experience than mobile can provide. I guess as more people go mobile-only, there will be a bigger market for higher priced mobile games, but I can't imagine anyone who considers themselves a gamer right now doesn't have either a console or a relatively high-end computer. (And I don't see anyone who doesn't consider themselves a gamer dropping more than $5 to play a game.)
  - TheCraiggers 12y ago
    >I think "I want a diversion" is more common than "I want a game". Mobile games compete against Facebook, Twitter, the news, text messaging, anything else someone can do as a diversion on their phone. And none of those things cost anything at all. People who want a game and are willing to pay good money to get one generally expect a better experience than mobile can provide. I agree with your general point, but I want to point out that the last sentence doesn't have to be true. Like tools in a toolbox, some platforms are more well-suited than others. The reasons vary for this, but in games it usually it comes down to control schemes. Mobile has its advantages as well- you always have it on you, likely has network connectivity 24/7, its unique control scheme, etc. I think mobile's biggest problem right now is creators are still trying to shoehorn last decade's games on a platform that was not designed for it. They may be different games than we're all used to, but there's no reason why mobile can't come into its own. That all said, I would rephrase your last sentence to "...generally expect a better experience than mobile currently provides." For what it's worth, I feel a game like Clash of Clans uses mobile's strengths very well (although I personally find it boring and its revenue model distasteful)- it makes good use of mobile's control scheme, makes good use of its platform's always-on mentality by delivering notifications of attacks, etc, and is social.
- Mithaldu 12y ago
  From what i read in articles about this, you have three groups: - people who pay nothing - people who pay about a full game's worth - people who pay astounding sums This works out because almost all AIP games sell cheats, which excert a different draw (or sometimes even a push) on players.
- dyarosla 12y ago
  The values differ amongst those gamers. But on average it amounts to those 1-2% CLV being >= $.99 (and exactly why the games are free to begin with). The strategy that these developers make is simply, if we have a larger pool of total users, and we lower barrier to entry of downloads (make it free), then you can guess that the 1-2% of paying users will grow linearly with number of total users. Making it free and marketing it as such lowers customer acquisition cost, while still retaining a low to decent CLV (and this is discounting the extreme case users who pay a lot higher than would be expected of a mobile purchase as well)
- winsome 12y ago
  Here's a good look into how much "whales" spend on IAP http://venturebeat.com/2014/02/26/only-0-15-of-mobile-gamers-account-for-50-percent-of-all-in-game-revenue-exclusive/ http://venturebeat.com/2014/02/26/only-0-15-of-mobile-gamers...
- doctorpangloss 12y ago
  Even among these 1-2% of users there is a significant skew in spending, where 20% of the users make 80% of the total revenue. In these games, you can say there are three kinds of payers: 80%: LTV of $5-10, or people who would have bought the game for $1-10 up front. A significant amount of additional revenue is earned from these users when you change from paid to free-to-play, because they end up paying not the $2.99 you charge at the door but the $9.99 they're actually willing to pay. 20%: LTV of $50-$1,000, or people who really like your game and understand how the mechanics of paying and playing tie together. ~1%: Unobservable LTV, people who will keep spending until your game dies, not until they get bored. These are your diehard fans, they'll buy your limited-run art posters from Kickstarter, they'll play all your sequels simultaneously, they will clamor for you not to shut down your servers, they'll ask you to make more of the same. A game like Clash of Clans has generated a cohort of people whose lifetime value is longer than the likely age of the game. If you play it, and appreciate how the mechanics of the paying integrate with the mechanics of the game, you'd understand how it differs significantly from your typical psychologically-manipulative casino. Suffice it to say, it is extraordinarily hard to make a Clash of Clans game. With regards to your specific example, I think Blizzard with Hearthstone and Valve with Team Fortress 2 both showed unequivocally that, even for people who are willing to spend $60 (or TF2's case, $25), you earn 5x more (Valve's numbers) with a free-to-play title with no pay-to-play mechanics (like TF2). I don't know how much more Hearthstone has earned by being free-to-play, but TCG mechanics tend to earn very well in this setting.
themartorana 12y ago
I think we're skipping the non-exploitative companies that rely on this model. Like mine. We tried selling a game - it doesn't work. We have a free (ad-supported) and paid version of our game, and we make 95% of our money on ads. Adding removing ads as an iAP to the free version, instead of having multiple versions of the game on the store, saw that go from 5% to 15% or so. It's RARE to have any true success in the mobile game market. It's even RARER to have that come from a game that has an up-front cost. iAP is the new shareware. Anyone that bitches about iAP has to get their head around this. The market dictates how people are willing to spend money, and it's via iAP, not up-front costs. We love making games. We love our job, and our company, and we want to keep doing it. But there's a hard truth that ad-supported free games have very, very low ARPU - for us, in the $0.20 range. We're lucky to have millions of downloads and hundreds of thousands of daily active users, but very few game studios are. Someone that buys the ad-free iAP is worth 5x our average ARPU. So selling people customizations or whatever else iAP is the only way to raise ARPU to anything sustainable. Gamers don't (and never will) spend $60 on a mobile game again, and we have employees to pay and families to support. Yes, it can get exploitative, but if you have a better idea of how small game companies should survive - real ideas, not trolling - we'd love to hear them, because we would implement them immediately. Edit: grammar.
- rgbrgb 12y ago
  Right, this will have short term negative impact on your revenue but in the long run it may encourage more users to download the paid version because AAA iAP apps no longer set the "free" standard for pricing.
- gtaylor 12y ago
  As a fellow developer at a software company, I totally get where you are coming from, and can see the challenge this presents. It could absolutely require a change of direction for your company. As a consumer, I really don't like being asked to buy things in a Free game. I'm more than willing to shell out for a quality game upfront, and do so without hesitation. The "free" games upselling me at every turn has honestly made me a bit burnt out with the Play store. If your app/game is of high quality, let me try it for a few minutes and I'll buy it if I like it, no problem. No need to badger me about "optional" extras. People like me may or may not be a large chunk of the Android-using population, but I figured I'd share.
kosei 12y ago
I take issue with the idea of considering consider this a "sad" event or assume that people are "falling" for emotional tactics and that they're later "convincing themselves" that the money was well spent. I think if you break down the vast majority of expenditures, you could say this. * Bought a $500K house over a $400K house, or over a $25K house that was completely livable? Seems like the buyer fell for emotional tactics and peer and/or realtor pressure. Later they convinced themselves the money was well spent. * Upsold on a new phone? Apple used emotional tactics to compel you to spend that money when you weren't really interested. In games: * Spent $200 during the Steam Sale on games you never actually played? How manipulative of Valve. * Spent $1,000 buying Magic Cards after-market so you could win at a local tournament? It's a psychological sickness that you'll later convince yourself was just you "having fun". There's a serious problem when people analyze any customer's behavior as being different from their own, and therefore irrational. I do think that there are many companies that trying to take advantage of consumers, but to another commenter's point, there are also many companies doing this responsibly. You could argue that many industries or businesses work on irrational behavior of consumers, but I think it's a slippery slope to categorize it as irrational - it's just behavior. People spend their income on all forms of entertainment good and bad, and frankly I was unhappy a lot of the time buying console games for $60 that never lived up to expectations. At least with free-to-play games I can choose what I'm paying for.
- watwut 12y ago
  The whole problem started with people who paid/downloaded and felt lied to afterwords. Better analogy would be an advertisement for renovated house with fixed ceiling and you find the ceiling was just colored and is leaking water during rain. In most free-to-play games I have seen, player does not really know the real value he is paying for. At least when you do first buys, you usually do not know how far you can get with that item and when you will have to buy another one.
- platinum1 12y ago
  Economics says people will pay what they think something is worth, and it's up to the consumer to balance the cost vs. the utility they get from it. In your examples the key is if the buyer was fully informed, or surprised and learned something new after buying that changed their mind. It only works as well as the consumer is informed about the product, the market, and the alternatives. Paying $200 for a bunch of Steam games might be fine, as long as you know what you're getting... Or, you might feel scammed if you thought you were getting a complete game and later discovered you had to pay more via IAP to get what you thought you paid for in the first place. This change (not calling IAP apps "free") is part of trying to inform the consumer. I'm not sure if it's the best solution as IAP seems like its own category, but that's the goal.
sebastialonso 12y ago
> [...] "free" games and its design has long been associated with forcing emotional, heat-of-the-moment-spurred buys from consumers Why is this a bad thing? You decided to download and to play the game. You put yourself under the "game" rules. You are an adult, not a child. >Even worse is when they later convince themselves that the money was well spent (say, for an extra life in Candy Crush). This is a highly subjective claim to make it pass as an argument. I may personally agree that every money spent on games is money not well spent but that is just my opinion. Users are not babies. As long as no gun is pointing at them (i.e. the game gives you any content for free but also offers you more if you pay ), every purchase they do is legitimate. Maybe I'm losing the point of this whole debate, I don't understand what you think users need protection against.

jrockway 12y ago

What's the expected value over the lifetime of a game from these 1-2% of users? Do they spend thousands of dollars, or do they just spend $10 or $20? I still don't get why mobile games are aimed at "I want a game, but I only have $0.99 to spend." Computer games cost $60+.

DanielStraight 12y ago
I think "I want a diversion" is more common than "I want a game". Mobile games compete against Facebook, Twitter, the news, text messaging, anything else someone can do as a diversion on their phone. And none of those things cost anything at all. People who want a game and are willing to pay good money to get one generally expect a better experience than mobile can provide. I guess as more people go mobile-only, there will be a bigger market for higher priced mobile games, but I can't imagine anyone who considers themselves a gamer right now doesn't have either a console or a relatively high-end computer. (And I don't see anyone who doesn't consider themselves a gamer dropping more than $5 to play a game.)
- TheCraiggers 12y ago
  >I think "I want a diversion" is more common than "I want a game". Mobile games compete against Facebook, Twitter, the news, text messaging, anything else someone can do as a diversion on their phone. And none of those things cost anything at all. People who want a game and are willing to pay good money to get one generally expect a better experience than mobile can provide. I agree with your general point, but I want to point out that the last sentence doesn't have to be true. Like tools in a toolbox, some platforms are more well-suited than others. The reasons vary for this, but in games it usually it comes down to control schemes. Mobile has its advantages as well- you always have it on you, likely has network connectivity 24/7, its unique control scheme, etc. I think mobile's biggest problem right now is creators are still trying to shoehorn last decade's games on a platform that was not designed for it. They may be different games than we're all used to, but there's no reason why mobile can't come into its own. That all said, I would rephrase your last sentence to "...generally expect a better experience than mobile currently provides." For what it's worth, I feel a game like Clash of Clans uses mobile's strengths very well (although I personally find it boring and its revenue model distasteful)- it makes good use of mobile's control scheme, makes good use of its platform's always-on mentality by delivering notifications of attacks, etc, and is social.
Mithaldu 12y ago
From what i read in articles about this, you have three groups: - people who pay nothing - people who pay about a full game's worth - people who pay astounding sums This works out because almost all AIP games sell cheats, which excert a different draw (or sometimes even a push) on players.
dyarosla 12y ago
The values differ amongst those gamers. But on average it amounts to those 1-2% CLV being >= $.99 (and exactly why the games are free to begin with). The strategy that these developers make is simply, if we have a larger pool of total users, and we lower barrier to entry of downloads (make it free), then you can guess that the 1-2% of paying users will grow linearly with number of total users. Making it free and marketing it as such lowers customer acquisition cost, while still retaining a low to decent CLV (and this is discounting the extreme case users who pay a lot higher than would be expected of a mobile purchase as well)
winsome 12y ago
Here's a good look into how much "whales" spend on IAP http://venturebeat.com/2014/02/26/only-0-15-of-mobile-gamers-account-for-50-percent-of-all-in-game-revenue-exclusive/ http://venturebeat.com/2014/02/26/only-0-15-of-mobile-gamers...
doctorpangloss 12y ago
Even among these 1-2% of users there is a significant skew in spending, where 20% of the users make 80% of the total revenue. In these games, you can say there are three kinds of payers: 80%: LTV of $5-10, or people who would have bought the game for $1-10 up front. A significant amount of additional revenue is earned from these users when you change from paid to free-to-play, because they end up paying not the $2.99 you charge at the door but the $9.99 they're actually willing to pay. 20%: LTV of $50-$1,000, or people who really like your game and understand how the mechanics of paying and playing tie together. ~1%: Unobservable LTV, people who will keep spending until your game dies, not until they get bored. These are your diehard fans, they'll buy your limited-run art posters from Kickstarter, they'll play all your sequels simultaneously, they will clamor for you not to shut down your servers, they'll ask you to make more of the same. A game like Clash of Clans has generated a cohort of people whose lifetime value is longer than the likely age of the game. If you play it, and appreciate how the mechanics of the paying integrate with the mechanics of the game, you'd understand how it differs significantly from your typical psychologically-manipulative casino. Suffice it to say, it is extraordinarily hard to make a Clash of Clans game. With regards to your specific example, I think Blizzard with Hearthstone and Valve with Team Fortress 2 both showed unequivocally that, even for people who are willing to spend $60 (or TF2's case, $25), you earn 5x more (Valve's numbers) with a free-to-play title with no pay-to-play mechanics (like TF2). I don't know how much more Hearthstone has earned by being free-to-play, but TCG mechanics tend to earn very well in this setting.

themartorana 12y ago

I think we're skipping the non-exploitative companies that rely on this model. Like mine. We tried selling a game - it doesn't work. We have a free (ad-supported) and paid version of our game, and we make 95% of our money on ads. Adding removing ads as an iAP to the free version, instead of having multiple versions of the game on the store, saw that go from 5% to 15% or so. It's RARE to have any true success in the mobile game market. It's even RARER to have that come from a game that has an up-front cost. iAP is the new shareware. Anyone that bitches about iAP has to get their head around this. The market dictates how people are willing to spend money, and it's via iAP, not up-front costs. We love making games. We love our job, and our company, and we want to keep doing it. But there's a hard truth that ad-supported free games have very, very low ARPU - for us, in the $0.20 range. We're lucky to have millions of downloads and hundreds of thousands of daily active users, but very few game studios are. Someone that buys the ad-free iAP is worth 5x our average ARPU. So selling people customizations or whatever else iAP is the only way to raise ARPU to anything sustainable. Gamers don't (and never will) spend $60 on a mobile game again, and we have employees to pay and families to support. Yes, it can get exploitative, but if you have a better idea of how small game companies should survive - real ideas, not trolling - we'd love to hear them, because we would implement them immediately. Edit: grammar.

rgbrgb 12y ago
Right, this will have short term negative impact on your revenue but in the long run it may encourage more users to download the paid version because AAA iAP apps no longer set the "free" standard for pricing.
gtaylor 12y ago
As a fellow developer at a software company, I totally get where you are coming from, and can see the challenge this presents. It could absolutely require a change of direction for your company. As a consumer, I really don't like being asked to buy things in a Free game. I'm more than willing to shell out for a quality game upfront, and do so without hesitation. The "free" games upselling me at every turn has honestly made me a bit burnt out with the Play store. If your app/game is of high quality, let me try it for a few minutes and I'll buy it if I like it, no problem. No need to badger me about "optional" extras. People like me may or may not be a large chunk of the Android-using population, but I figured I'd share.

kosei 12y ago

I take issue with the idea of considering consider this a "sad" event or assume that people are "falling" for emotional tactics and that they're later "convincing themselves" that the money was well spent. I think if you break down the vast majority of expenditures, you could say this. * Bought a $500K house over a $400K house, or over a $25K house that was completely livable? Seems like the buyer fell for emotional tactics and peer and/or realtor pressure. Later they convinced themselves the money was well spent. * Upsold on a new phone? Apple used emotional tactics to compel you to spend that money when you weren't really interested. In games: * Spent $200 during the Steam Sale on games you never actually played? How manipulative of Valve. * Spent $1,000 buying Magic Cards after-market so you could win at a local tournament? It's a psychological sickness that you'll later convince yourself was just you "having fun". There's a serious problem when people analyze any customer's behavior as being different from their own, and therefore irrational. I do think that there are many companies that trying to take advantage of consumers, but to another commenter's point, there are also many companies doing this responsibly. You could argue that many industries or businesses work on irrational behavior of consumers, but I think it's a slippery slope to categorize it as irrational - it's just behavior. People spend their income on all forms of entertainment good and bad, and frankly I was unhappy a lot of the time buying console games for $60 that never lived up to expectations. At least with free-to-play games I can choose what I'm paying for.

watwut 12y ago
The whole problem started with people who paid/downloaded and felt lied to afterwords. Better analogy would be an advertisement for renovated house with fixed ceiling and you find the ceiling was just colored and is leaking water during rain. In most free-to-play games I have seen, player does not really know the real value he is paying for. At least when you do first buys, you usually do not know how far you can get with that item and when you will have to buy another one.
platinum1 12y ago
Economics says people will pay what they think something is worth, and it's up to the consumer to balance the cost vs. the utility they get from it. In your examples the key is if the buyer was fully informed, or surprised and learned something new after buying that changed their mind. It only works as well as the consumer is informed about the product, the market, and the alternatives. Paying $200 for a bunch of Steam games might be fine, as long as you know what you're getting... Or, you might feel scammed if you thought you were getting a complete game and later discovered you had to pay more via IAP to get what you thought you paid for in the first place. This change (not calling IAP apps "free") is part of trying to inform the consumer. I'm not sure if it's the best solution as IAP seems like its own category, but that's the goal.

sebastialonso 12y ago

> [...] "free" games and its design has long been associated with forcing emotional, heat-of-the-moment-spurred buys from consumers Why is this a bad thing? You decided to download and to play the game. You put yourself under the "game" rules. You are an adult, not a child. >Even worse is when they later convince themselves that the money was well spent (say, for an extra life in Candy Crush). This is a highly subjective claim to make it pass as an argument. I may personally agree that every money spent on games is money not well spent but that is just my opinion. Users are not babies. As long as no gun is pointing at them (i.e. the game gives you any content for free but also offers you more if you pay ), every purchase they do is legitimate. Maybe I'm losing the point of this whole debate, I don't understand what you think users need protection against.