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Move over Freemium: Paymium is the New Game in Town

By on October 20, 2011

This post was originally published as part of a regular column on Gamasutra.

Freemium or free-to-play have been the business model buzzwords in games for the last two years. We’ve begun to move from the kneejerk reactions (“they’re not even games”, “people who play them are stupid”) to an emerging acceptance that freemium games are a viable business that can also support fun, engaging games.

I also think that we’re moving beyond freemium.

A recent report from Distimo was widely reported as saying that In-App Purchases accounted for 72 percent of revenues on iOS devices. Given that only 4 percent of games on iOS devices even have IAP, that was an amazing stat.

The press reports were not entirely accurate. Distimo actually said that games with IAP accounted for 72 percent of revenues, including the cost of the buying the game in the first place.

Enter the world of Paymium™.

What’s Better Than Free? Paid For

Mark Rein, outspoken VP at Infinity Blade and Unreal developer, has said that he could not imagine launching a game without in-app purchases that were ready on launch on iOS ever again.

Infinity Blade was a premium title that sold for as much as $5.99 on a platform where free or $0.99 have become the norm. Within two weeks, Epic had released IAP with price points that reached as high as $50.

Before long, revenues from IAP were approaching those from initial sales. It wouldn’t surprise me if Epic is now making more money from IAP than it is from initial sales of the game.

So Do You No Longer Support Free?

I remain a huge supporter of free. I believe that free is the natural price point on any platform where the price of making one more copy is as close to zero as makes no odds. There are some situations where I believe paid may, possibly, be a better solution:

  • If you have a strong brand: the primary advantage of free is that people who don’t know your IP, brand, or game can experience it easily. If you already have a strong brand, you may be able to price high. (Few brands are actually this strong)
  • If you are a marketing-led organisation: If marketing is your USP as a business, you know how to persuade gamers to part with their money for a game. It might be worth playing to your strengths.
  • If your product is the best game the world has ever seen: this is highly unlikely

In essence, you will have to spend money to market your game; the higher the barrier to entry (i.e. the price), the more likely you are to have to spend lots of money to market your game. So in most cases, I would argue in favor for free.

But whether I am arguing for free or not, I always support allowing users to spend more money in the course of their enjoyment of the game.

The internet has enabled you to find your biggest fans and let them spend more money with you. Whether your game is free or paid-for, it will have cost you money to acquire customers. Some of those customers will love what you do. How will you enable these fans to spend lots of money from you?

The screenshot of Infinity Blade’s iTunes page shows you the top in-app purchases for the game. The most popular upgrade (for a game that sells for £3.99) is £2.99. They also sell IAP for much higher rates, and in total IAP, is about half their revenue.

I believe that games should go free, or they should go expensive. Never be cheap. But always, always, always offer IAP.

Move over freemium, Paymium is here to stay.

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: