One of the greatest mistake game companies make is building or launching products that are paid apps, not free-to-play (F2P), which then monetize through micro-transactions. Despite the fact that survey after survey shows F2P games generate more revenue than paid apps, virtually all the investment money goes to F2P products (and VCs are pretty intelligent) and most companies that abandon paid apps for F2P never go back, there are a surprisingly high number of companies still focusing on the paid app model. In particular, many mobile studios whose roots are in the traditional (console) gaming world still prefer the paid app model. As I am often asked to help game companies, it is very frustrating when they forgo my advice and build a paid app. The usual refrain is “But look at Angry Birds.”
A recent analysis by Forbes (“Rovio’s Revenue Crisis and the App Market Evolution”) shows beyond a shadow of a doubt it is just foolish to still be building paid apps, even if you are Rovio. To summarize the key analysis and findings from the Forbes data:
- As of 6 March, Rovio does not have a game ranked above 90 in the US charts of top grossing iPhone apps (Apple ranks top grossing by revenue generated from the app).
- Angry Birds Star Wars was 91 in the top-grossing chart and Bad Piggies was 100, despite their ranks of 8 and 13, respectively, on the top Free chart (Apple ranks top free based on number of downloads).
- This analysis shows how download volume performance and revenue performance are now barely correlated; this represents a major change, as the original Angry Birds was in the top 20 grossing apps for 22 months.
- Conversely, the top grossing iPhone app (Clash of Clans from Supercell) is ranked 70 on the download charts.
- Outliers show this trend even better. Rage of Bahamut, the card battle game from DeNA, is not in the top 1,000 in terms of downloads but is number 14 when it comes to generating revenue. Rage of Bahamut actually generates more revenue than Temple Run: Oz, the number one download.
- The article points out this phenomenon is the same on both iOS and Android and in all virtually all territories.
Given that your goal is to make money, this data shows that you then should create a game that is meant to make money (as crazy as that sounds). Not only does the Forbes data show the paid download model is not working (by Rovio’s absence from the top of the charts), it shows the importance of building an app that will do a great job of monetizing.
The key is to build the game with optimizing monetization as the goal from the first day of development. If you build to have a great paid app you will not be able to turn it into a great F2P experience after launch. Monetization needs to be integrated in the design to work well, especially on an F2P app.
The worst mistake you could make would be ignoring this data. I recently met with a really smart dev studio that had been planning on creating a paid app, and when they read the Forbes article they realized it was the wrong path and are now redesigning it for F2P. As he said to me, “You can’t deny the data in our industry.” Although it is difficult to change, it is worse to fail, so look at the data and build accordingly.
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