The game Spirits of spring (2014), a collaboration of Minority Media Inc and Larva Game Studios, was launched in a premium model. Despite the low price and kind comments, they had several downloads that they don’t want to remember.
This experience and his desire to be popular convinced Larva Game Studios to try a freemium business model with Night Vigilante (2015), his first intellectual property development entirely his. The objective: to obtain higher numbers of downloads and income. Yeah. Do business with free videogames. Everything makes sense. But how does a freemium business model work? How offering your free product allows you to earn money?
Freemium applications achieve popularity very quickly and earn more revenue in both the App Store and Google Play, and it’s not black magic.
Free vs. free
Maybe you wouldn’t go to a library if it wasn’t open. But if you want to take a book, you pay a membership. Or you would prefer to go to a bar without a cover, but you will pay for the beers.
In the digital field, the freemium model works when expenses are close to zero, explains Chris Anderson in his famous book, Free: The Future of Radical Price (2009).
Once an app is finished, it doesn’t matter if you have one or a million customers. Storage and distribution will cost you almost the same. And if you turn your users into your product’s apostles, with rewards for suggesting it, you don’t need to spend on advertising. Have you seen a Candy Crush ad that isn’t an annoying friend’s invitation?
They are the advantages of having a product made of bits and not of atoms: cost reduction. An app is only enough to copy its bits from the server where it is stored on a mobile device. Unfortunately, that cannot be done with the atoms that make up a pizza.
However, costs and expenses still exist.
This you must pay to sell for free
To develop any game, however simple, you need a team of creative professionals. And they won’t work for free, unless slaves. But that’s not right, don’t try.
Costs
- Script: Do not be fooled. Writers also want money. A simple game like Street Gol Gold Edition (2015), developed by Larva Game Studios and promoted by a company of Giovani Dos Santos, has given them more benefits than Night Vigilante, a video game with a more complicated script, comments Jorge Morales.
Moral: a simple script will cost closer to zero. - Simple is not synonymous with “bad.” You must create an emotional link to the user, so he wants to pay for extra functions, Nicole Lazzaro insists. So when you wake up, the money will be there.
- Programming and design: As tempting as it may seem, don’t save them. In Mexico, there are few professionals with a high level in the area of video games. 90% of the costs for the production of Night Vigilante were for payroll payments, and foreign freelancers made some parts of the programming and design.
- Legal: That the protagonist of your game is outlawed, does not mean that you should also be.
Breaking the law due to carelessness or leaving your work unprotected is very simple.
Contemplate the preparation and registration of copyright, intellectual property, and privacy terms in your budget.
You can tell us all the jokes of lawyers that you will learn in the process. - Security system: Your users will share their most private data with you. You must not betray their trust. You will have to hire services to keep them safe.
- Collection system: Ironies of life: if you want to receive money, you must pay for it. There are different services for collections: Conekta, Easy Payment, Pay-U, Paypal. And no, none is freemium. Some will charge you for commission; others will charge you for the service.
Expends
Distribution: Entrance to the developers club in Google Play and App Store has a fee.
Google Play is cheaper, $ 25 for life. And not to lose the elitist style, in App Store, you will pay $ 100 a year to be a developer.
Google Play gets more app downloads than the App Store. But users who did not mind paying extra pesos for their phone, do not mind doing so for their games.
App Store offers more revenue to developers, but some studios, such as App Annie, show a significant increase in Google Play revenue.
Updates One would like to give users programming codes as perfect as Shakespeare’s sonnets.
It is not always possible, and the programmer must be at the bottom of the barrel to solve them.
The updates also allow the user to be reminded that your app is on their device.
Marketing. You feel that your app is fantastic, and your users will be motivated to share it for themselves.
Let’s say it’s true: advertising it will allow you to reach your download goals in less time and double or even triple your reach. And suppose it is not so true: advertising it will enable you to achieve the minimum required to obtain a return on investment.
33% of applications with more than one million downloads on the App Store, achieved it in the first month.
33% of applications that achieved more than one million downloads on Google Play did so in three months.
Invest to win their hearts; they will make you money later.
Seduce, then sell
In freemium, the app does not behave like a product to sell, but a service to offer, says Vineet Kumar.
The entrance to a nightclub can be without cover because it is a service where you will buy products or a free mass concert, they will sell your products, and you will see a lot of publicity. In a freemium app, it is similar.
To get to this point, you first invite people to download your application for free, you fall in love with its operation and the persuasions of paying for an extra service.
If you think about it, it is not very different from an exotic dancer in a nightclub convincing you to buy a martini.
The purchase of the martini is called “conversion.” And, unfortunately for the developers, the apps are not sexy enough to convince every user of purchasing. The conversion is measured with the following formula:
Total number of paid users / Total number of free users = Conversion rate
It is recommended to calculate a conversion rate of 1% to 5% to estimate revenue and the time to recover it.
Although there are applications that can achieve up to 25% conversion, it is more important to have a large number of users. 1% of a million is much more than 50% of 5,000. To create a fortune, developers must first achieve fame and do not always know how to do it.
Therefore, when Larva Game Studio decided to design Night Watchman as a freemium game, it allied with Kedoo, a publisher with experience in marketing and sales strategy. Based on studies on gamers’ consumption habits, options were added to the game to customize it and to buy consumables as extra energy and thus achieve conversion.
The goal now is to reach 100,000 downloads to recover the investment in less than two years.
With this model, 5% of users can subsidize the remaining 95% to keep it free. Wait, wasn’t that “communism”?
Freemium numbers
Downloads will arrive first, revenue later. According to an App Annie study, Stayin ‘Alive:
Games That Last in the Charts, the most successful games reach their peak of downloads very soon. However, it is from there that they begin to achieve more conversions, and therefore, higher income.