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'Freemium' iPhone Apps Growing as Successful Business Model

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GigaOM takes a look at so-called "freemium" iPhone apps: applications that are free to download and offer basic functionality but generate revenue through the use of In App Purchase content. According to the report, freemium apps are becoming increasing popular with developers, who are finding it a viable business model, and the number of such apps generating sufficient revenue to rank among the top-grossing App Store titles is increasing.
A look at the top-grossing iPhone apps today finds 34 of the top 100 apps are free, but make their money through in-app purchases of mostly virtual currencies as well as other premium features. Remco van den Elzen, CEO of analytics firm Distimo, said he believes in-app purchases now represent about 30 percent of all iPhone App Store revenue. "We're seeing more developers implement more in app-purchases especially with games," he said. "Freemium Apps are also picking up significantly. A lot of developers realize it's a successful model."
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Another analytics firm tracking such data revealed that in January only two freemium iPhone apps ranked in the top 50 grossing apps, a number which rose to 10 by the end of October and stands at over 20 today.

The striking success of freemium iPhone apps comes even as their prevalence in the App Store remains low, with only about 1.34% of iPhone apps using the model during the third quarter of this year.

Interestingly, the freemium business model has yet to catch on with iPad applications, as none of the top 200 grossing iPad apps utilize the strategy on a platform where higher purchase prices for applications are the norm.

As the report notes, iPhone developers are learning how to offer a solid app experience for their free versions while also pushing attractive upgrade options via In App Purchase, finding that the strategy can be more lucrative than offering ads in their applications and attract a more loyal base of customers.

Article Link: 'Freemium' iPhone Apps Growing as Successful Business Model
 
Article Link
https://www.macrumors.com/2010/11/11/freemium-iphone-apps-growing-as-successful-business-model/
Never will I ever download one of these freemium games. Still sad we lost ngmoco to this rubbish.
 
I remember watching the watchdog programme covering this scam.
The app was free to download and attracted children to play it. Say the dad let them on the iPhone, the kid would then buy ingame currency without knowing hence costing hundreds of pounds.
 
I think most people see that they are free and then once they try and play or use them they promptly delete them. I for one would rather pay for an app and actually own it and not have to pay "dues" to get some other functionality. I avoid these "fremium" apps by checking there most popular in-app purchases before even wasting my time downloading them.

I knew as soon as Apple gave them the ability to do in-app purchases that we were going to lose a lot of good apps to the dark side.
 
Yea what is the scam?

I d/led Angry birds and there are about 10 free levels. Once you get to the end they say you can purchase the rest of the levels....at that point I just delete the program and find another game. I just downloaded a brain puzzle game that gave 5 free levels.

It's free so why not?

I downloaded another game the other day that had some Christian iAds floating on the top of the screen. I found that to be 100% more offensive -- delete!


I wonder though.. how many gullible people out there are clicking to purchase the 'premium levels' and 'added content' and not realizing how much it is really costing them? :rolleyes:
 
What is the problem with this?

Why do people have such problems with this business structure?

I guess I don't see a problem with this. I'd actually prefer this pricing model to the current LITE vs FULL model. Sure, some developers abuse the concept for the ability to overcharge for content. However, if the App is free for "demo" purposes but then has a single in-app purchase for the full game, I don't think that is a problem.
 
Yeah, I don't believe Angry Birds falls into this category--it's just a lite or full paid version thing.

There are apps like Godfinger and other "strategy and life" apps that utilize this. Farm story, etc.
 
So they merge the "free trial" and "full" versions into one app. This means less duplicate entries to sort through on the app store.

Good.

How can anyone be opposed to that? You're all fans of clutter?
 
Loono said:
I remember watching the watchdog programme covering this scam.
The app was free to download and attracted children to play it. Say the dad let them on the iPhone, the kid would then buy ingame currency without knowing hence costing hundreds of pounds.
Click to expand...

Sounds like bad parenting, which nobody wants to admit to. Nothing to do with any "scam".
 
I'm not sure why people are so down on Freemium apps. I think they are genius. Here is how I see it:

I'm not going to pay $5 for an app that I have zero idea I'm going to actually like. Some devs have "dumb" lite versions, but then you have to back to the app store to d/l the full version. PITA, and something I rarely do. OTOH these "freemium" apps let me upgrade on the fly. More than a few times I've been enamored w/ an app that I've done this. Dev gets $ from me that he otherwise would not, which is good b/c it encourages further development. But it doesn't mean I upgrade willy nilly because the option is there. It just gives me an easier choice. I'm also NOT into games that require you to pay REAL money to buy FAKE items like Farmville.

So I'm confused why people they are a scam. It seems to me it just removes a barrier between purchaser and dev.
 
Ferazel said:
Why do people have such problems with this business structure?

I guess I don't see a problem with this. I'd actually prefer this pricing model to the current LITE vs FULL model. Sure, some developers abuse the concept for the ability to overcharge for content. However, if the App is free for "demo" purposes but then has a single in-app purchase for the full game, I don't think that is a problem.
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i agree i like the 'try before buy/upgrade' model better than the lite vs full... Less clutter, and allows me to choose and easier to upgrade.

P.
 
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Agreed that this isn't (or shouldn't) be a scam. It is a viable business model to let users demo their product before purchasing but shouldn't be a way to "trick" users into buying content. The upgrade price needs to be clear when the content is being offered and there should be an "Are You Sure" button to prevent accidental clicks.

There are tons of Windows and Mac programs offered this way. Try the demo version (or the full version for a specified period of time) and then pay if you want the full version or to keep it forever. If developers do the latter I realize that they must offer a short trial window to the full version (3 hours-1 day) as people would download games and play them for a few days without ever purchasing them and then deleting.
 
santaliqueur said:
Sounds like bad parenting, which nobody wants to admit to. Nothing to do with any "scam".
Click to expand...

How on earth is that bad parenting?

Is the parent supposed to watch over the kid's every move as they're playing a game on the iPod/iPhone? That's ridiculous.



As for the topic, for some reason, i'd rather pay for a game outright and know that I have full functionality (with the OPTION to purchase additional things), than get a free game and HAVE to make a purchase for full functionality.

It might not make much sense, but when I download a free app, it's usually because it was free and I figure why not. When I initially pay for an app, it's because I want that app.

...this coming from someone who bought every lens and film in Hipstamatic :eek:
 
This isn't new, nor is it a scam! :confused:

They've had the "try before you buy" model for a long time, no? Pretty much all of my computing days, dating back to the early 90's, was spent dialing BBS's so I could download and run shareware apps that would let you try the whole thing out for, say, 30 days, or demoware that offered "most" of the program functionality until you unlock it.

The only difference is that Apple facilitates the payment and unlocking of the full version now, whereas on a traditional platform like the Mac or Windows you'd have to go to the company website or some third party system like Kagi to purchase a license, then copy/paste a serial number into a "register me" dialog box (or activate a secret URL to download a different binary for the fully registered version).

pdot said:
As for the topic, for some reason, i'd rather pay for a game outright and know that I have full functionality (with the OPTION to purchase additional things), than get a free game and HAVE to make a purchase for full functionality.

It might not make much sense, but when I download a free app, it's usually because it was free and I figure why not. When I initially pay for an app, it's because I want that app.
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I don't see the difference. You download the free version of Angry Birds and you get 10 free levels (or whatever the number is). It's fully playable, they're fun levels, it doesn't nag you. You knew when you downloaded it that the free version would have fewer levels than the paid version! If/when you're ready, you download the full version -- for a DOLLAR, mind you -- and it comes with a gazillion more levels. Either way it's a fully functional game and you got what you paid for. I don't see why people have a problem with this!

Edit: I guess there may be other apps that don't quite work like this, and if so, then I would agree that if the FREE app doesn't offer you a reasonable amount of utility without FORCING you to buy add-ons, then it's not worthy of keeping.
 
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People seem to forget developers need to eat, too. If you want high quality games, they cost money to make. They can't make enough money on ads only. I see no problem with giving you a basic game, and if you like it, you can buy more levels, etc.
 
Have had some of the freemium issues with my four year old daughter but it's pretty easily solved. She doesn't have my password to do upgrades on the fly and if I determine it's something she really likes, I'll upgrade, if not, I won't. I think overall it's a good thing but it can certainly be abused. Hopefully, Apple is keeping a very close eye on the amount of times someone can be pimped within an app. The whole Farmville thing spending tons of $$ is ridiculous. Anyone that spends $49.99 for a batch of 'gems' so they can buy some more nebulous crap is a little bit crazy. But I guess if you have blow money like that, it's a free country--right? At least currently.....personally I like it because you can check the app out and upgrade without having so many steps........
 
Not a new business model!

Drug dealers have been doing this since the beginning, the first hit is always free. Once you're hooked, most everybody will continue to pay to get a little more. Or do depraved things, but I don't think the App store accepts sexual favors or stolen tv's for payment.
 
Chupa Chupa said:
I'm not sure why people are so down on Freemium apps. I think they are genius. Here is how I see it:

I'm not going to pay $5 for an app that I have zero idea I'm going to actually like. Some devs have "dumb" lite versions, but then you have to back to the app store to d/l the full version. PITA, and something I rarely do. OTOH these "freemium" apps let me upgrade on the fly. More than a few times I've been enamored w/ an app that I've done this. Dev gets $ from me that he otherwise would not, which is good b/c it encourages further development. But it doesn't mean I upgrade willy nilly because the option is there. It just gives me an easier choice. I'm also NOT into games that require you to pay REAL money to buy FAKE items like Farmville.

So I'm confused why people they are a scam. It seems to me it just removes a barrier between purchaser and dev.
Click to expand...

Buying a pack of levels is what it should be used for, but not for buying seeds to grow plants. One thing is it's true use and another is to use it to look for idiots and morons and little children that don't understand it.
 
I think some people here are missing the point---

It's not the ok, this is lite and I've liked it so in the app, I upgrade..

It's like oh, this app is cool but to get any further I have to buy more "coins" for 99 cents. Oh, ok now I've ran out of that or I need more potions so I have to buy more "coins" in order to progress...another .99.

Etc, etc.

This happens with games that I mentioned...GodFinger, Farm Story, City Story, etc.

Those games are the one that piss me off personally.

I don't mind the other trial to paid in app purchases--those make sense...but it's only a one time thing. The others, in order to keep going--you've got to keep paying.
 
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