Should developers switch all their efforts to freemium?

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Liam Tung has an interesting view on how developers will make money on mobile apps in the future, over on ZDnet. Looking at data from Gartner and Distmio, Tung highlights the rise of in-app purchasing, and suggests that developers switch to the freemium model.

From Tung's editorial:

While app developers have already realised in-app purchases can be lucrative — notably Finland's Supercell, maker of Clash of Clans, and Sweden's King.com, which is behind Candy Crush Saga — in 2013, paid-for apps will still account for 75 percent of total revenue, according to Gartner.

However, revenues from paid-for apps are expected to fall below half of all revenue by 2016, as earnings from both in-app purchasing and advertising grow. By 2017, total revenues are expected to reach $76bn, with paid-for apps accounting for 37.8 percent, in-app purchases 48.2 percent, and advertising 14 percent.

Certainly these numbers highlight the rise of the freemium model, but I don't think that developers should be quick to jump on the bandwagon. There are a number of reasons to avoid the freemium model and stick with something more traditional.

The first is the style of game. Not every genre is suitable for a model which requires in-app purchases to activate boosters and buffs to make a game easier to play. Freemium is not about in-app purchasing for extra levels, but that slow burn of currencies and boosters, buffs and cheats, that lets the buyer bypass a gateway the developer has created.

Those gateways are not always suitable for every game.

WP8 Marketplace Countries

WP8 Marketplace and IAP charts

The second is that some people would simply pay for an app and know they have everything on offer, rather than the drip-drip payments that a freemium game will induce. It's also perceived to be fairer for the user, as they know how much a title will cost going in.

Freemium is seen by some as one way around piracy - if the main app is free, then it doesn't matter where it is downloaded from. The cynic in me would suggest that the rise of freemium is in proportion to the rise of piracy on mobile apps, and I'd be interested in a study around the rising numbers of both, so it is unlikely to go away, But I can't see a wholesale switch to freemium happening by game developers for many small but significant reasons.

In any case purchasable apps will still be needed - text editors don't really need an in game currency that you need to top up with real world cash - and while the freemium growth will continue, I don't think that it's going to take over the mobile gaming industry in the next few years. Do you?

Source / Credit: Liam Tun (ZDnet)