Some Thoughts On Monetization

Some Thoughts On Monetization

So - we had a lot of feedback after launching our report yesterday! I'd love to link to all the coverage the report enjoyed, but there's too much to do it justice. But it's probably worth talking about a couple of common themes that have emerged.

It's no surprise that so much commentary focused on the fact that a mere .15% of freemium game players in the month contributed over 50% of all in-app revenues. But it is a little disappointing that some seemed to see this as a sign of failure for the freemium model. We think this is far from the case. A couple of obvious points are worth repeating:

  • That's .15% of a big number. Approximately 1 billion players are playing mobile games worldwide. That's a large audience, and a lot of that is thanks to freemium. Of course most of them don't spend in any given month. That isn't surprising either. But of those who DO, the revenue curve is familiar to many businesses. In fact our data closely matched the 80/20 pareto law when looking at the analysis of payers only. Bottom line is the freemium model has been spectacularly successful - which explains it's widespread adoption
  • As covered by Gamasutra and others, the reliance on 'whales' leads to suggestions that the freemium model relies on massive spending from a small number of players. But the answer to this objection is in the research. Our .15% made an average of 7 purchases in the month at an average value of around $11. That's an $80 a month hobby. Of course there are outliers, but the model doesn't rely on them.

There'll be much more to say on the data in this report in the coming days and weeks, but for the moment it's worth making these specific points clear. Of course the freemium model isn't perfect. In fact in Swrve we would argue that we've only scratched the surface when it comes to smart ways to maximize revenues, delight players and grow the industry as a whole. That's what we do every day for our customers in fact!

If you want to read the full report for yourself - it's right here.