'Freemium' apps are here to stay no matter what the FTC says

Jeff Macke
Yahoo Finance

There is no free lunch, even if you’re eating nothing but Candy Crush. As the industry for mobile apps grows, the business model that seems to work best are the so-called “freemium” games that give users a taste of the action for nothing but force them to pay up if they want to advance further, faster.

Sure, you can wait for lives to restore on Candy Crush by King (KING) and continue to play for free but for a trifling 99-cents you can get another shot now.

Given the self-selecting nature of grown ups and kids who chose to download apps in the first place (hyper, short-attention spans, disposable income) it’s not surprising these in-app purchases have become big business.

According to the New York Times the mobile gaming market hit $9.5 billion in total revenue with a stunning 95% coming from in-app purchases. Parents and even the Federal Trade Commission can complain all they want but in the attached video Aaron Pressman says in-game purchases are here to stay.

“They need to make money somehow,” Pressman shrugs. “There’s a range of ways they make you pay. Some of them are little more legitimate, boosting up your character has been a thing with console and online gaming for a while.”

The “shadier” alternative to selling power-ups, at least as Pressman sees it, are games that freeze for as long as a day before letting gamers play unless they’re willing to pay. Shady maybe, but for the app makers the business model isn’t different than selling any other addictive product. The trick is striking the right balance between waiting time and price. The popular game Two Dots gives players five chances. Once those are gone players can either wait 20-minutes for a each new life or spend 99-cents and play immediately.

Does it work? To date it’s cost me $11.88 to get to level 65. Is it ethical? As long as you can afford to buy the phone and capable of setting up an account at the app store it’s hard to see how the government could make much of a case against the freemium concept. If there were laws against being an ADD gamer we’d have to lock up 50% of the country.

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