The true cost of free-to-play games

The true cost of free-to-play

The App Store has become dominated by free-to-play or "freemium" games. I started discussing this with some smart people on Twitter earlier today, but wanted to expand on it here, because I think it's important. What we don't acknowledge we can't change, and it feels like the current direction of iOS gaming needs to change. While some of the free-to-play games are brilliantly balanced and realized, providing value for both the makers and the players, most are not. Most suck. And a lot of that is our fault.

It's Apple's fault too. iOS has an interesting history when it comes to apps. When the iOS App Store launched in 2008, there were no trials or demos and no easy way to get refunds. There were, however, games like Super Monkey Ball, which cost $10 to buy. For a while that price-point held but over time we -- the collective we -- said we weren't willing to pay that much for a game.

Developers reacted by racing to the bottom in an effort to rise to the top of the best seller lists, held launch-day sales, or cut their prices at some point after launch. It's a common retail strategy because, in many cases, it works. It also trains a segment of the customer base -- us -- not to buy apps at full price but to wait for sales.

Over the years, instead of trials or demos or refunds, Apple proffered in-app purchases (IAPs). At first, free apps had to stay free, so if games wanted to use IAPs, they had to charge at least $1 up front. That restriction was later lifted, and free-as-in-IAP was born. The hope seems to have been that ads could be removed or additional levels could be purchased, helping game makers make money.

Yet once again, we told game makers we wouldn't pay to remove ads or to buy extra levels. We could tolerate ads, and limited levels were just fine.

Independent developers need to make money to feed their children. Large gaming houses need to make money to keep making big budget games.

So, given the rules of the App Store imposed by Apple, and the loud-and-clear message we've given them as customers, game makers have turned to free-to-play, or freemium models.

Most of us won't pay $1 for a great game, but will pay $99 in IAPs to have a better looking hut or farm or business or than our friends and fellow gamers.

Most of us won't pay $1 for a great game, but will pay $99 in IAPs to get back to racing or fighting or crushing candy as quickly as possible.

Ego and impatience, not ads or levels, are what most often monetize games on the App Store.

Developers certainly aren't blameless either. Enough of them caved in and raced to the bottom to validate the cheapest of our expectations. More egregiously, while some do a great, customer-friendly job, others are as manipulative and exploitive as the worst of casinos. They employ behavioral analytics and conduct the equivalent of psychological warfare to try and extract every penny they can, for as long as they can, from gamers. We reward them with Top Grossing status and so much business that more and more of them sprout up every week.

They build and tune games to be addictive in the most financially draining sense of the word, like the coin-ops of old. The only difference is, you couldn't stuff more quarters into an arcade cabinet to get further, faster, and better impress the people looking over your shoulder.

You can on the App Store.

And because free-to-play, or freemium, is proving so much more lucrative than the simple, one-time, up-front payment system of the early days of the App Store, even established gaming franchises and studios, unable to make money any other way, are switching to it, and sometimes to the less savory versions of it.

Top grossing app IAPs

In this regard, Apple is failing in their stewardship of the App Store, and allowing the value of their platform to falter. Not the overall value -- they're still making and passing along more money than ever -- but the value to well-intentioned developers and customers. And therein, as I've said before, lies the path to Atari-like irrelevance, and ET cartridges being buried in the desert.

Introducing real trial or demo modes, paid upgrades, and/or easy refunds -- things that exist on other platforms -- could go a long way towards influencing the App Store gaming economy away from the worst elements of free-to-play. Banning "games" with worthless IAPs, "games" akin to casinos if the player could never, ever win, would also help.

Most of all, we need to stop feeding the IAP machine, and stop rewarding that business model with our money. We need to pay a fair price for good games, for premium games, and reward those and that model instead.

We need to stop bitching that "it should be free" or "$1 is too much". We need to stop pretending that a game that provides hours of enjoyment is worth less than a movie ticket or a fancy cup of coffee. We need to support the the best and the brightest developers with real money, so that they keep making the kind of games we want to buy.

Sadly, that's unlikely to happen.

Apple created the system. Developers have learned to game it. And we -- the collective we -- have told them we're just fine with that.

We prefer it.

Have something to say about this story? Share your comments below! Need help with something else? Submit your question!

Rene Ritchie

Editor-in-Chief of iMore, co-host of Iterate, Debug, Review, Vector, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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The true cost of free-to-play games

45 Comments

Sadly, I think we the customers are to blame. IAP can work as a shareware model, or even as demoware, but either developers see more money in the freemium model or customers just don't care. Time will tell I guess.

There are only a few games I've used IAPs for and each time I feel like I'm being ripped off. I think they should offer a full version of a game with all levels unlocked and others where you have to reach a certain level to unlock more features. I'd pay more for a game with this offering.

How can people who she'll out $300 - $1000 on iOS devices not be able to afford $6 for a premium game? It's all over app reviews on iTunes. People crying about $4 for a game that cost hundreds of thousands to make. Equally how can devs expect to make huge amount by releasing free to play games to the very same people bitching about $4?

Tbh when I first jailbroke my iPhone 3G I used to pirate apps to get an idea if it was worth the $5 because there is no try to buy. This helped me make informative choices and kept my credit card from being full of bad choices.

These days I have a great mix of iPhone game reviews, people I follow on twitter and apps that showcase new and price dropped apps to help make informed choices without the need of pirated try to buy.

As somebody who spends a lot of money in the AppStore it really angers me to see the freemium product becoming more common place on game franchises like Real Racing 3 which I would gladly pay up to $10 for.

One such case where people can 'shell out' a couple hundred dollars for a phone and still not be able to 'afford' apps would be teenagers. Especially with the rising popularity of iPads and the declining but still strong iPod Touch, iOS devices are in the hands of a LOT of teenagers, whose parents may be fine with shelling out to buy them an iDevice, but not fine with paying for apps, and trust me when I say there are a variety of weird excuses they can give for this. In such a case, freemium works because these teens get the game for free, without piracy, meaning they're more likely to tell their friend and it spreads virally until it reaches someone who CAN buy apps/IAPs and then, money is spent.

Now, if the game wasn't free and thus allowed to spread virally in the teenage social circles, it may not have even reached this person who's going to spend money on IAPs, thus, freemium makes the developer money they wouldn't have made, without much of a loss since none of those teens were going to pay for the game anyway.

You would happily pay $10 for it. Most people wouldn't spend $1 on it. A few would spend $1,000 on it. It would take 100 of you to make the same revenue as a single Superfan. It would take 1,000 $1 users to do the same. Based on a $1 CPM and assuming each free user saw 100 ads, it would take 10,000 free users, playing a lot, to make the same money as a single Duperfan. That's why the F2P model works

I get your argument but sorry games are not worth paying for let alone paying more for. And I mean any game. At least not worthy paying to me. I've paid for like 4 apps total out of 120+ apps and paid total of $5. downcast, tweetbot but i use those daily. I don't derive enough use or enjoyment from phone games to warrant a cost. And I've got about 5 or five apps on my phone from when they went free. They are good games but not worth me paying for them as i almost never ever use them. The people that want them will pay for them. But it ain't me. I've no interest in paying for games at all no matter how good they are. IAP for your Farmville home or whatever is for suckers. If the choice is an pricier but better game over no game for free I'm fine with it. I'll take no game and be fine with it. And it's not an issue of not being able to afford something. It's an issue of priorities of life. I get very little benefit from a game. I'm sure others differ but i can afford games or apps i'd simply much rather put my money towards something more important and useful. Hell i got an xbox and i've only bought a few games cause most games are not remotely worth the cost and several i've bought i bought on cyber monday or used simply because it hit a reasonable price point. But back to ios games, if a game sucks i didn't make that guy make a sucky game. He made it. If nobody will pay for his non-sucky game thats unfortunate but to me that simply means that person overinflated the value of that game idea. Anyways my two cents.

Hey Chaosking121, here's the perfect example of your worthless teenager who spreads the freemium model.

This "I don't care to pay the creator" attitude should be rewarded with a stock iPhone that doesn't come with an App Store. You're ruining it for everyone, including yourself. It's no different than the way people here in America complain about Chinese imports and then do all their shopping at Walmart.

"Introducing real trial or demo modes, paid upgrades, and/or easy refunds -- things that exist on other platforms -- could go a long way towards influencing the App Store gaming economy away"

But other platforms also rely heavily on IAP games, so those features aren't helping very much.

Banning these games would also only send publishers to other platforms, likely accompanied by loud accusations of how Apple was bullying them.

I don't think there's any solution. People are buying into these games heavily so going against that is a lost bet.

I'm fine with them by the way, simply have a personal rule that I won't spend more than $10 or so on the game. After that I wait or come back to play later. I've done it for CSR Racing (finished the game, a lot worse IAP than Real Racing 3), the Simpsons Tapped Out (still playing)

I don't download free games. But then again, you're probably not reaching the audience that does.

IMO, just as Apple doesn't have us, the advanced users in mind, when it comes to iOS features, the freemium model doesn't have us in mind either. It's all about the mainstream.

The best way to combat it? Stop reviewing these freemium games. Stop including them in "top games" articles. Bash the model. Bash it constantly. Maybe other blogs like Engadget or Verge will jump on the bash wagon. Make it seem utterly ridiculous to consider a freemium game as good.

Freemium games still buy a lot of advertising so it's not going to happen like that.

We'd need to get rid of "freemium" news sites first, or about 99% of them,

Ugh. King.com has WAY too much of my money right now. Mostly due to my wife's impatience with wanting to move to the next set of levels on Candy Crush Saga. But ugh.

And you know what? In a weird way, I'm kinda OK with it. They've created a genuinely simple, engaging game that is easy to pick up, hard to master. And it keeps her happy, so I'm good with $1 every few weeks.

Honestly, I think the hard thing to swallow is it seems like it's an arbitrary cost associated with additional play time, but when you think about the amount of play hours you get for that $1, it's not so bad compared to other entertainment expenses. I'd say that $1 buys her about 10 - 15 hours of playtime, which is far cheaper than the ~$10 to go to the movies for 1.5 - 2 hours. And, depending on how bad the movie is, is far less risky.

IAPs are OK I guess, but they need to be reasonable. IAP-heavy games doesn't really improve the enjoyment value of a game, rather it's the opposite of it.

The odd part of this is that iOS piracy is still a giant issue and that must force developers to to to the IAP model. Then on the flip side, Apple just lost a class action suit on this very topic (yet they still don't seem to care to fix it).

No they can't. They can release entirely new versions of apps, which isn't the same. It creates more work for them, is a worse experience for users, and doesn't make anyone really happy.

Honest to God, I can not figure out why people would pay money for virtual "coins", upgrades, etc. It is literally GIVING cash to developers for nothing! Ooooooooo. I get 100 coins for $50. You are so right, it's the user's fault for this cesspool of an App Store. Look, every other gaming platform charges decent money for their games. Some are almost totally worth the $40-$50. The problem with gaming on a mobile phone is that it's limited due to the "mobile" platform. The games are short lived and cannot hold anyone's attention over a long period of time. They are disposable. Unfortunately, nothing's going to change soon. It is what it is. :-/ .....oh yeah, and some people predict that the next huge platform for gaming will be on mobile devices - that it's getting better and better. That's never going to happen. It's a novelty at best.

I never minded the $10 app model. At least I knew that it was a one time purchase and then the game is mine to play as much as I want. On a side note, I don't see anything wrong with developers charging for major upgrades. Not bug fixes, but for new features, etc. Maybe like once a year or two, charging half of regular price for upgrading. That's reasonable. If people were willing to pay this, then app quality might improve. How can a developer make money long term if they sell an app and continue to upgrade it for free forever? That's almost ridiculous. The only way to survive that way is to pound out new shitty apps every other day for $0.99.

"The games are short lived and cannot hold anyone's attention over a long period of time" ?

Tell that to the legions of plates playing Clash of Clans, Candy Crush Saga, Simpsons Tapped Out, Dragonvale, Hay Day or ,any other excellent games for months on end.

"Most of all, we need to stop feeding the IAP machine, and stop rewarding that business model with our money. We need to pay for good games, for premium games. Instead of bitching that "it should be free" or "$1 is too much", we should reward great games and stand up developers with good money, because that's the only way to get more of both."

This is the behavior that is driving it. All the other points are what enable this behavior. Take those enablements away, and no one is getting paid.

I will download a "Lite" version of a game that I am unsure about. Once I find myself playing it more than a few minutes here and there? I purchase the full version. Occasionally I will wait for the holiday sales, but more often than not, I want to reward developers who make something I enjoy. Those Triple-E games? I buy each one the day it drops. They have earned my money, and unless they start releasing crap? I will continue to "blindly" buy their apps. I know I am probably in the minority, but hope that I am not.

I also have no problem paying for an App. Wasn't LogMeIn initially like $30? I bought it and use it frequently. Might be my top 3 apps in terms of use.

The bigger concern, to me, is the Mac App Store. There, the other issues you describe are much more of an issue.

Rene, I really feel the biggest reason developers are using the Freemium model is to combat piracy. iOS piracy is a huge problem for developers. I read somewhere that one developer went out of business because their game was pirated at over 75%.

IAP makes it very difficult to pirate. I seem to remember at least one story of some hacker figuring out a way to circumvent IAP to unlock part of a game.

If Apple would get off it's backside and give developers a way to protect their apps better, they might move back to charging for games and apps.

Is this a way for the Devs to cut losses from cracked apps? If people are cracking apps and thats it then that could be a substantial loss of profits. However, maybe IAPs are their saving grace because you still have to pay to play...to a certain extent. Anybody concur or am I totally off?

I've seen so many friends and family members that won't pay $2.99 to remove ads from SongPop or a game of the like and use the free version but they have no problem downloading a silly game like FarmVille or Bejeweled and buying power ups every week that easily add up all too quickly.

I understand the dev makes money off the ads but the thought process people have is all wrong. I'd rather pay $10 to $20 for a GOOD app that's full featured one time. And honestly, I never understood people complaining about new app released. If the developer took the time to rewrite the code completely and make a great app even better, I can vote for the quality with my wallet.

I guess I can equate it to building a website. If I pay a developer to build me a website and then decide 6 months later I want a completely different website or want it to function in another way, I expect to pay the developer for that work. Just because I paid for one site, it doesn't entitle me to free website upgrades forever. I expect that developer to fix issues that arise, as they come up, that aren't my fault, but beyond that, if I want new features, a better website, and new things that deviate from what I originally agreed to pay for, I expect to pony up the cash.

I think the key word here is entitlement. A lot of users feel entitled to better software with a free price tag, and that's not realistic, it's delusional. And just ends up with everyone paying more in the end.

I also agree it's a bigger issue in the Mac App Store.

Rene, you're a true superhero! You always want to fight crime and injustice! And that is why your net result will be nil. Just like in comics a new super-villain will take the defeated one's place, so will "evil" developers try to rig the system no matter what changes are made to it.

In other words - the way to solve any problem is not to fight against it. To truly solve the problem you need to address the underlying motivations. Once an action has no reward mechanism people will stop doing it. Anything less than that will result in a push-and-pull reaction: the very reason why a superhero is still fighting the same type of bad guys after ten seasons of the comic. In the grand scheme of things, he has achieved nothing.

This is so true and really we need to do something about. Maybe everyone give Tim Cook a email about this... Paying for a great or decent game is ok in my book. But getting a great game for free with limits so you spend a ton on IAP is crazy. A game could end up costing 10 times as much as a console game.... I love the iphone since day 1 but soon enough I think the IAP system will push me away to another platform that is not filled with free games or where you at least could find a demo before you buy...(if it exists)

It is ridiculous how much money people will spend in game although they wont pay one cent to buy the game in the first place.I think this will definitely have to change in order to allow for game developers to earn the money that they deserve.

I've seen it coming and I hate it. What really pushed me over the edge was discovering the much anticipated real racing 3 has chosen that model. And the structure always seems set up so that you really are stuck with a crippled trial unless you fork over cash. It's not even about impatience. In RR3, like others, you'd never earn enough to advance. I'd pay $15 for RR3 if it was like RR2, where you can actually earn enough by winning to buy more cars.

I have to add, I always pay to remove ads and such in support of the app developers. Or buy the "pro" version for same reason

Personally, I don't mind the IAPs. However, I have never done an IAP, but I cannot guarantee that I won't in future. Games like Clash of Clans, Real Racing 3 etc. are great games. If they were paid I would have not bought them (and maybe got them from "unethical" means). With IAP I have genuine games, and I know "other" players are actually paying for me too. Because other people do IAP, I get to play such cool games without paying for them. Freemium games also ensures large player base compared to premium games.

It's quite simple really: Freemium destroys good games.

It forces game designs that center on tossing coins at the game rather than game designs that serve to make the game enjoyable and compelling.

Freemium games are the equivalent of trash TV-programming shoving ads in your face every 5 minutes vs. 2-hour feature movies. They are the equivalent of pulp fiction vs. lovingly crafted novels.

There's no problem with pulp-games (aka. Freemium). The problem is that when a platform encourages nothing else but.

A little late to the conversation here, but I really had to get my $0.99 for 300 coins in.

I think it's more reasonable to ask developers to find innovative revenue models and create high-quality games than it is to ask the general app-consuming public to stop being impatient. Consumers gonna consume. If you find the current IAP practices are bringing down the overall quality of games, then by all means, talk with your wallet and support the good premium games and skip the free ones. The fact is, the IAP model is working for at least some people, and until it's broken, developers and publishers have no good reason to not exploit this little chink in the human psyche. It's not like players are hapless sheep in the whole affair either; they know what they're paying for, they know it's stupid, but they do it anyway because they get some kind of entertainment value out of it. If people are having fun, what's the problem?

I think this has a lot more to do with the fact that the iOS game ecosystem is quickly reaching a saturation point where small independent developers can't compete with big publishers that can afford to churn out free, high-quality, IAP-driven games. Even among the big boys, how many people do you think will buy the next Asphalt game unless it is leagues ahead of Real Racing 3, (nevermind the little guy that wants to make his own racing game)? I wouldn't be surprised to see more developers moving to less competitive platforms where they can charge more than $0.99 for a game without being laughed out of the room.

One of the earlier commenters said that games aren't worth a buck to him, and I think that's the case for many iPhone and iPad owners. That said, I applaud the freemium model for turning non-gamers into gamers, however casual they may be. The only real problem that causes for more hardcore gamers is that there's a lot of IAP-driven stuff to wade through in order to find a more classically-framed experience. That's ultimately good news for iMore, since it gives us a lot of curation to do.

I'm usually a fan of just paying a couple bucks up front for a great game. However I usually wait to check reviews on it before putting money down on it.

I've seen two types of IAP games out there. Ones that offer an IAP boost, but making the game still playable with a little bit of entertaining grinding, and ones that basically make it impossible to get anywhere without dozens of hours of unenjoyable grinding. The former stays on my device, and I'll just keep at it to unlock rewards myself. The latter is an instant uninstall.

While I agree with the overall sentiment of the article, I disagree with some of the stated opinions and proposed solutions.

First, you say 'most of us won't pay $1 for a great game, but will pay $99 in IAPs to have a better looking hut or farm or business or than our friends and fellow gamers.'
Actually, most of us won't pay $1 for anything, and very very few will pay $99 for IAP (or even $0.99). The whole point and the way freemium works is by having 90-99% of the people play for free, but then the remaining ones pay much more on average than $0.99 or even $10 (say, a price for a 'premium' game). Now if you also take into account that the total number of player for a free game will be much higher than for a paid one, the economics are clear.

While I understand (and as a gamer and game developer, partially share) the complaints of gamers saying it's destroying the 'real' games, it's just the way the market works. It's true that it's definitely affecting the way games are designed, and in most cases in a bad way (with design becoming more of a psychological game than art), but I think the proposed solutions completely miss the point.

How should Apple decide what's worthless IAP or whether the game is unfair or not? People have been complaining very loudly about their censorship anyway, because the AppStore is perceived as a free market (at least for the most part). Sony or Microsoft can do that with their consoles, because they force you to work with them and abide by their rules from the start, but it's just not the way the AppStore(s) work.

Providing refunds wouldn't fix anything either, as evidenced by Android which is also dominated by f2p games (and increasingly so).

As you've said, asking consumers to stop supporting this isn't realistic either. Mostly because the most important people - the ones paying those high amounts for IAPs, don't really mind or see anything wrong with it.

The people who are at loss here are core gamers, who feel the quality of the games and game play experience are being destroyed, and passionate game developers who are losing the ability to turn their visions into great games, because they just can't afford it.

And speaking of game developers - they're definitely at 'fault', but game development studios are _companies_, you can't expect them to just say no to IAPs in favor of the fixed-price model just because it would result in better games. Are American companies manufacturing everything in the US because it will result in higher quality products and more jobs for Americans? No, they're making everything in China because it's more profitable. Why would you expect game companies to be different? Of course, there already are developers who are refusing to use IAPs, but they are usually that - just hobby or at best small indie developers, not companies who need to pay their employees. Why would EA choose to go the 'premium' route if they will make more money with the freemium one? I also don't see it as a moral issue, it's just a matter of free market.

So I don't think there's really a 'solution' to the problem - it's just a question of how it's going to resolve itself. The way I see it, it can go in several directions:

1. Over time, users get better at judging what's fair and what's not, and reward the fair games with their time and money. Occasionally, we'll still have premium games, just not many and especially not from big studios. This is a variation of the current situation, just a bit more balanced one.

2. Freemium completely destroys the market, and people just stop playing. The whole industry gets marginalized. Could happen, but would likely just result in a cycle (i.e. similar to the Atari situation).

3. Developers find better ways of doing freemium, which would get us rid (mostly) of crappy farm-style games, and result in both better games and happier users. I'd love for this to happen, but it requires innovation - and would most likely result in games much different than what we currently consider a gamer's game.

I usually use freemium apps (just like real racing 3)
My only thing is:
1. Some users (usually in a game), uses the pay 2 win system or the so called IAP.
2. In the increasing popularity of apple devices, I really think that more freemium apps will be produced (in a much better way) in the next few weeks/years
3. IAP can be donated to support developers (like remove ads)
4. Some Developers today wants to keep customers happy when their app is free (usually full versions)
(Just like sponsored free app a day or apple's app of the week)
5. Half of Apple users around the world (even in the Philippines), uses freemium apps

May I add,
In the App Store, I seen the text "offers in-app purchases" when you view the details.
It will know the customers that the app has IAPs....

I couldn't agree more. We the consumers are too blame. We can sit here and complain about this or NFL ticket prices or data package costs for smartphones...but complaining won't change anything. The consumer has more power than we realize and if we stop downloading this crap then the market will change but until then we have made our bed now we have to lay in it...sorry my dad always used these sayings on me as a child...haha

Easy solution. Apple limits iAPs to no more than 19.99$ and a limit of 100$ Max per app per acct in iAPs. That'll force devs back towards the old model

As a parent, I cannot stand IAP and ads in kids games. So our app 'Which Aussie Animal' is 100% ad-free and contains no IAP. We do charge 99c for the full version, but that's it. It's not the popular model, but it's the model I look for when purchasing apps for kids.

http://www.whichaussieanimal.com

Mobile gaming and pay to win is ruining an entire generation of gamers. Even most console games these days feel like they've been dumbed down and are far too simple.

There's always gonna be a glut of consumers happy to drone away in freemium gameplay much like they're willing to drone away in a forrest of slot machines in Vegas. They get the same mindless experience on their mobile devices, apparently. I, for one, would be more than happy to pay good money up front for a real game that offers valuable, extended gameplay. For instance, as a next gen consoler, I happily paid 100$ for BF4 with Premium access to all DLC's, knowing I'd spend 100's and 100's of hours, without a shred of boredom, for that access...for that depth of gameplay (glitches and all, with respect to BF4!! :) ) I will happily pay 60$ for an excellent, deep dungeon crawler such as Diablo III (once available for PS4) compared to the freemium crap offered on mobiles such as Dungeon Hunter 4. Within an hour, the schtick becomes apparent and I'm implementing the extended press on the homescreen icon to get the thing wobbling....and then promptly delete.

If drones are willing to pay for casino experience, so be it....but I hope to god it doesn't squelch out true-quality games available for the rest of us. Maybe Diablo will break the mold...offer deep, mobile style gaming at a reasonable price. I'd pay 10$, or perhaps more, for the iOS version. I wonder if others out there will do the same?

I have played quite a few "free-to-play " games for android, and in my experience, most of them can be beaten by paying $9.99 for the in-game currency. Some may be a bit tougher, and the price to beat those games would usually go up another $9.99. I have no idea who would buy $99.99 worth of in-app purchases. An important thing to note is that Plants vs Zombies, bought in new condition for the PC, normally costs $9.99, though when it first was released, it cost $19.99 for a new copy.