The 5 Reasons Mobile Games Aren't Freemium

Free-to-try comes at a heavy cost for developers.

Why aren't more games freemium?  Defining freemium as "free with a one-time unlock" apps, the business model would seem to strike a fine line between free-to-play (where a game is supported by unlimited amounts of in-app purchases) and paid games. Smash Hit by Mediocre is one particular example of this sort of game, where players can pay to unlock what is essentially the full version of the game. Free-to-play's unlimited spending potential can affect game design to where a game has to be conducive to the business model, and it has impacts on game design and enjoyment for many players. Conversely, paid games can require a risky up-front payment, and refunds are far from a universal policy on major stores. So then, why do so few games seem to use this compromise model of offering a free trial with a one-time unlock? Well, there's several reasons why it's such a problem.

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Not many users convert from free to paid

Smash Hit
Screenshot of hit ball-launching game, Smash Hit by Mediocre. Mediocre

There's a simple axiom to realize with free games in general: if people are given the opportunity to not pay, they won't. Freemium conversion rates are historically rather low. Even on something like Xbox Live Arcade, where mandatory demos were offered, ​conversion rates varied wildly from 4 to 51%, averaging out at 18% back in 2007. However, that was the exception and nowhere near the norm. Ouya games were seeing low single-digit conversion rates at launch. PC games often see low conversion rates as well. Specific percentages often vary because of the market at the time, and with various platforms, but 3% is a good, very rough estimate. Anecdotally, many developers on PC serve as a canary in the coal mine and have sworn off demos, such as Positech and Puppy Games.

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It's tough to get downloads for any free game

Horizon Chase
Aquiris Game Studio

But then the counterpoint would be that "yes, freemium games convert free users to paid poorly, but they make up for it in downloads." Well, that's an iffy situation. If a game would get 10,000 sales as a paid game, but only draw enough attention to get 100,000 free downloads, and then the game converts at 3%, that's only 3,000 sales. And that's making an assumption that a game could even get a million downloads, if not more as many would need to be a sustainable financial success. Then, that's not factoring in that many big-budget free-to-play games often use marketing campaigns with expensive user acquisition costs. And these user acquisition costs can make a huge cut into what a paid user would pay. Freemium only makes sense if downloads can be increased overpaid sales to a massive degree.

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Freemium unlock pricing isn't viable

Badland 2
Badland 2 for Android screenshot. Frogmind/Cheetah Mobile

Part of the reason why free-to-play works financially is that it becomes possible for players who pay a lot to help finance the game. Whales can help finance a game and make it a success, though mid-level and low-level paying players serve as a useful base that serves a non-monetary purpose. A freemium game is more likely to be a fixed experience, and so can't pull in the whales, and could scare away players if its entry price is too high. As well, mobile developers have to still be cognizant of mobile pricing norms – even a game that would be worth $15 or $20 on console and PC might be worth a fraction of that relative to other mobile titles. Why spend $3 to acquire a user that would possibly only pay $3 once?

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Risk of lost sales

Does Not Commute
Screenshot of time-bending racing game Does Not Commute by Mediocre. Does Not Commute

One of the clever things about a paid up front game is that it hooks people in and might force someone to spend more time with it than they otherwise would have. With a freemium game, a person who otherwise would enjoy an experience they paid for, might be more willing to just abandon it if they don't like the initial portion of the game. While there's certainly the potential for added sales, without a doubt, it's also risking that developers give up sales that they otherwise would have had. Granted, this raises a good ethical question about paid games, but for developers, it makes sense to just do that instead of freemium.

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Freemium games require much of the same design as free-to-play

Card Crawl

 Part of the problem with freemium games is that they require much of the same design of free-to-play games. The free portion has to be balanced such that it offers enough content to get players hooked, without offering so much that they won't buy the full game, just getting satisfied on the free portion. This might mean front-loading the game's content and designing the most exciting parts of the game to be in the free segment. Which eventually kind of raises a good question – if a developer has to do work to optimize their game to get players to spend money on it, why not just make it a more traditional free-to-play game?
In fact, the reason why many primarily ad-supported games don't even offer ad removal IAPs is because they convert so poorly that they often aren't worth the effort. They're more valuable as a way to pacify players who would be upset by their omission than by any financial benefit, often as many players want this value to be low. 

There are still reasons for freemium games to exist

So while they are rare, and developers often have little reason to do them, why do some freemium games still exist? There are often non-monetary principles involved. Sometimes it's just the goodness of developers who see this as the most consumer-friendly business model. Or there are developers who fear piracy on Android, and so want to provide a free version for potential customers to try out. And the business model does work for some companies that try to use it! The thing is just that it has many drawbacks, and there are inclinations for anyone else to use it in the future. So why would Super Mario Run be free? Well, it's worth considering all the factors above. Nintendo is the exception to the rule when it comes to mobile. Pokemon GO went to number one on mobile app stores almost instantaneously. Analysts are estimating that Super Mario Run could be downloaded over one billion times. Granted, if the game was cheap to unlock, like $2.99, and converted at a small rate, that likely wouldn't be making the kind of money that Pokemon GO makes in a month. But as a way to get Nintendo's most famous character onto virtually every phone in existence, with a sign that Nintendo isn't just out to make the same kind of free-to-play games as everyone else. As well, the game could definitely be a way for Nintendo to cross-promote their future titles through in-app marketing. Again, if Nintendo wanted to maximize the revenue they would get from Super Mario Run, they would go with a free-to-play business model. But by going freemium, there are benefits that come with it beyond the bottom line for them. And that's why freemium doesn't take off – it requires the ability to get a massive number of downloads with minimal marketing costs, either a small amount of money necessary for the game to be sustainable or just ideology. Otherwise, going paid or free-to-play is the ideal move for developers. And while freemium is best for players, a business model that is not sustainable for creators is not viable for the players either.
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