[Examining the "new normal" for the iPhone App Store, in which 99 cent games are being replaced by free-to-play, microtransaction-based titles, we speak to developers at Newtoy (Words With Friends), Ngmoco, and more.]
Pricing for games on Apple's App Store has frequently been described as a "race to the bottom". A look at the top paid games reveals a list that's full of 99 cent titles, with only the rare game charting with a price tag of $5 or more.
So how do you make your game stand out in a field full of lower priced apps? For some, the answer is simple: give it away for free. But is this strategy viable? Can in-app purchase and advertising make up for an actual price tag?
For at least three developers, the answer appears to be yes.
When Get Set Games originally released Mega Jump -- which just recently passed the six million user plateau -- the game wasn't free.
As the studio's third release, Mega Jump was priced at $0.99 when it launched in the app store. The team achieved what they describe as "decent sales," and at one point Mega Jump was one of Apple's featured games.
Eventually, mobile social network platform OpenFeint approached Get Set about a limited time offer, which would make the game free for one day only, coupled with heavy promotion. It was an immediate success.
"We set it free and it got a million downloads in three days, which is exceptional," explains co-founder Matt Coombe. "And so we saw our ranks go up and also we have a small amount of in-app purchases available, and we saw their sales just go through the roof right away. It was clear that more people equals more in-app purchases.
"But we found that our sales figures dipped almost immediately after the promotion. Despite getting a million people when it was free, as soon as it went back to just 99 cents, sales slumped almost immediately back to roughly where they were before. But the in-app purchases stayed strong, because we had a large community of people that had downloaded during that period."
After reverting back to the 99 cent price point, the studio eventually made the game free once again, as part of an OpenFeint promotion, for an entire weekend -- which led to yet another increase in both downloads and in-app purchases.
Finally Get Set decided to simply make the game free to download once and for all. "It just turned out that we could make much, much greater revenue by giving it away and selling in-app purchases then trying to sell the app itself," says Coombe.
Prior to making the shift to free, Mega Jump was seeing approximately 1,000 downloads per day and in-app purchases accounted for nearly a third of the game's profit.
Now that the game bears no price tag, downloads have skyrocketed to between 35 to 40,000 per day. And even though the average revenue per user is only approximately between five and ten cents, the sheer number of users makes this strategy much more profitable.
In addition to the pricing of the game, the in-app purchases themselves have changed along the way as well. Initially the game allowed users to purchase items, such as new characters, with real money.
But after receiving negative feedback, Get Set decided to change things around. Since players were already collecting coins in the game, the studio decided that those coins should be used for purchasing items and upgrades. And instead of buying those items directly, users could purchase virtual currency.
"We kind of thought that might actually hit us in terms of revenue a little bit, by allowing people to get stuff for free by just collecting coins in the game, but it actually had the opposite effect," says Coombe. "People are much more likely to purchase a virtual currency and use that to unlock stuff than they are to purchase items directly, which was mind-blowing."