Monetization Cage Match: Free-to-Play vs. Premium!

The mobile game market is very competitive; tens of thousands of games are being uploaded to the stores each week, and the majority of them are free. Well, why are they free? Why don’t developers charge their customers to play their game? This leads us to our first question…

 Have you ever been offered a free sample? Maybe, a free trial?

I bet you have!

It’s quite common to be offered a free sample or a free trial in this day and age. Why is that? Well, it’s difficult to get users to buy your product without marketing. Now, depending on the industry, some companies will say; “the product sells itself,” while at the same time they have huge sales and marketing teams…🤔

Products don’t sell themselves, and neither do mobile games or apps. This is why the majority of games and apps on the mobile market are free-to-play.

Free-to-Play vs. Premium

Everybody loves a demo or a free sample! Allowing users to experience your product for free is a huge incentive; users aren't risking much (other than, perhaps, their time).  Nevertheless, developers of free-to-play games are faced with a specific challenge: convincing the users who are playing their game to make a purchase. Developers of premium games face a different challenge; for users to fully experience the game, they have to pay first, making it a riskier proposition for users who may be reluctant to spend money upfront.

With that being said, both models can be successful. Let’s compare the two different monetization models side by side.

Free-to-Play

Pros:

  • Free-to-play games have the potential to make more revenue than premium games. Yes, it’s true: free-to-play games tend to make more money! The majority of the top grossing publishers of mobile games only publish free-to-play. If they do publish premium mobile games, it’s typically only a select few.
  • Easier to acquire users (lower barrier to entry because the game is free to download).
  • Easier to monetize in the long run. Whales are your best friend here!
  • Easier to market (if monetized correctly).

Cons:

  • No guarantee that users will make in-app purchases.
  • Users may not initially view your product as “valuable.”  You’ll have to work to convince them that it is.

Premium Model

Pros:

  • It’s guaranteed money (so long as users download your game!).
  • Users value your product, that’s why they paid to download your game. 
  • Metrics don’t matter as much as they do in free-to-play games. However, there may be extra scrutiny on press and user reviews of your game - keep that in mind!

Cons:

  • It’s difficult to market premium games. Apple and Google both take a 30% cut of all purchases made within their stores. This adds a layer of complexity when considering strategies for marketing the game. The cost of marketing the game may be prohibitive unless the game is sold at a high price (which may be a turn-off for users).  
  • Premium games rely on word of mouth, press coverage, user reviews, and a feature spot on the app storefront to acquire users. However, Google doesn’t feature premium games nearly as often as free-to-play games; which has led developers to change the monetization strategy used on the Android market.  
  • As an industry trend, premium games usually don’t have In-App Purchases (IAPs) or Ads. This means developers are making money when the game is first purchased but lack future revenue. Additionally, ad revenue is projected to increase, so money could potentially be left on the table. App Annie recently published an article highlighting the projection of ad revenue from 2015-2020:

Combined worldwide in-app advertising and net-to-publisher app store revenue is forecast to grow by 2.7x — from $70 billion in 2015 to $189 billion in 2020.

  • Premium games may be more susceptible to piracy, especially on Android devices. As a result, you may notice that some games are premium on iOS but free-to-play on Android. (e.g. Alto’s Adventure)

Alto’s Adventure ($4.99)

Alto’s Adventure (Free-to-Play)

  • It’s harder to test the market:

Yes, it is possible to soft launch premium games as free-to-play to test the mechanics, metagame, etc., but it’s still difficult to know if players will purchase the game when it launches as a premium title.

To summarize the pros and cons for both Free-to-Play and Premium games; we can say that both models have their strengths, but one is the clear victor on the current mobile app ecosystem. Free-to-play has been the more popular route for quite some time and its growth is projected to continue. Now, with that said, making the decision between free-to-play or premium also depends on your game, its genre, development status, and goals. Some developers prefer to launch premium games and focus more on the design rather than the monetization.

The choice is yours! Feel free to get in touch if you are looking for help in converting, growing and retaining users in your mobile game.