Feature Article

November 07, 2013

Freemium Model Credited with Explosion in Mobile Game Market

Mobile applications are getting more popular all the time. Among the numerous categories of different applications seeing the most growth, mobile games are leading the way. A new report by Distimo and MEF shows that mobile games have seen a significant increase in the percentage they make up of all mobile downloads. The mobile games are also making up a much larger segment of revenue that is generated by mobile applications.

 The report shows that mobile games are now making up about 31 percent of all mobile downloads across the globe. Despite that relatively small market share, the games are making up 71 percent of the revenue in the Apple iOS store and 89 percent of total revenue in Google Play.

 Games like “Monsters Invade: Oz” are popping up all the time and they are all following a very distinct business model. Games that are getting the most downloads these days are using something called the “Freemium” model. This means that the game doesn’t charge anything to download. The applications earn their money by selling upgrades and the like inside the application.

 Freemium models are becoming so big, that just 7 percent of mobile game revenues come from direct payments in order to download the application. The model in which people make small transactions that eventually adds up is taking the mobile gaming world by storm. It helps that mobile gaming in general is also taking off big time. There doesn’t appear to really be a decline in the interest in mobile games.

 While some games have gotten in trouble for hiding the costs of their Freemium offerings, most of those kinks have been worked out. Even games that were originally charging fees up front, such as “Plants vs. Zombies” have gone the Freemium route with the release of follow up games. Part of the reason for that is people are more likely to spend a dollar here, or a dollar there, as opposed to five, six, or seven dollars up front. Those small $1 purchases end up being more than a customer would have paid in a chunk.

Edited by Cassandra Tucker

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