
The fall of Angry Birds - bootload
http://www.treysmithblog.com/the-fall-of-angry-birds/
======
cletus
I don't dispute the OP's argument. It just makes me sad.

One of the things I really used my iPad for a lot is games. The distribution
mechanism and purchasing system are super-simple. You could (and can) get
high-quality games for a low price. I see I've spent 100+ hours playing
Bejeweled 3 _alone_.

Yet the trend has clearly gone towards in-app purchases. I tried some golf
game (Tiger Woods something?) and it was constant nagging for in-app
purchases. That got deleted in about 2 minutes.

Then there are the "social games", which to me is really an abuse of the word
"game", since they are nothing more (IMHO) than exercises in feeding addiction
and inducing compulsive behaviour. There is no element of skill. It's simply
who can purchase the most. And I've tried a bunch (spending no real $$$) to
see (I'm a sucker for world-building games and there's a dearth of those,
sadly).

The second category (normal games with in-app purchases) create the wrong
incentives. Whereas Angry Birds originally spread because it was a hugely fun
game, the game developer is incentivized to make you fork over more money,
typically at the expense of the game itself.

It saddens me that Angry Birds has gone the in-app purchase route too.

Sadly the genie is out of the bottle. Any sensible game developer will go this
route. Add to this the "social" layer being foisted on users and it's really
looking like dark days ahead for gaming.

~~~
cageface
And this is exactly why I'm predicting a crash in the mobile games market.
People are going to figure out sooner or later that they're being exploited
and not actually having much fun and the whole house of cards is going to come
tumbling down. It's actually worse than that because games make up the bulk of
the app stores' revenue.

Zynga was just the bellwether here.

~~~
dmix
> people are going to figure out sooner or later that they're being exploited
> and not actually having much fun

The same could be said for Casino's, if the visitors looked at it rationally.
But humans often don't make decisions rationally. Especially when it comes to
entertainment and escape from reality.

~~~
Jd
I think mobile/social games are going to get much bigger for just this reason.
Casino's have been playing the human psychology game of trading ring-ding-ding
and related human excitement for centuries with astonishing success. Even
though they've been seen as a menace to humanity, they've nonetheless been
able to been able to use every trick in the book to expand their physical
presence and market impact.

However, there are huge limitations to casinos: they are limited by
regulation; they are limited to physical infrastructure; they have limited
space that the customer has to come to.

Quite obviously, none of this exists for the online world. This is the
incredible success story of Zynga. They've managed to build a giant online
casino and call it a game, and get the execs of Google and Facebook licking
their heels.

This is a market sector that will not simply expand. It will explode.

~~~
alttab
Disagree. The addiction and draw of a casino is MONEY. Not "ding ding ding".
Pay to play games eventually offer dismissing reward. Every time you step into
a casino you could win big. There is no incentive for these types of mobile
games. "one more roll" simply doesn't apply long term.

I agree there will be a correction in mobile gaming. At least I hope to see
these vapid "games" get kicked in the nuts a little.

~~~
Jd
I'm not sure that I want to share more complete thoughts on this subject, as
it could easily be used to develop the next generation of money-sucking social
games, but here's a partial response.

Casinos offer a variety of different games, which have different appeal to
different types of their clientele. There are lottery type games, in which
there is a faint hope of a extraordinary windfall, which appeal to people who
want money without working for it (i.e. people in debt). There are games in
which there is a large degree of control and which the winner emerges because
of his/her psychological prowess which appeals to the serious gamer (i.e.
professional poker players). And then there are the run of the mill ring-ding-
ding games, which appeal both to the idea of winning money, the suspense of
the spinning wheel, and various other attention keeping mechanisms.

Social games have the ability to emulate virtually all of these. Although
ostensibly buy-in is limited to virtual money that can never be removed from
the game, there is nothing stopping large markets to grow around virtual items
that can be traded (as happened with Ultima, EQ, SL, Eve, etc.).

The clutch here is that the "fun" of the experience in both cases largely
revolves around ideas of advancement, social enhancement of the idea of
advancement, and (potentially) some real world tie-in.

Actually, in many respects the social game is far more advanced than the
casino already, insofar as it offers the idea of advancement which is
potentially not tied to money (i.e. leveling up), but which can also be tied
to money if people want it to be.

The problem of this right now is the fact that virtual currency cannot be
liberated, but as soon as that problem is solved the casino will be an
obsolete institution, soon to be extinct.

~~~
alttab
If rewards could then be converted into real world prizes or money, even if
the games are based on "skill" (read: poker), wouldn't these new games be
subject to the same regulation as on-line casinos?

~~~
Jd
Ostensibly, but just how well are governments doing at regulating online
casinos? Ok, add in easily accessible VPNs and stable currencies not tied to a
regulatory body. The question is not can and will governments make these other
currencies illegal, but can governments enforce any laws that they make?

------
rjsamson
"Last year I held a special webinar that was invite only and everyone had to
sign an NDA before attending. On this webinar I explained the current state of
the mobile game industry and my plans to dominate as an independent
developer."

For me, that quote about sums up the rest of the article. Too much arrogance
in there for me.

~~~
petercooper
Trey Smith is from the "Internet marketing" world and a friend of Frank
Kern's. Now, I like these guys (as far as I can learn stuff from them for free
- spending $10K for a "mastermind"..? nah ;-)) but they seem to take
approaches that.. rub some people up the wrong way (and that's putting it
lightly). Nonetheless, I've still found there's a lot to learn from their
experiences even if the delivery is a bit.. _slick_.

~~~
gaius
So they're basically PUAs.

~~~
will_lam
No, they're not, although they did work with PUAs. The Verge did an editorial
on them a while back. [http://www.theverge.com/2012/5/10/2984893/scamworld-
get-rich...](http://www.theverge.com/2012/5/10/2984893/scamworld-get-rich-
quick-schemes-mutate-into-an-online-monster)

While a bit slick/sleazy in their approach their work revolves around using
social psychology principles (social proof, scarcity etc), conversion tricks,
clever copy, giving away freebies in order to build up their email lists.
These guys eventually upsell on their premium products for a ridiculous price
whilst offering their digital product for a "limited time only" to convert
users who've got a good amount of value from their give-away products.

There's hardly any regulation in this industry and the FTC has come down hard
on these guys on more than one occasion.

------
Timothee
I dislike free-to-play games because they tend to distort the gameplay towards
paying additional in-game credits. It also feels a bit like printers: you get
the printer for cheap but pay a lot on inks. Here they lure people in with a
well-designed free game that lives on in-app purchases (IAP).

That being said, the revenues discussed in this post are crazy.

On a side-note, I wish the App Store allowed to filter out by apps that have
or not IAP. I really don't mind paying for apps and games but sometimes there
will be a cool free game available. Nowadays most games are free but with many
IAP. If I see a high-ranked free game I tend to turn around when I see it has
IAP because I know the gameplay will be around buying more stuff.

On a second side-note, I wouldn't mind the fall of Angry Birds. IMO, the game
has received a disproportionate amount of success and the merchandising all
over the place has been ridiculous (e.g. a "Angry Birds" Roku box? That makes
no sense). The game is ok but not very original or entertaining (again, IMO)
but the milking of the brand has been the worst part of it.

~~~
kmfrk
I imagine that all it takes is for a few media outlets to pick up on the
advent of IAP for Apple to address it. It's becoming somewhat of an ethical
problem for them.

Maybe we'll see an equivalent of The Great Google Purge.

~~~
akldfgj
It's interesting that the App Store used to explicitly ban upsells ("This
feature requires MyApp Pro") in apps, since it is a customer-hostile feature,
until they realized they could make a fortune with it.

------
MrFoof
People wonder where video game arcades went after the console market started
to really gain traction in the early to mid 1990s (and really got rolling with
the Playstation 2). Outside of Japan, they largely went away, but now they're
back: on your mobile device.

We've gone right back to feeding tokens (in-game credits) because now you can
distribute the equivalent of an single-game arcade cabinet -- a game that is
designed to optimally take in cash at a given rate -- to every mobile device.
A good analogue would be to make a beat-em up arcade cabinet that let you
start out for nothing, but when you inevitably get KO'd, you have to feed it a
few tokens for the privilege of continuing before the 15 second countdown
elapses and you have to start from the beginning.

~~~
pbhjpbhj
Did any arcade games do the equivalent of allowing IAP - like get a better
weapon or new super move for 1 credit?

~~~
bronson
"Insert Coin to Continue" seems like an IAP.

~~~
joering2
I think that's different. In arcade's example, the only reason you needed a
coin is when you have used all your lives. Now, if you had better skills, you
could get through the entire game without a single additional coin.

In IAP module, the game is designed so there is no chance (at least for 99%
players) to go through the game without purchasing the stuff on the go. Take
"where is my water" for example. You can continue game as long as you keep
scoring all 3 coins on each level. If you miss even one coin, after many
levels you will be missing that coin to open another level. There you have an
option to open the level for $$$ Now, some of those coins, in my gaming
experience, were impossible to score, but that's a different story...

~~~
Domenic_S
> _Now, some of those coins, in my gaming experience, were impossible to
> score_

If you had better skills, you could get through the entire game without buying
a single additional coin! ;)

------
robryan
Personally I get put off a bit by free to play. I expect to have the game
pushing ads at me non stop or trying to get me to purchase things in game.
Where as I associate a quality paid game to be clean and just giving me the
game without all those other distractions.

Granted I am sure there are some decent free to pay titles, just the mental
impression I get before trying new games, based on past experience.

~~~
highace
True... YOU expect the game to push ads at you or try to sell you things,
because this is your domain. You look at it from a totally technical point of
view, you have plenty of experience dealing with this sort of thing. Mr Smith
the average app user on the other hand doesn't have this expectation, and if a
little box pops up telling him he can upgrade his sword twice as quickly for
just 99 cents, he just might do it..

~~~
SquareWheel
That scares the pants off me. I really fear games moving in this direction.

~~~
nkohari
If you think about it, though, most things are already sold this way. The
people who are less engaged are subsidized by those who are more engaged.
Mobile phones and broadband internet are good examples.

~~~
mertd
Is it really the case for broadband? I pay as much as the guy frantically
torrenting day and night but right now I'm just commenting on a text-only
website.

------
CmdrKrool
Funny thing I've found myself doing recently, when I'm hooked in to one of
these horrible, grindy, submarine IAP games which I should know better than to
keep loading up but hey I'm only human. Since my iPad is jailbroken I just SSH
in, find the game directory and more often than not find my stats sitting
there in a simple .plist file (maybe a binary plist, but then you just use the
appropriate editor), make myself an in-game millionaire, load it back up and
enjoy the game at max power for a few minutes before turning it off and never
thinking about it again, a 'weight' lifted off my shoulders. It shocks me, how
when the grind is suddenly removed, my interest in such a game that minutes
before I had been feverishly, morosely addicted to, /completely evaporates/.

It's funny how me doing this is quite comparable to piracy, but - rightly or
wrongly - I feel almost no guilt about doing this because by the time I've got
to this point I've lost all respect for the game anyway.

It's ironic how Apple's locking down of the device is enough for most
developers not to bother obfuscating their game save files so that if you have
taken the trouble just for that jailbreak step, you're unlikely to meet much
further resistance.

And finally when I do run into a game which has apparently taken cursory
defensive steps such that my crude hackery only succeeds in stuffing
everything up and losing whatever progress I did have, this too turns out to
be funny. As I have no impulse to start playing from the beginning again, I
breathe that very same sigh of relief, and forget all about it. Win-win.

~~~
mdonahoe
There are forum posts and youtube videos for how to cheat in most IAP games.

Developers are learning to fight against it, but it funny how much effort goes
into making sure some bits dont get flipped.

------
colinshark
Free to play might ruin games.

Games are supposed to be fun. In a free-to-play game, the game designer's goal
shifts from fun to incremental revenue collection. I think it's an abusive
dynamic between the game designer and the player. If free-to-play becomes the
norm, we might wonder why games are not as fun anymore, without being able to
put a finger on it.

~~~
chucknelson
I agree. While all of these pseudo-gambling games have been common place on
PCs and the web for going on a decade (maybe more?), it's sad to see it start
leaking into traditional game spaces as well.

iOS is basically brand new, so maybe it was inevitable for these types of
games to take over. I'm interested to see what happens in the next console
generation - it might be a sad state of affairs beyond big-budget AAA titles.

~~~
Splines
It's truly unfortunate. If the money is really in F2P (and I think it is), I
would _hate_ to see "core" developers like Epic/Valve/ID integrate those
features into their games because it makes business sense.

Yes, TF2 is F2P, but I think they've done it in a fairly tasteful manner. The
MvM stuff with tickets is skirting the edges a little bit, but time will tell
how it all turns out.

~~~
mdonahoe
I like that MvM costs money. It's a simple way to ensure you are getting
paired up with people who are dedicated to finishing the match.

------
swombat
Forget about whether IAPs are bad. Did nobody pick up on this?

> _In the last month, this single game generated over $12,000,000 on iOS
> alone. They have not ported the game to Android yet._

> If this is the case and it holds ranking for the rest of the year, then this
> single game is worth $109,500,000 PER YEAR on the low side.

Holy fucking shit. $100m a year of high-margin sales for a single iOS games?

World of Warcraft makes, last time I calculated it, roundabout these amounts,
and WoW is one of the most financially successful games ever and requires
masses of investment in infrastructure, new content, community management,
developers, and so on - so big it swallowed Blizzard whole for a while.

If a silly, simple, stupid looking iOS game can make $100m a year of almost
raw profit, this is... well, just mind-blowing, really.

~~~
harpastum
$100m a year is clearly crazy money, but it's not quite at the scale of WoW
yet.

World of Warcraft subscribers have been declining steadily for the last couple
years [1], but they still have ~9.1 million subscribers.

The least a subscriber can pay is by buying in 6-month increments, which is
12.99 a month [2].

So, even though they're making less money than ever, 9.1 million subscribers
at 12.99 per month is 1.4 _Billion_ a year.

[1] [http://www.ign.com/articles/2012/08/02/world-of-warcraft-
los...](http://www.ign.com/articles/2012/08/02/world-of-warcraft-loses-
subscribers) [2] [http://us.battle.net/support/en/article/payment-option-
credi...](http://us.battle.net/support/en/article/payment-option-credit-card)

~~~
david_shaw
9,100,000 * 12.99 == 118,209,000

So, unless my math's off, I think that's pretty close.

------
gingerlime
Is it just me or did the game market become much more sinister than it used to
be? It's all about getting people effectively addicted to make more money out
of them. Give them a taste for free, once they're hooked, start cashing in on
those poor addicts.

~~~
tsantero
Calling the game market "sinister" borders on hyperbole.

Horia Dragomir and Stephanie Kaiser from Wooga gave a presentation[0] on
metrics driven game development at GOTO Copenhagen earlier this year. Through
the lens of one of their more popular franchises "Monster World", they
discussed, among other things, A/B testing and the surprisingly short life
(days to weeks) of a game feature before it becomes irrelevant. Nothing in
their talk suggested late night meetings in dark corners, plotting to turn
their users into addicts. Rather, they discussed adapting to rapidly changing
trends and patterns--which sometimes but not always included introducing new
in-game purchase items.

If on the surface the game industry as a whole appears to you to be an online
equivalent of a casino, thats fine. What I see are dedicated and passionate
engineers trying to ensure the survival a product in which they've dedicated
years of their lives to getting right, by employing many of the same
techniques nearly every other user facing tech company uses everyday, and I
for one am not ready to cast the first stone and accuse entire industries of
moral bankruptcy.

[0]
[http://gotocon.com/cph-2012/presentation/The%20Metrics%20Des...](http://gotocon.com/cph-2012/presentation/The%20Metrics%20Design%20Pattern)

~~~
Wilya
There are surely very dedicated people working in some casinos. That doesn't
have anything to do with them doing interesting stuff.

And the fact that they use "what every other user facing tech company uses" is
exactly the problem. I like and use A/B testing, but it's purpose as a tool is
to take decisions based on what extracts the more money from users. There's no
dark corner, but the goal is definitely the same. And it's not exactly
something that I want to associate with games.

The fact that your whole post, and a big part of the link you give, is as much
applicable to selling games as to selling rocking chairs or any random saas
product is exactly the problem. Marketing and sales come first, game
development is merely an afterthought.

------
jere
>Phase 1 of app store monetization was Premium games (.99 titles)

I have no doubt this is how it works, but I never thought I would see the day
when something that costs a dollar is considered _premium._

~~~
DLWormwood
I came here to post this same thing… Except for a couple of holdouts like
Square Enix, the notion of paying more for something non-consumable vs.
consumable seems to be at an end in the software space.

~~~
rhizome
I wonder if there's any economic theory on circumventing or avoiding a
pricewise race to the bottom that would be relevant here.

------
casca
Trey bases his assessment on Apple's published "Top grossing" list. This is
potentially problematic as it's not clear over what time period this is based
or what other metrics Apple uses to put apps into this list. Apple, like the
publishers would like to encourage people to spend more over time than just
download free apps so they're incentivized to encourage the implication that
in-app is the way to go.

Perhaps Angry Birds is dropping on the pay charts because people are finally
bored of the franchise? How many years and different ways will people pay to
shoot slightly different pigs with birds?

~~~
justjohn
I suspect at this point, everyone who currently owns an iOS device and wants
Angry Birds has it. Their sales are mostly to new iOS device owners while new
games can sell to everyone.

------
TWAndrews
I hate, hate, hate games that use in-app purchases as a significant part of
game play (and removing grinding qualifies, imo), to the point that I look to
see what the top in-app purchase are and won't download games which let you
buy in-game currency.

------
mdkess
I really don't like free to play games, as they're implemented now. The
current strategy is simply "pay to progress" rather than to unlock more
functionality. I was playing this game called Tiny Tower, and in it, you could
pay to finish building a room. If you paid for the room, you ... had another
room. You could then pay for another room. The dynamic of the game didn't
change, things just moved along.

Even without this, because so few people pay anything, the dynamic of the in
app purchases is skewed so that you have to spend a ton of money to get
anything out of your purchases (people willing to pay are willing to pay a
lot, apparently). So people like me, willing to spend $5-$10 on a fun phone
game but not $50, are sort of left behind.

------
jader201
Re: "The fall of Angry Birds", this article should be titled "The fall of paid
games, the rise of IAPs".

Angry Birds, as a franchise, is doing anything but falling. Just look around
the next time you go to a Walmart or Target. Angry Birds lunch boxes. Angry
Birds Halloween costumes. And yes, Angry Birds Cheese Nips[1], which my kids
are consuming even as we speak.

And it's only inevitable that Rovio is or will be working on an Angry Birds
game that takes advantage of IAPs over an up front charge.

[1][http://www.walmart.com/ip/Nabisco-Cheese-Nips-Angry-Birds-
Ch...](http://www.walmart.com/ip/Nabisco-Cheese-Nips-Angry-Birds-Cheddar-
Baked-Snack-Crackers-10.5-oz/21000202)

~~~
pbhjpbhj
Or perhaps just "the fall of transparent gaming costs". Apparently the games
are still paid, just pay-as-you-go without any clear/simple way to determine
how much the game will cost to complete?!

~~~
orangecat
Exactly, and we pretty much have ourselves to blame. We prefer to get ripped
off via "free" or low upfront costs, or "sales" taken off ridiculously
inflated prices. Honest pricing is generally not rewarded; look at the Nexus
One, or JC Penny's attempts at transparency.

------
petercooper
There are some interesting insights in here, but I think it's a bit like
talking about the "fall" of Harry Potter or the "fall" of Star Wars. People
get bored of particular entertainment franchises and icons and move on to the
next thing. While there's undoubtedly more to milk from Angry Birds
(especially if iOS devices get new innovations they can lean on), they'd
better be working on new franchises that could be even bigger.

------
dasil003
I have a feeling that everything he's saying is true, and it makes me very
sad.

------
crazygringo
I wonder if the whole reason IAP is winning...

is because trial periods aren't being done? Wouldn't it be a lot simpler to
make Angry Birds free, have only the first 20 levels be playable, then pay
$9.99 for the remaining 80 levels? (I'm making these numbers up BTW.)

Obviously IAP makes a lot of sense for Farmville-style games that are all
about "objects", but when tacked onto Angry Birds Space, or most games really,
it feels like the company is just trying to take advantage of you.

Why don't we see any "free trials" like this in the App Store? Is it against
Apple TOS or something? Or have studies shown it just doesn't work? (And I
don't mean the free "lite" versions of games -- those are annoying because you
lose all your progress and have to start the full version from zero.)

~~~
mdonahoe
IAP wins because the developer can capture more of the area under the curve
for what people are willing to spend to the play the game.

With traditional games, you either pay the $10 or you dont. Once you have
bought the game, you are done. Maybe you can buy an expanion pack later, or a
tshirt, but the developer literally is out of ways for you to spend money.

With IAP, players can pay as little or as much as they want.

The danger is that the game can become less fun if you are always being
prompted to spend more money. But I think there are games that do it well. I
have spend over $100 playing Valve's TF2, a game that is free-to-play, and I
don't regret it.

------
habosa
$12,000,000 a month? Holy shit. I had no idea the ceiling was that high. I
made a free to play Android game that took me 6 weeks and made about $10
total... I guess I need to give this another shot.

~~~
mdonahoe
They probably spend $4mil/month on advertising to drive new players to the
game. That's how this all works.

------
kylec
There really should be a Game Store separate from the App Store. Currently, if
you're not looking for a game, pages like "Top Grossing Apps" are completely
useless in the App Store.

------
Zenst
Saw a friend of mine the other say, he had a angry birds teeshirt on. He has
never played it ever in his life nor even knew it was a game, just liked the
teeshirt. I showed him the game, involving the killing of birds and pigs and
he was not phased in any way but still likes his teeshirt.

Apart from that any old death of Tetris type article were you change the title
to angry birds will be relevant in such matters of simple fun games and there
lifespan.

~~~
grhino
If you account for merchandising, I wonder if Angry Birds is beating the top
free to play app?

~~~
yskchu
I'm sure it is, there's so much Angry Bird stuff around now

Just today:

Passed by a Samsung Promotion, play angry bird games on SmartTV, win Angry
Bird merchandise

The cable car in Singapore has "Angry Bird" promotion cars with Angry Bird
Decorations; has whole shop dedicated to Angry Birds Merchandise

Local supermarket, spend $$$, collect stickers, redeem Angry Birds

------
egb
I'm curious why people seemed to love and/or idolize Team Fortress 2 going
free to play, but there seems to be a negative vibe surrounding it for mobile
gaming...

One of many mentions on their 12x revenue increase from F2P:
[http://games.slashdot.org/story/12/03/08/2148224/valve-
switc...](http://games.slashdot.org/story/12/03/08/2148224/valve-switching-
team-fortress-2-to-free-to-play-increased-revenue-twelvefold)

~~~
duskwuff
Because TF2 has made a very specific effort to avoid "pay-to-win" gaming. Most
of the expensive items in TF2 are largely cosmetic; all of the seriously game-
changing items can be crafted, found, or obtained through unlocks.

~~~
cshesse
Plus, TF2's stock weapons are generally the most versatile, so there are few
if any game-changing items.

------
minikomi
Just as a point of reference: the top 15 grossing apps in Japan at the moment
are free to play but with in app purchase battle/card social games. I also
work making them.

1-5 <http://i.imgur.com/cuzGb.png> 6-10 <http://i.imgur.com/ckpIC.png> 11-15
<http://i.imgur.com/jzFWa.png>

#16 is Line.

------
Retric
The problem with FTP games is they miss a huge segment of the market. I have
spent thousands on games, but less than 20$ on free to play games because I
dislike the gameplay compromises needed to support FTP. That said, the app
store funnels things towards FTP games but a subscription based game-play is
probably a better long term money maker.

~~~
PJones
A subscription game only works if you're WoW. Virtually every other big name
MMO since that has ended up free to play.

~~~
clarky07
EVE is still subscription based

~~~
krakensden
although their ISK<->subscription time market seems like a nice compromise- if
you can grind, you can play for free. If you want to skip some grind, you can
pay to get ahead. And no one feels like they're being fucked with by amoral
Wharton grads.

------
georgemcbay
Free to Play is certainly popular now, but I'd be shocked if it were still
popular in a year. It is exactly the sort of model that IME works while it is
semi-novel but creates a model fatigue in customers that results in eventual
backlash of even those who accept it at first. So, he's right, but F2P model
will also eventually "fall".

------
stcredzero
_> A very small percentage of people buy stuff in games. Of this small
percentage you have people who will spend a LOT. These are your die hard fans.
I know, because I am one of them and won’t bat an eye spending $50 in a game I
like._

Data? Citation? I'm genuinely curious. Is this now the common wisdom for indy
games?

------
tsantero
>> A very small percentage of people buy stuff in games. Of this small
percentage you have people who will spend a LOT. These are your die hard fans.
I know, because I am one of them and won’t bat an eye spending $50 in a game I
like.

I would love to analyze the in-game purchase data across multiple free-to-play
games on multiple platforms (e.g. facebook, app store, etc) in order to see
the distribution of user spending habits. While I'm sure there are power users
who spend magnitudes more than the average, I'm skeptical that they're the
main driver of revenue. What I'd like to see is the average % of users who
make in-game purchases, the average in-game purchase over time, frequency of
purchases and what % of total revenue the average represents.

Unfortunately, I don't think Zynga et al will be releasing this data publicly
anytime soon.

~~~
patio11
_I'm skeptical that they're the main driver of revenue._

Your skepticism is founded on a prediction about a measurable feature of
material reality, right? Your prediction is catastrophically inaccurate.

[http://casualconnect.org/lectures/games-for-
gamers/virtual-g...](http://casualconnect.org/lectures/games-for-
gamers/virtual-goods-for-core-gamers-emily-greer-anthony-pecorella/)
(Particularly slides 16, 17.)

[http://gigaom.com/2011/07/25/game-devs-looking-for-
revenues-...](http://gigaom.com/2011/07/25/game-devs-looking-for-revenues-go-
whale-hunting/)

[http://www.quora.com/Social-Gaming-Startups-and-
Companies/Wh...](http://www.quora.com/Social-Gaming-Startups-and-
Companies/What-is-to-good-strategy-to-deal-with-ever-growing-importance-of-
whales)

Feel free to take anyone in the industry out to coffee if you want
confirmation.

~~~
tsantero
Thank you for the links, but in the future don't put words in my mouth and
then use them as a basis to insult me.

~~~
patio11
My inclination when people feel insulted is generally to apologize, but I've
re-read my comment twice, and I cannot apologize because I am not contrite. I
neither put words in your mouth nor insulted you. You can choose to _feel_
insulted regardless, like you could choose to feel insulted if a teacher said
"Nope, there is in fact no carbon in a water molecule -- here's some resources
or talk to a chemist and they'll set you straight", but that is entirely under
your control. Prior to deciding to become insulted, I might suggest pondering
"Do I want to commit to routinely being unhappy when soliciting information
about subjects I purport to care about from people who know more about them
than I do?"

~~~
mechanical_fish
This happened to me the other day. It's like I can't write ten words of
argument on HN anymore without someone fainting dead away.

This seems like a good time to thank you for correcting many of the
catastrophically inaccurate things I've thought over the years. ;)

------
ckayatek
I see minecraft pocket edition on that list as well and it is neither a $0.99
game or a free to play. I think this is evidence that people are willing to
pay for a well-made product. For me this article is simply a rehash of Zynga's
whale strategy and we know how manipulative and frankly evil that is.

~~~
giulianob
Minecraft already has brand recognition though. A lot of these other games
don't yet.

~~~
tbeseda
And that recognition is among a less casual, often "hardcore" audience.

~~~
rocky1138
No way. It's children. Boys age 9-13 are Minecraft-crazy. Anyone with a server
can tell you that.

------
Xcelerate
I am absolutely _baffled_ that in-app purchases are so popular. For me, I
would rather pay a one time fee for an excellent game than be "nagged" to move
myself ahead in the game. I play Tetris occasionally on Facebook, and I get so
annoyed with the constant spam for extra coins, dollars, armor, line speed
upgrades, etc. I'd rather pay $40 and get the game in pristine _finished_
form.

I don't know what to make of it, really. I'm usually decent at predicting what
will be popular, but this time I completely missed the boat.

It really makes me kind of sad. I remember when I was little I would get a
game like Zelda for GameBoy for $30. That game obviously had tons of work put
into it and gave me endless hours of enjoyment. Games for phones seem to lack
this kind of depth.

~~~
Silhouette
I'm 100% with you: personally, I would happily pay a substantial price for a
good quality game, which I could install on whichever computer I want without
it messing anything up, and which had a single-player focus. Sadly, hardly
anyone makes games like that any more.

It is, unfortunately, the logical conclusion of Internet piracy. The pirates
can talk about how a ripped off copy isn't really a lost sale and they
wouldn't have paid anyway until they're blue in the face, but the fact is that
_someone_ has to pay for the games these people obviously enjoy so much. Given
that one-off big purchases of games seem to have at most 5-10% efficiency in
terms of people buying legal copies, the people making the games are looking
for alternative models where the pirates can't just copy the whole thing,
which means something where you take the money interactively or something
where you never actually get most of the game data installed locally so you
can't copy it. And that means in-app purchases for the little guys and things
like DLC and MMOGs for the big players.

And they still throw in increasingly obnoxious DRM for good measure,
presumably because the net win from making it more difficult or time-consuming
for some people to get a pirate copy outweighs the loss of custom from people
like me who would buy a good game without the junk but won't spend that kind
of money on software we aren't actually going to own/control.

In short, if you miss paying a fair price for a finished game, blame the
pirates, and blame the short-sighted executives at the big game companies who
couldn't find a better way to respond to those pirates than screwing their
legitimate customers.

~~~
sigkill
Your comment just reminded me why most of the software is going SaaS. One
could conjecture that the developers see IAP exactly as a SaaS.

~~~
Silhouette
There are definitely a lot of the same arguments to be made for SaaS, though I
think there are others as well in that case.

For one thing, many relatively small payments is often an easier sell than one
big payment, even if the small payments add up to more over the long term and
even if the customer is fully aware of this. (Although on reflection, a model
that seeks to get many IAPs over an extended period isn't so different in this
respect.)

For another thing, customers who are unsure can try the service legitimately
without paying "full price" or resorting to piracy. At the other end of the
spectrum, while you're potentially making more money from long-term
subscribers than you would with a large, one-off payment, those are probably
the people who get the most value out of your service so they don't
necessarily mind. So you get a certain amount of self-selecting market
segmentation without even having to do any work for it.

But sure, the automatic copy-protection without the downsides of intrusive DRM
is definitely a huge win for SaaS.

------
m_myers
An interesting variation on F2P is the one used by World Golf Tour [1], which
I've been playing a bit recently.

Instead of forcing users to pay real money to get better equipment, it has
another means of earning credits: viewing advertisements. That means that a) I
don't feel like I'm actually spending money (except opportunity cost), and b)
they can show pretty well-targeted ads to users who are _requesting to see
them._ I don't know the financial details, but I'd guess they can sell for a
pretty decent rate. And you have to view quite a lot of them to get as many
credits as you could have bought outright for $10.

As an added bonus to them, relying on ads means I have to disable AdBlock for
their entire website.

[1]: <http://wgt.com>

------
dark_element
Interesting fact on how desperate people can get to be better at games. The
lack of in app/game purchases in MMOs created a whole industry called "Gold
farming" <http://en.wikipedia.org/wiki/Gold_farming>

------
ynniv
Free to play is the modern coin-op. Sure, it can ruin a game - anything can.
Executed properly you'll find a mechanic of variable pricing based on a
customer's interest in your product. If someone cares more, they (can) pay
more. Who could ask for a better pricing model?

------
timmaah
They are making up for it in merchandise.

I have been touring the US this summer and have been amazed by the number of
people wearing Angry Birds shirts. Even grown men. Walmart has huge Angry
Birds signs right next to established brands like Levi and Nike.

------
drue
If I wasn't living it I would believe this to be The Onion or something out of
1984.

------
andr3w321
It makes sense that the free apps are making more when you think about it.
They're getting the most money out of each customer. Every customer is not
worth 99 cents. Some are worth a LOT more. Just like when you go overseas and
the locals have on cheap price for locals and a much higher price for the rich
foreigners.

There have to be other ways of achieving the same end goal however without the
constant nagging. Has anyone tried a game where people pay by the hour for
instance? First hour free?

------
beggi
I think this wave of Free-to-play games with incessant requests to gamers to
buy in-app coins and whatever might lead to a wave of expensive (like $30-$60,
similar to the desktop market) up-front games that will have a promise of no
in-app purchases. I know I'm at least, and I suspect a lot others, are
yearning for the old days of Sim City and Sim Tower where you didn't have to
pay extra for specific buildings.

------
anovikov
I don't see any failure there. They have relatively few installs, but near top
revenue, meaning: nearly everyone have already installed their stuff, and
stuck with it, and spend a lot there. They just turned into an established
business, maybe no longer a 'startup'. Falling growth rate is inevitable if
you have already conquired the world.

------
webwright
If you'd like to see the fall over time, here's a graph:
[https://skitch.com/webwright/eq2es/angry-birds-rank-
history-...](https://skitch.com/webwright/eq2es/angry-birds-rank-history-app-
annie)

The blue line is the overall grossing rank over time.

------
J0415
OT, but in CSR Racing and many "pay to avoid waiting" games, there's actually
a bug where if you move forward the time on your device, the game thinks the
time has passed and gives you the free gas.

~~~
andyking
But then, the time is wrong on your phone - which could cause problems far
worse than "having to wait for a new feature on a mobile game."

------
ww520
Curious about the credit management mechanism. For the unused credits (coins),
can the users ask for refund? Or they expire after some time, just like the
cell phone purchased minutes.

~~~
rhizome
Refund?!

------
digitalengineer
How will this effect Google's Mobile Advertising Strategy? As the numbers show
for almost _all_ free Apps, the In-App-Ad's are being replaced by In-App-
Purchasing...

------
mkale
IAP games are like going to the arcade and paying some small amount per play,
rather than buying the game upfront and getting to play as much as you want.

------
podperson
I hope the trend proves to be short lived, and suspect it will be.

