Games analyst Nicholas Lovell explains why free doesn’t mean unprofitable
Many freemium Facebook games are generating $20 from each of its customers, according to a leading games analyst and consultant.
“Numbers for Facebook games are hard to come by but across the web, many freemium games are generating ARPPU (average revenue per paying user) of around $20,” wrote Gamesbrief founder Nicholas Lovell in a new Develop feature.
The evaluation comes in the wake of rumours suggesting EA has sealed an extraordinary $250 million takeover of Facebook game group Playfish.
Playfish has made its business and reputation largely from the free games it has released on Facebook, with users growing from 35 million to 60 million in the past twelve months on the social network.
“Free does not mean unprofitable,” said Lovell. “Facebook users have become accustomed to the freemium model, whereby they have the option of paying for virtual goods, which might give them special powers, accelerate the levelling-up process or allow them to express their identity.”
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Lovell said that the central advantage of microtransactions that there is no upper cap to how much money a user can spend on a game.
“It is not a binary choice between £0 and, say, £4.99. It is a sliding scale between zero and a very large number indeed. Bigpoint, for example, have several users who spend over $1,000 each month on virtual items in their web-based games such as Dark Orbit.”
Lovell did however offer warnings about the freemium model, as part of his full exploration of the issues surrounding social network games.
