FEATURE: Making money with free games

If you walk around a major city for long enough, you’ll stumble across someone giving away a free sample of something or other. Often it’s snack foods or toiletries.

I’ve sometimes wondered whether it’s possible to live off free samples, if you know where the distribution points are. You might end up with rotten teeth, but you could have very shiny hair.

There’s a sound rationale behind this generosity, of course. If you can get customers to try a product, they’re more likely to buy it. Also, if people try a great new product, they’re more likely to talk about it.

The same idea has been used in software for a long time, helped by the fact that software can be copied without incurring costs. Before the internet, people legitimately traded freeware or shareware software.

Businesses sprung up to distribute shareware by post or in cafes. People could try software with little financial risk, and then pay to register the software they liked.

Typically, features would be held back to encourage registration. Doom is the most famous example of a successful shareware product, but many programmers were able to sell software on a more modest level to people they couldn’t otherwise reach, thanks to shareware.

Why is this relevant today? Well, Nicholas Lovell of Gamesbrief has analysed the 100 top grossing apps of 2011 on Apple’s US app store, and found that 57% of them are free, including 7 of the top 10.

By giving away the app, developers are able to build rapport with customers, and then make money in a few different ways, which I would suggest are:

• Advertising: This can work well for both end users and advertisers if the advertising is well targeted to the user’s interests. The challenge is to design a game that can accommodate advertising without disrupting gameplay. Advertising-based apps can only really make money if they encourage immersive gameplay that brings people back repeatedly. A single visit isn’t worth much, but a base of loyal players can be monetised effectively.

• Selling app upgrades: The ‘free trial’ model gives people access to a cut down version of the game for free and invites them to pay for the full release. It can be tricky to create a representative cut-down version, but puzzle games can work particularly well in this format. This can often generate more revenue per player compared to advertising, but the drawback is that you can only make one sale per customer, unless you create a series of games and try to get players to buy into them all.

• Selling premium content: The in-app purchase has been a huge innovation in financing games. The idea here is that the game is given away, but people can buy additional content for it. Sometimes this content could be a level or something else that adds value to the gameplay, but often the new content is purely about status: a new hat that friends in the game can see, or a larger house for a character to live in.

Implementing these charging methods requires integration with the app store you’re using. For example, the Intel AppUp developer program offers three APIs that you can integrate with your Windows game to enable these revenue models:

• Advertising components from mOcean Mobile and Webmoblink are available for free integration with your app.

• The In-App Upgrade API can be used to direct players from a trial game to the store where they can purchase the full version.

• The In-App Unlocking API enables additional content to be sold and then unlocked from within an app. You upload the content descriptions to the app store using a .csv file, and the store handles the transactions and authorises the app to unlock the content.

To create a successful game, you need to exercise creativity in its concept, design and execution. But you also need increasingly to be creative with its business model. If the chart of top grossing apps on iOS is to be believed, free could be the way to go.

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This blog post is written by Softtalkmobile, and is sponsored by the Intel AppUp developer program, a single channel for distributing apps to multiple devices, multiple operating systems, and multiple app stores.