If you’re an Android user who likes games, Tuesday was a big day. After seven months as an iPhone app, the wildly successful mobile game Temple Run was finally released to the Android platform, triggering an outpouring of excitement on Twitter and social networking sites. “Temple run is now on my phone. *dies of happiness*,†gushed [1] one fan. “Temple run for Android is finally out! Well I know what i’m doing at school today:)â€Â wrote [2] another.
But the successful Android release of the Indiana Jones-like action game marks more than a new way to waste time in class. It’s a pointer to the future of gaming, not just on mobile devices, but potentially on computers and game consoles as well. Temple Run has already made its three-person development team untold amounts of money, and it’s expected to be one of the most popular and lucrative games on Android too. And it’s done it all by being free.
When Apple launched its digital game store in 2008, most games cost a few dollars. The success of 99-cent apps drove prices down. Then in 2009, Apple changed its store to allow free downloads to feature in-app purchases, for the first time making it possible to give away a game and make money later.
Now free is the most lucrative price point. From kids’ games like Smurfs’ Village to puzzles like Bejeweled Blitz, 15 of the first 20 games on Apple’s Top-Grossing Apps list are free. The analyst group Distimo estimates that half of the revenue for the 200 top-grossing apps comes from the freemium model [3] . Everyone from indie game developers to established companies is jumping on the freemium bandwagon.
“A lot of people who care about games are now making freemium games,†said Giordano Contestabile, manager of the Bejeweled business at Electronic Arts subsidiary PopCap, at his Game Developers Conference talk in early March.
One of them is Temple Run co-creator Keith Shepherd. A diehard Apple fan, he bought his iPhone on the day the company released it in June 2007. At the time, Shepherd and his wife Natalia Luckyanova were working in Washington, D.C., writing enterprise software for healthcare professionals. It wasn’t what Shepherd saw himself doing as a kid, and by the time Apple released the iPhone development kit a year later, Shepherd had already quit his job and was wondering what to do next.
“When I was a kid I got into programming because I wanted to make games,†he says. “The two of us came up with a … game called Imangi [4] . We played to our strengths â€" we’re not artists, so we made a simple little word game.â€
Shepherd and Luckyanova launched Imangi on the day the App Store debuted. It made a few thousand dollars â€" nothing earth-shaking, but enough to convince the pair to keep going. Christening their company Imangi Studios, Shepherd and Luckyanova created more iOS games over the years, having a few minor hits but no breakout successes.
“If you download my game and delete it, I make nothing.â€
Then came Temple Run. The game grew out of an earlier Imangi release called Max Adventure [5] , which used icons on the iPhone screen to emulate the dual-joystick setup of game consoles. Max was  a “pretty big flop,†says Shephard, but it inspired the couple to design its next game to use controls that were more native to the iPhone. Tilting the device made your character lean left and right. Swiping up or down made him jump over gaps or slide under branches. The released Temple Run on the App Store in August for 99 cents.
It did well, at first. “It got a ton of critical acclaim, it got featured [on the App Store menu], people loved it,†says Luckyanova. Temple Run was one of the top 50 paid apps. The couple sold about 40,000 copies at 99 cents a pop. But then it started sliding down the list. With little to lose, Shepherd and Luckyanova abruptly changed the price to zero, hoping to make money by getting players to trade real-life cash for virtual currency.
Revenue immediately increased. People told their friends â€" hey, play this game. It’s free. You can grab it right now. By Christmas, it was the top-grossing app on the store. “It snowballed into a viral effect,†says Shepherd. The game is now at 46 million free downloads â€" and Shepherd and Luckyanova estimate that 1 to 3 percent of players wind up spending money on the game.
Publishers have experimented with a variety of tricks to make money from free games. Some have embedded ads in their games, selling eyeballs to advertisers instead of selling games to gamers. Facebook games like FarmVille only let players play for brief periods of time and with limited resources, asking for money at every turn if the player wants to keep going without having to wait.
Temple Run, and games like it, prove the formula doesn’t have to be so complicated. There are no ads, no limits on play time. There’s just currency. Every time you play, you earn gold coins to spend on new characters or power-ups. If you’re impatient, you can pay a few real bucks for an instant pile of gold. That’s it.
Freemium games demand a fundamental difference in design. You can easily create a standard game that costs $10, then decide to drop it to 99 cents if it’s not selling well. But you can’t drop it to free unless there’s something in the game that makes money. The games carry the heavy burden of hooking the player psychologically, keeping them playing long enough so that they’re willing to pull out their wallets. That’s a obligation the standard console game doesn’t face.
“In the traditional videogame console business, they think about, ‘Is the game marketable?’† says Gabriel Leydon, the CEO of Addmired, maker of top-grossing app store games like Original Gangstaz and Global War. “If I see it on the shelf, do I buy it? They have their 50 bucks right there â€" even if I walk outside and throw it in the trash, they still make their money. That doesn’t happen in free-to-play. [If] you download my game and delete it, I make nothing.â€
The event horizon when a free player starts spending real money in a game is usually at three to four weeks,  says Leydon. If the player loses interest before then, the game is â€" financially speaking â€" a bust.
“In console they want you to buy a new game every year,†he says. “In free-to-play we don’t want you to play anything else.â€
That sounds hard. But Leydon is a firm believer that freemium games can challenge the standard retail model, and even threaten home gaming machines.
Links
- ^ gushed (twitter.com)
- ^ wrote (twitter.com)
- ^ half of the revenue for the 200 top-grossing apps comes from the freemium model (www.distimo.com)
- ^ game called Imangi (arstechnica.com)
- ^ Max Adventure (www.imangistudios.com)
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