Why a paid app is a bad idea

Monetizing, Advertising & Marketing Marketing Methods
21

Because those customers are superstars, they’re willing to spend money on your app, so why let them fly away forever to make a quick buck? We should:

1- Monetize them for MONTHS through microtransactions

AND

2- Get them hooked on our future apps through house ads. You can’t put up house ads on an app if you’ve already promised it’s the “ad-free” version.

There’s 2 main strategies for paid apps:
A) Ad-free version
B) More featured version

Version A is obviously a bad choice because you’re throwing away your absolute BEST customers FOR LIFE, just to make a couple of dollars.

Version B is better, but is again shortsighted, because with a liiiittle more creativity you could come up with a way to monetize that user for life (and for MUCH more money per month) if you just broke up those functionalities into consumable microtransactions (Or leadbolt offers, too).

Here’s my 2 bold statements that will surely generate discussion :wink: :

-We NEED to stop calculating the long-term value of a one-time sale based on how long it would take to monetize that user through ads. The real value of that use is MUCH higher and generates money for MUCH longer if you intelligently implement microtransactions.

-Selling an app for a one-time fee these days is THE least profitable monetization decision you can make.

It’s not just me saying it, it’s the leaders of the video game industry including titans like Blizzard and Sony. Microtransactions aren’t the future, they are the PRESENT.

22

My 2 cents:
I believe that the best way to do it would be to have both a free version (with advertisements) and one paid version (without advertisements).

I think it’s extremely hard to get players to play an ad-supported game for enough time to make up for the income for a sale of a paid version of the app. There are almost no app that I know that are that addictive.
There have been lots of applications that have been extremely successful, for example Wordfeud and Draw Something but even though those were very, very addictive most people I know stopped playing it just a couple of months after they had downloaded them.

To believe that someone will keep playing your game forever is just foolish.

@Kiwicoco
I don’t understand the problem with number 1 of your resons why a paid app is a bad idea. If the paid version only removes the advertisement then you can still offer the same IAP’s as the free version.

For number 2 I think Rovio have solved this problem very well. They have it so that in the pause menu you can also see the other Angry Birds games that are out (this is for both free and paid version) and you can turn off the “advertisements” by clicking on a little pig in the right corner.
This way users will be notified for new games (but they’ll also have the ability to turn it off if they like) and they will also know that it’s a game from the same developer (I don’t know if the house ads also has some way of telling the users that the same developer have developed the game being shown in the ad)…

Also another thing which I can’t figure out is if the ad-based version is so good and will earn the company so much more money than a paid version then why do a lot of the big companies offer an ad-free version of their application. I mean they surely must have calculated on what would be the best option for them, right?

So I think the best option would be one ad-free version and also one paid version to remove the advertisements.

23

Big companies have another thinking - they do not aim for e steady income, they aim for a calculated goal of income and then stop bothering completely with this app completely when the goal is completed and throw out a sequel - where the game starts from the beginning. So they have costs of xx $ and they want revenue of xx $ *2 … that’s all it is.

Indy Developers aim for a steady income they dont want to start from the scratch over and over again :wink:

24

I think that differ a lot between every company. Some companys like to create a game and then just leave it while some keeps updating it. Like if you take a look at Angry Birds which I mentioned before you can’t find any Angry Birds game that is version 1.0.0 yet they have a premium version available to remove the advertisements (as they probably earn more that way)

I also think that users should have the option to upgrade if they want to, and for me the motivation for making Android games has never been (and hopefully never will be) money, so tbh I don’t care if I make a little less money if it will keep my users happy :slight_smile:

25

Agreed!

Because you lose the prime real estate of a full-screen house ad spot on startup. =/

You’re right, that is a decent way to do it!

However, that’s MUCH less effective than a full-screen cross-promotion ad on startup. If you’re wondering about how effective it is, just compare the CTR of full-page ads vs. small format in-game ads on regular networks. Full-page ads on startup get WAY higher CTRs virtually across the board. So why give up that option? And if someone still did it after the user bought the ad-free version then that dev deserves a bad review for not offering what they promised: An ad-free version.

Well for one, most of the big companies and games, like Angry Birds, sprawled up in iOs gaming infancy. And since they achieved high levels of success by just selling the app, of course they just keep doing that now, years later. And with their scale they can continue to make millions with that model.

But also, microtransactions are just ripe, just now! 6 months ago, they were mostly worthless on Android, heck, 2 months ago they were impossible on Kindle Fire! Now they’re a reality in the 2 biggest Android stores, AND we’ve got MoVend offering cross-store in-app purchases. Suddenly, microtransactions have actually become viable, so now the old model of the one-off sale is really only a smart decision for huge companies (and even they could be doing a hell of a lot better with micropayments. Just ask Zynga! :P)

True, but again, Rovio hit it big with Angry Birds when microtransactions weren’t feasible (in fact, iOs ads weren’t a reality either) They had no choice but to monetize by selling a paid version. Now there are many different viable models, they just haven’t switched because with the size they got it doesn’t matter much to them, they still get amazing numbers.

Nice! Very noble!! :slight_smile:

I just ask, why would microtransactions not make your users happy? You could even skip ads altogether and offer just a free version with microtransactions that keep users happy because they keep getting fresh content forever, and you keep getting revenue for longer, too! :slight_smile:

26

Gonna disagree with you. And I have hard numbers to back it up.

At the end of every game of [WordHero], the score is submitted. This means I know how many games people have played.

So I looked at the leaderboards and pulled the stats for several players whose names I recognized as ones that play WAY too often. I found a few in the 5000’s and more in the 2-3k range.

Since each game is 3 minutes, let’s do the math:

Time spent ‘in game’ = 3min * 5000 = 250 hours of playtime.

THAT IS 31 DAYS AT 8 HOURS PER DAY !!!

(Side note: I have users post in reviews that they are SO ADDICTED to my game that they are being late for work!)

During those 250 hours of playtime, that person has seen 15000 adverts !!! Even with a CTR of 0.1% (I actually get around 0.3%), that person has clicked on at least 15 adverts. Assuming a CPC of $0.05, that is $0.75 income for that person.

If you wanted a high bound, it would be CTR of 0.3% and a CPC of $0.1 with an income of $4.5.

So what does this tell us ? Even if you have an insanely addictive game, your most addicted users are still only going to produce a ‘minimal’ return equivalent to a purchased version.

IF (and we all know this is not true), you could get the same number of paid users as free users, then paid = way to go. Unfortunately, reality bites.

This explains why companies do an ad-free paid version. They have already monetized the user with a ad-supported version. Getting the user to buy a ad-free version is just double dipping !

So how can we do better ? Well, it is like buying a single share on the stock exchange vs buying a fund… rather spread your income sources ! So companies do ad, paid and micro-transactions all in one game…

27

Hahaaa! I stand corrected!

Not because I didn’t think a game could be that addictive, we have 2 VERY addictive games in this forum alone! (WordHero and RoboMiner)

But because I thought after a while, those users might get “banner blindness” so even if they’re addicted they wouldn’t click on ads anymore after a while. But you just showed us that they do, so that’s great!! :slight_smile:

28

I think it would be interesting to find out if Robominer was designed from the ground up to be addictive or just kinda of happened that way.

I can tell you that for WordHero, I spent literally hundreds of hours learning about addiction (in the industry, it is termed ‘inducing the desired behavior in the customer’) including psych papers, etc. I also studied addictive games and did a bunch of mockups and financial analysis before even learning Java.

Only when I was convinced that I had a winner did I start coding. Well, I did make a ‘winner’. I hit my target. I made a very addictive game.

And then I spent MONTHS trying to figure out how to monetize it properly.

The lesson here: making an addictive game is NOT the target… making a financially successful game is the target.

29

That’s awesome, mind!! Do you have some high-level pointers on what makes a game that addictive? :slight_smile:

30

I did (and do) not spending much effort in analyse what makes a game addictive (but truely I should - never thought about it that way you did…).

I am not very good in imagine things make a plan and do the coding - I always do it the other way. I have an idea and start coding making a prototype and play it and see if I have more ideas which I can integrate and/or if I can realize my idea technically promising.

So if I got a prototype I can’t stop playing around with, I proceed with building upon it. You see I am more practical instead of wisely and it does not always work out.

I have my own ideas what makes a game … I wouldn’t say addictive - I would say interesting enough to play it for a longer time. Many players are reminded on classics like Boulder Dash - that was a hit before - so it is a hit right now xD
Also, I never mentioned, that players would play up to level 46!! That scratched already the memory max on some phones!

I really would be also very interested in getting more technical knowlegde of what makes a game addictive and I really appreciate WordHero in this manner it is very well made. In Robo Miner I work most of the time in thinking about new game parts :slight_smile:

On the other hand I am a player myself. I like to play games and I know why I play some games that often so I merely try to “copy” that into my own games.

Maybe I could write an article about that subject … xD

31

Since this has devolved into a “how to make a good app”, I posted a reasonably detailed account of the early stages of [WordHero]'s development here.

32

A paid and free version may work best when considering certain markets. It depends on the context. However, I do believe there are situations where having a paid only app would generate more money.

If an app really entices the user to get it (due to pictures or description), a paid version only may fare better. A one of kind game guide or scantily dressed women type apps probably make more money as paid only. This is just from observation, and strictly my opinion, so feel free to disagree.

33

No, actually you’re right, I can totally see the apps with scantily [not] dressed women working better as a paid app, haha :stuck_out_tongue:

edit: Although the porn industry was the pioneer in offering free trials on the internet and making way more money that way, because they got spread around all over the place because their stuff was free!

34

except that you need to enter your creditcard data in advance for a free trial xD

35

Yeah but that’s not their marketing strategy, it’s the fact that they give low-quality videos and photos away to portals that aggregate them, and in the video they tell people they can get a free trial by visiting their site.

It’s like drug dealers giving away free joints to lure people in, and then once they’re hooked, they charge them.

…Did I just degrade this thread into talking about the drug and porn industries??? lol Hey, they’re the smartest marketers, we can all learn from them! Haha

36

So the real question is : How can we learn from this and apply these lessons to the app industry ?

37

Many have already learned from it - like giving something away when they join their facebook group.

And I think ever demo app out there, does the same thing, giving away some free services in hope they will buy the paid version- but that’s nothing really new and actually the porn industry has a completely different “userbase” xD

38

I think the main factor here is the addictiveness. These industries both have the huge advantage that their products are highly addictive. Even more than games :stuck_out_tongue: They can afford to give away a fair amount for free, knowing that people will always want more.

If you can make something free that’s really addictive, then people will always pay for more. Perhaps that’s where micropayments make most sense. When people are addicted to your game (or app, or whatever), they’ll probably tend to make irrational, addiction-driven decisions. So you can take advantage of that (in a not-evil way, of course) by giving them lots of opportunities to buy small upgrades.

On the other hand, if they’re making a rational, feature-driven decision, you could be better of selling them a one-time paid version. Because otherwise they’d be annoyed by the need to constantly pay for more.

39

Yeah but to be fair… How is fake iphone addictive?
It’s a great idea and a huge hit, but I do not see it being addictive.
But in case of games you are right, getting people to play the game over and over is they key to making a successful game.

40

I am pretty sure, david mentioned the addictivness in relation to the example of the porn industry :slight_smile:

His fake iPhone have another buzz instead of being addictive: It is viral, which can also be a very huge successor - I believe that a viral app does pay of better as a paid app than a ad-supported app - it is more likely to get downloaded because it is “popular”. An ad Supported Game (or App) does much more rely on being played/used over a longer period