I'm in the middle of implementing some monetization features for a Facebook game right now and it got me thinking about the economic viability of such things.

I'm sure that most here don't have any real experience with this -- I can only think of a few who I know do -- but what is your opinion on such business models?

My assumption is that while many will try to make a commercially successful game by combining ads, in-app purchases, and subscriptions, most will never recoup their investment. A game needs to either have no direct costs associated with development -- for example, everything is developed in the team's free time with no expectation of generating income -- or become extremely popular before any profit can be made. In the majority of cases, the only people making money are those who are paid to make the games for other people.

I'll save you all the details of what I've directly observed, since you can likely determine it based on the content of this post.

My opinion is that IAPs make games suck... Games using IAPs are designed to get you to buy coins or upgrades, instead of being designed to be fun.

But don't they have to be "fun enough" to get you to make the purchases? And aren't regular games fun enough to buy in the first place? Yes, the attitude of nickel-and-diming you to distraction is bad if overdone.

Off topic: FF showed a wavy line under "nickel-and-diming" so I got a screenshot of suggested correct spellings.

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In-app purchases usually suck big-time, maybe with some notable exceptions.

If done well, in-app purchases can ADD to the experience and fun, while providing a nice way to support the developers.

I had a good example with Android's port of Hexage's Robotek, the game is solid and can be played all w/o purchaes.

But I really liked it so I could buy some "slot coins" for power up and for 2$, which I did mainly to support the game (which in turn didn't really need my bucks so badly eh).

IF you overdo it and the game becomes basically a pachinko to drain your money...eh, I can't but agree totally with Trent.

But anyway I'm positive with this kind of business models particularly suited for mobile, I'm sure it could be leveraged to maximise quality and ease of distribution, whilst having only even a small part of the app audience actually pay money.

I think that you hit the nail on the head...at least for the current market.

I think (I cannot have verified data about it) that there are an awful lot apps out there that are left "slowly die of non-userness" since they were not sucessful enuff to sustain further support&development (thus once done, the producer pays the codemonekys and shuts the office down for that particular app); the app itself is left on the market just to generate ads-revenue from latecomers.

To me, this kind of thing is what driven a good number of "casual" game apps to implement the pay-not-to-wait monetization model (think about Candy Crush Saga from King Games) which DEADLY suck.

Things will change over while the distribution base becomes larger. Mobile apps are easy to distribute to MILLIONS of users at once thorugh branded markets (appStore and Google Play), and that is only bound to grow even larger given time, so the kick-in revenue from ads will play stronger role in an app startup, making it more feasible to play for a mid-range scenario for Apps producers....broadening possibilities and no havin to expect a ROI of a few weeks.

Unforunately I could not venture further into these matters as my trade is a completely different one....but well, just wanted to put in my 2cents.

In the games with IAP I've played, the only "fun" part is the purchases. You get some cool feature by spending money but soon enough you realize the developer is just going to milk the crap out of you.

I suppose if done well, it could work, but I haven't seen it.

Battlefield 3 was cool for me, I just paid for all the weapon addons which meant I could murder people quicker without having to actually try that hard.

Lazy people will pay, if they love it enough I guess...

There are some profoundly dumb people in the mobile space... and they are willing to pay to win. If you were to, say, shamelessly take advantage of them, I'd really not think less of you.

I wouldn't think less of you if I loved playing your game and could enhance it with some of the overflowing wealth I happen to be enjoying at the moment

Yeah.

Look up the Skinner box. Similar techniques are used in making games, particularly games like WoW and social/mobile games with iap. It doesn't have to be fun, it just has to trigger the right levers in your brain, and you'll continue to play, and in some cases, pay.

Huh, I just spend the last four hours asking myself why I was currently wasting time in Windows trying to beat Need for Speed Underground, then trying once again to compile A5 in Windows with nothing but stone knives and bearskins. I really ought to format the Windows drive to ext2 for extra storage and stop torturing myself with all the fail.

I agree. Or at least, they are designed to be not very fun when you decide to play it without buying any IAPs. I've been playing a game on my phone the last weeks and they are being quite obnoxious - it sends me a push notification every day about free diamonds I'd get for every facebook friend I add to it, and whenever I die it brings up the store allowing me to buy better gear.

I'd much rather have paid $2.99 for it and instead have a more balanced gameplay. Now instead it's annoying and completely unbalanced (since I'd never ever pay for an IAP)... but then, I sort of like that I get a harder difficulty that way so I'll still try to finish it.

Back in the day we had cheat codes for that. They were included in the original purchase price. Not that the type of game that I'm working on right now costs anything in the first place...

Maybe I've just gotten cheaper since there's a nearly endless amount of electronic entertainment available. If someone wants money for something, there's gotta be someone else doing something similar enough who'll do it for free.

That's exactly what makes IAPs bad in the first place to me: "only" a baaaad design choice, BUT there are examples that are well balanced or at least non-exploitative? I am positive on it (as alredy mentioned).

But back in the days, there were the net distinction betwenn 50$ game and 0$ game, namely piracy, which today faded a (little?) bit.

These purchase models where the user can play regardless of IAPs lowers significantly piracy chances...given also that usually "free" versions ship easily and with supporting ads (the fairer ones with non-extremely-intrusive ads, some other with obnoxious ones!) and that downloads figures are often in the 1000s one could HOPE to harvest at least some money.

I feel the same way, but on the other hand I appreciate if I can play something with the possibility to CHOOSE to pay or not.
And I am confident that for such an app in the mid-run cash income is higher than if provided to the public through one-time payment as the only option.

But maybe it's just me.

I like the approach taken by Path of Exile - make the game free, yet fun to play as is, and have paid add ons that have no effect on gameplay. The majority of purchases they have are cosmetic so you can use them as status symbols, but they don't add or detract to/from the actual game itself.

Zounds! Suppose you could buy breast implants for Lara Croft!

I would upgrade to double H's.

[EDIT]
Not that I'm into that kinda woman, but it would be freakin' hilarious.

While playing Fable you can always get fat, but I really wanted to see American style morbid obesity in my character. Again: for the lulz. I just think that murdering an entire village as a 500 pound "piemaster" would be awesome.

The piemasters that I know who weigh more than 400 pounds can barely walk, let alone chase somebody down and assault them.

What I usually do with that kind of game (that doesn't require a constant connection), is turn off my iPod's wifi temporarily. No more ads in the free version.

I don't think there's any doubt that "free" apps with IAPs sell more. For quite a while now the iOS charts Top Grossing section has been dominated by these "free" apps. And I really hate that they call them free. The worst part is, freemium apps can limit you however they want, but DEMOS have very strict restrictions on them, such as you're not even allowed to hint the user at buying the full version. :/

Of course, and of course being "free" they're not "sold", right?

Seriously? ....this is nuts at the nth level ....absolute nonsense!

Clever! Even thou, I think ads are not that bad and if the generate revenue w/o clicks (which I think that small Google Play banners do, while full page ads do rely on clicks as well but pays you also rent for the screen real estate each second shown) I gladly tolerate them to a reasonable limit....reasonable to me is a bit LESS than Ruzzle does, for example.

I don't know their rules, but would it work to have no immediately purchasable "full" version of the game, but rather only have it available via in-app purchase to enable it? Then you have a popup saying "Click here to buy the remaining quests now!"

I tried to play the free version of Angry Birds on my company iPad once. The ads drove me insane and I deleted it almost immediately. I'm obviously in the far minority, as that's quite a popular game.

Dude, ext4 is all the rage now, especially since Mr. Reiser's life took a somewhat unfortunate turn.

I still use lilo.

Model of the future.

I resonly got all of the x-Com games on steam. old and new.
and i got all the and on for the new game.

A hint you sould sell a way for people to cheat at your game is it not miulty play based.

in the old x-com i used to hack the save files in Dos how ever i dont see a way of doing it yet because of steam.

I work at king.com (we made candy crush, which some of you have probably been annoyed by on facebook), and our whole money printing press is based around micro transactions/IAP.

I don't really care for the whole concept, for the reasons mentioned above (games are often designed to get people to buy rather than to be just fun).

To be fair though, our games (speaking primarily about candy crush saga here) can be played fine (if a bit slowly) without paying anything - if I recall the latest figures correctly, 75% of players who are at the highest current level in the game have not paid anything.

As for making money of it... We'll, it's certainly possible, but you'll need to be talented and lucky to get through the noise, regardless of monetization method. One large benefit of using social features (which is often a part of IAP-games) is that you can make the player choose between "pay us" or "find us new players" - this can save a lot of marketing money (or rather, give you the same effect as a lot of marketing money, for free).

You also need to keep it mind that if you are developing a "social casual game" YOU (the developer) are not the target audience. What you find annoying, cheap, weird or unfathomably evil might not seem that way to them (or so marketing keep telling us).

What do you mean by that? It's against Facebook's ToS to "incentivize" invitations. (Unless you just mean you get rewards for friends signing up regardless of the method.)

At my game studio, all our games are freemium models. They are implemented pathetically, but since the games are targeted at young children whose accidental clicks generate our revenue, The Boss has kept the same model in place.

There have been a few freemium games (Jetpack Joyride, Icecream Jump) with IAP models that changed only aesthetics. They were completely free to play as much as you want, and would only alter visual effects: paying and non-paying players would get the same gameplay experience. Some other ones, like Bubble Mania or CSR Racing, use an energy system that limits how much you can play per day. Once you run out of energy (bubbles, gas, etc.), you had to put it down for several hours so your energy regenerated, or IAP the energy to continue. So same game for paying and non-paying, but paying players got to play longer.

Blockheads, for iOS, was a time sync. Earlier versions would pause what you were doing, so leaving and returning to the game hours later was no different than just continue playing and waiting out whatever task you were doing. Recent changes to the game now let you "do stuff" offline, but its biggest IAPs came from speed-ups. If you had the time and patience to wait, it's 100% free. If not... $$ cha-ching $$.

All these games listed have grossed in the millions for their IAPs. They are probably a small handful of games that have done IAPs "right" -- where players want to pay for IAPs to enhance their games.

That being said, the IAP model beats those annoying ads in my book. And as I've only seen the subscription model work for either very large games (World of Warcraft) or a very small handful of indie games (AnimalJam), I would think that it would be incredibly difficult to pull off correctly.

What is the scale of your game? What is your target demographic?

Matthew: For example; when you run out of lives, you can either wait, pay or ask a friend for help. Stuff like that.

Yes, you're allowed to do that as long as you don't call it "Lite" (which is the word I was looking for instead of Demo.)

Jonatan: Candy Crush Saga is neat-o! ...the quality level is quite high even thou gameplay gets a little repetitive after a while....anyway props for having released the Android version, now the timed levels are actually fun

Me and my wife are quite high level and haven't paid a buck, for example, but the one and only obnoxious thing in the game IAP model is the pay-not-to-wait when you finish a quest and have to get three tickets from friends (or pay less than 1$).

I understand what marketing says...(I do work in sales actually ) but MEH!

Your game is one of the examples in which I fully understand IAPs, and even w/o buying anythimg the game is fun.

@Jonatan Hedborg: My sister has an iPhone 4, my mom has a first gen Kindle Fire. Any reason the Kindle Fire can run the game noticeably better than the iPhone 4? (maybe take this as a sign to put the game on Amazon's App store as well, so people with Kindle Fires don't need to install from some random web site that got the APK)

I'm not working mobile, so I can't really guess. Isn't the kindle fire a higher performing device in general? It's like a mini-tablet?

The kindle fire is a tablet, but its not really "high performing". The nexus 7 is a lot faster, and about the same price.

I said "higher" Compared to iPhone4 that is.

Wait, the Fire is better than the iPhone 4 in terms of power? (I do know the Nexus 4 is better than the Nexus 7, personal experience there )

Speaking of, I really need to look into what background tasks just out right kills performance on my Nexus 7. It has a habit of running slow at the oddest of times, moments in which I'm sure my Atrix was fast at.

I hate candy crush saga... it doesn't let me play more than the first 20 levels because I have no Facebook friends to send me 3 tickets. So simply had to stop playing and uninstalled it.

Well, you could always pay

If I recall correctly, we are working on alternative methods of getting tickets from friends (not via facebook).

But yeah, the model isn't for everyone.

Well, as I said, I'd never ever pay for any IAP

Oddly enough, from the few times I've used a Nexus 4, it has seemed less responsive than the Galaxy Nexus which is a year older. I just broke the screen on my Galaxy Nexus and was offered a free "upgrade" to a Nexus 4, but instead I'm opting for getting the existing phone fixed. The wireless charging was tempting, but I prefer performance.

I once bought an IAP and I felt like a sucker 1 hour later.