"Free" Isn't a Significant Risk for Rovio
It's official: In mobile gaming, the "freemium" model wins the Kewpie doll.
Four years into selling downloads of what at times has been the world's most popular mobile game, Angry Birds, the Finland-based gaming company Rovio Entertainment is raising eyebrows for moving one if its major revenue streams.
Instead of costing a dollar or two to download, Rovio's new game, Angry Birds Go, will be what's dubbed "free to play." That terminology means that instead of charging a user at the time of download, an app markets itself as "free," but usually includes a sophisticated in-app system for users to buy upgrades, bonuses, and other goodies while they are playing the game.
Angry Birds Go is following the in-app purchase trend brought mainstream by the U.K. gaming company King's Candy Crush Saga. The new game allows players to purchase upgraded cars and bonus rewards inside the auto-racing game's app. Rovio's executive vice president for games, Jami Laes, told the Wall Street Journal this is the first time the Angry Birds line has gotten into this newer monetization strategy, but it's not even Rovio's first foray into free-to-play games.
"We have had free games available for a number of years, and pretty much all of our games have already micro-transactions and in-application billing in them," he said.
Games such as Candy Crush and Supercell's "Clash of Clans" have been criticized by psychologists and publications (including this one) for hooking their players with sophisticated game mechanics that encourage repeated small purchases--and end up charging customers more in the long term than they could charge up front. Rovio might seem to risk this kind of criticism, too. Only, the financial upside to the "freemium" model might be too big to let a little criticism stop it. After all, Rovio wants to once again make the top-10-grossing-app list. In 2013, every app on it was a game, and only one charged a download fee.
Is this move indicative of what kinds of games we'll see from Rovio in 2014 and 2015?
"It is kind of an implication of our future direction, where we are thinking more of games as free-to-play," Laes told the Journal. "We think that when done right, free-to-play is the best model for our fans, consumers, developers, and publisher."
Still, Rovio's success so far has been undeniable. Angry Birds games have been downloaded more than two billion times and have grossed more than half a billion dollars for Rovio. Even without download-fee revenue, however, the company's prospects look good. As of last year, the company made nearly half of its money off of licensing agreements, including those for toys, clothing and other gadgets. And it is planning on licensing (yet another) massive theme park soon.
Rovio may be soaring even higher soon.
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