Stop me if you heard this one: Game Developers are greedy and in-app purchases are out of control. Sound familiar? Every gamer with a smartphone complains about this on reddit and other forums. Is all of this just for the money or is there a hidden reason behind the apparent expensiveness of mobile games. Why are mobile games so expensive?
Your Answer Upfront:
Mobile Games are expensive because there were no gatekeepers and rules set in place when the smartphone gaming industry was born. Experienced gamers avoided mobile gaming and the developers were left with a newbie audience of newcomers without any gaming experience that accepted whatever the developer did (they didn’t know better). To this, add the special expensive offers that only target the richest of the players and you’ll understand just why mobile games are so expensive.
In this article we’re going to look at the reason behind the pricing structure and pervasive monetization methods that an overwhelming majority of games use. We’re going to start by looking at the mobile gaming audience and how the audience’s lack of “education” enables greedy monetization tactics. We’re then going to look at the source of the issue, the developers and publishers. By the end of the article you’re going to have a pretty good idea why mobile games are so expensive.
The Mobile Gaming Audience
I’m not going to hold any punches on this topic. The biggest reason mobile game developers and publisher get away with bad monetization tactics is because the audience allows them. And I’m not blaming the audience – far from it.
The thing is, most smartphone gamers out there are newcomers to the gaming market. They started gaming when they got their mobile phone. They’re not people who grew up with gaming and most of them never would have jumped into PC & Console gaming in the late 90’s and early 2000’s. What this means is that they never got to appreciate what a Premium Gaming experience is.
The grew up with FREE games that had ads and In-App Purchases. That’s the norm for them. If every developer out there decided to drop bad monetization tactics and stop abusing ads and in-app purchases the audience for those games would drop significantly.
Older gamers from the pre-smartphone era grew up paying for games and being smart about it. In exchange for our hard earned cash we made sure that the game we’re getting isn’t a bad one and the money isn’t wasted. We would research the game we were interested in by reading magazines, watching reviews and talking about it online. Developers had to jump through a ton of hoops to COURT US into buying their products.
With the rise of mobile gaming things did a complete 180. Suddenly, developers had the opportunity to approach a new audience and re-write the rules. When the first Android and iOS smartphones came out we had our powerful computers and consoles and our AAA games and we ignored the inferior devices like phones. This left an entire audience of non-gamers with no experience to be preyed upon by an industry with a ton of experience in making games that was beholden to it’s previous audience. There was money to be made and no gatekeepers – no more experienced gamers that knew better.
The Mobile Game Developers & Publishers
I’ve been making games for 15 years now, professionally and I worked on multiple games that earned millions of dollars in revenue (though that money never got into my pocket, all of it went to the companies I was working at). As an indie developer making premium titles for Mobile and PC? It’s extremely hard with so much competition everywhere. I have moments where I feel like there’s so many Game Devs out there that I can’t go to a pub in Bucharest and order a beer without bumping into some game developer hogging the seats.
A lesson in Mobile Game Development Economics
As a premium game developer I have to wow the audience and get them to part with their hard earned cash. But when I work on a freemium mobile game? It’s so, so easy. I just gotta make sure that I get a few things right:
- I have money at my disposal to pay for User Acquisition. A couple tens of thousands of dollars should be enough to maximize profits.
- My game can be played in small sessions. About 3->7 minutes of game time/session.
- There’s enough content there to keep the player engaged for about 1 week of daily gameplay, with up to 5-7 sessions per day.
By the rules mentioned above I have to make sure there’s enough engaging content to keep a person playing for 343 minutes or, better said, about 5-6 hours (7 minutes per session * 7 sessions per day for 7 days).
Why? Because by leveraging ads and displaying interstitial ads I can earn, on average, about $0.02 / impression (showing an ad). Display 7 ads in a 7 minute session? That’s $0.14. Do that 5 times per day? That’s $0.7. Keep the player engaged and coming back to the game for a week? That’s ~$5 from that user. Considering it costs anywhere between $0.12->$3 / user to buy by audience using User Acquisition techniques and Marketing? I can end up making about $1-$2 profit per user.
The first bullet point in the list above is making sure I have a couple tens of thousands of dollars at my disposal. Let’s say that for every $5 I make a profit of $0.1 in the end (accounting for users who don’t spend a week in the game or those that just play once for day or people who never play the game after the first session). From my $20k initial budget I would earn a profit of $400/month.
There are many many many game devs who release premium smartphone games who don’t earn that much in the game’s life time and here I am, with a relative small marketing budget, making all that money really easy. Now imagine a publisher/developer with hundreds of thousands of dollars. Spend $100k? That’s $2000 in profit. And I haven’t even started adding in-app purchases for consumables, extra lives and retries.
The Truth About Mobile Game Monetization
The only thing is, most game developers out there don’t have a budget of $100k. The indies certainly don’t. But the big guys? The Voodoos, Ketchups and Kwalees of the world? They certainly do.
And the thing is, the big mobile publishers were doing this from the get-go. The only reason it worked is because they did it with people who didn’t know any better. The audience never grew up paying for games or researching games or knowing that a true gaming experience doesn’t involve watching an ad every minute, or upon death. The current vast majority of mobile gamers grew up with $0.99 games at best or free games with ads and IAPs. They think that these kinds of tactics are normal.
Most of the mobile gaming audience were taught from the get-go that it’s okay (and in some cases) a must to spend 99c for new lives, energy and in-game content.
And if you think this is too much, wait until I bring in the subject of whales.
Keep Your Eyes On The Whales
“Whale” is a term that mobile game developers and publishers “affectionately” use when talking about Big Spenders. They represent less than 0.1% of your total players and the chance of you, as a developer, having a whale in your audience increases with the amount of people that play your game (aka it scales up with your advertising budget, since that’s how you bring players into your game).
Remember the bullet point list from earlier? It needs an extra bullet point.
- Have a list of expensive offers for those who can afford to pay for them.
There are two situations when players will drop cash:
- When they can afford it
- When they are so annoyed and angry that spending money on your game is less of a problem than not being able to progress
The difference between the two points is that point number 2 only happens a few times. Annoy the users too much or too early? You’ll loose them. But point number 1? Have the offers there and just show them to people. Big spenders are probably going to buy it without skipping a beat.
Why Are Mobile Games So Expensive?
Mobile Games are expensive because there were no gatekeepers and rules set in place when the smartphone gaming industry was born. Experienced gamers avoided mobile gaming and the developers were left with a newbie audience of newcomers without any gaming experience that accepted whatever the developer did (they didn’t know better). To this add the special expensive offers that only target the richest of the players and you’ll understand just why mobile games are so expensive.
Where To Next?
You’ve reached the end of this article. I write extensively about the mobile gaming industry, their tactics and how greed influences a game’s design. I have some more articles that might interest you, such as this one where I review Apple’s MagSafe Battery Pack from the perspective of a gamer (aka should you buy it if you play iOS Games?). If you’re curious if Game Development is profitable know that I wrote a big big article on how I earn my income as a freelance Mobile Game Developer.
That being said, if you want to stick around, you can check out “How Do Free Mobile Games Make money“, “Why Do Mobile Games Have Fake Ads” and “Why Do Mobile Games Have In-App Purchases“. I write extensively about the mobile gaming industry – the same industry that removes classic retro games from the store because they have an ad filled, Pay2Win, Free2Play and micro transaction infested games. Oof I’m grumpy and tired of these practices.
There’s also a monster post (about 4000 words) that answers the question: “How Hard Is It To Make A Mobile Game“. It goes in-depth with actual examples on how Experience, Resources and Financials affect the difficulty of developing and releasing new mobile games!
If you like our content and want to stay up-to-date, you can subscribe via the mailing list widget on this page! Or give us a follow on twitter. Is there something else you’d want covered on our Best Smartphone Games blog? Let us know in a comment below.