Even though it’s not the first iOS game with a premium price point, the recent release of Final Fantasy Tactics: The War of the Lions (Square Enix) on the App Store for $15.99 has fueled a lot of discussion about higher-priced iOS games by big companies. Are these premium games here to stay? If so, what does it mean for the overall iOS market and especially for indie developers? In this post I take a brief look at the history of game pricing on the App Store and speculate on what’s possible to come in regards to iOS games.
The App Store has been known almost since its inception for the many quality games available for extremely low prices, free and $0.99 being the most common. This “race to the bottom” phenomenon has been heavily criticized for supposedly discouraging the creation of games with more of an AAA-quality similar to what’s commonly seen on consoles and PC or even handhelds. It also makes it harder for many developers to increase the price of their apps because of the skewed perception of value by many users and the inevitable comparison with cheaper games that offer hours and hours of content.
Angry Birds is the quintessential $0.99 iPhone game. This is a game that sold millions of copies thanks to great gameplay, fantastic art style and inviting price. It cemented $0.99 as a purported perfect price for iPhone games, low enough so that it could be an impulse purchase for most users. Once upon a time, before in-app purchases, top-grossing lists were dominated by 99-cents games and it seemed like you couldn’t go wrong by choosing this price point.
The truth might not be so straightforward, though. For developers, pricing their apps this way can be problematic since it requires more sales to break even, thus increasing the risks associated with developing for the platform. With a $0.99 price there’s also no room for maneuver and the app can’t be discounted (aside from becoming free for limited time). On the plus side, the lower prices allow users to purchase more apps, sharing the pie with more developers instead of concentrating sales only among few big developers/publishers.
In-app purchases allowed a new model to reach the App Store: the free-to-play (F2P), microtransaction-based game. This is a model that had already proven to be extremely profitable on the PC, mainly with Facebook games. To notice that, one just has to look at Zynga, the most famous case. Zynga became a billionaire company with Facebook games that boast dozens of millions of players every month. The F2P model also proved successful for iOS and soon replaced $0.99 as the most lucrative model for the platform.
If $0.99 games sought to lower the entry barrier, F2P games basically got away with it entirely, trusting on their ability to hook players so that they’ll eventually pay for something in the game. When done right, F2P can be great both for the developers and for players. For more of my thoughts regarding the F2P model, take a look at my previous iDevBlogADay post.
While there were cases of premium-priced games before, a more generalized trend reversal began with the launch of the iPad. The iPad saw releases with higher prices both of exclusive, previously unreleased games and also of more expensive versions of iPhone titles. The new device allowed developers to release their apps as universal binaries, working natively on the iPhone and iPad, yet another reason for a higher price on release. The enormous success of games like Epic Games’ Infinity Blade, Rockstar Games’ GTA: Chinatown Wars and Square Enix’s various games (Final Fantasy III, Chaos Rings) demonstrated the viability of the iOS premium model. Since these premium games were generally closer in design to traditional PC and console games (many being ports of games previously released on these devices), they garnered attention from hardcore gamers and more traditional game media outlets, allowing the external world to see the iOS platform as a viable hardcore gaming device.
Soon, the pretty heavy distinction between smartphone and handheld gaming that used to exist started to fade away. While their portable nature could naturally suggest lighter, snack-sized games, the $30-$40 prices of handheld games meant they were seen as more polished, focused efforts against their cheap smartphone counterparts and for some people it looked like many of the better handheld games had no place on smartphones. Nowadays, with increasing revenues of smartphone games, there’s even been speculation about the death of dedicated portable game consoles. While a few years ago it was unimaginable that a company like Nintendo would release its games for the iOS, this doesn’t seem so absurd right now and in fact, there are people inside the company apparently pushing for that.
While the viability of the premium model might attract more companies to iOS development, which should provide more quality apps for the platform and increase the overall value of the market, it might have a negative impact on the money distribution. If the average app gets more expensive and users keep spending roughly the same amount of money, the overall number of apps purchased per user will naturally be lower. This could lead to a more hostile environment for smaller developers in which a few big names would get the big share of the pie and the rest would be left with scraps. This scenario could also make it even harder for smaller developers to get their apps noticed against the big players, which is already a herculean effort these days without a sizeable advertising budget.
Another side effect of the likely arrival of more big names on the App Store and the new market that will result is a possible change of perception of the situation of indie iOS developers by external users. While the App Store has been commonly seen as indie developers’ heaven thanks to the many reported successes, there’s a chance that it will become known as more of a big publishers’ playground. Regardless, and even if it will probably make things harder for indies/small developers, the iOS platform should still be viable and offer great opportunities for them. In fact, anyone who’s been following the App Store for some time knows that the days of the iPhone gold rush are long gone and it gets harder everyday to get noticed, so this could be just another bump in the road for indies to traverse. If this ever happens, the PC platform should be a great role model for the iOS, since it remains a fantastic platform for indies even with the many PC AAA games released every month.
As previously said, F2P, microtransaction-based games are generally seen as the most profitable model in the current iOS market and the domination of the top-grossing lists by these games corroborate the impression. $0.99 games, the former kings of the top-grossing lists, only manage to occupy a few spots of these lists these days. If the premise of the increase of AAA (or near-AAA) developers with more expensive titles on the platform is true, it’s not unreasonable to imagine that we’ll see a growth in the number of premium titles making it to the top-grossing lists. Because of that, I don’t think it’s impossible for us to be moving to a future in which the majority of the most profitable titles will be either F2P games or premium games, with niche (not necessarily unprofitable) titles in-between. The $0.99 price point seems increasingly more suited to be used as bait to catch undecided users in limited-time sales (a tactic mastered by EA) than as the main revenue model for many games.
Of course, this is way too hypothetical and there’s no sure way of knowing if any of this will actually happen. It’s not easy to believe in the decline of $0.99 games since this is such an iconic price for iOS games and so many success stories happened with games priced this way (Angry Birds, Cut the Rope, Tiny Wings). Hell, I even made my game with this price in mind! I do believe that the signs are there though and while there will always be quality $0.99 games, they’ve already been surpassed by F2P. Why can’t premium games be next?
We’re on to some very exciting months on the App Store. The iOS market is ever-changing and growing and it’s entirely possible the near future will bring changes that no one has been able to predict so far. I’m looking forward to seeing what happens next! Now that I stated my points I’d like to know what you think. Do you believe in the decline of the $0.99 games or will this price point remain as strong as ever? What are your thoughts on the future of the iOS gaming market? Let me know in the comments!