Keith Shepherd and Natalia Luckyanova. Photo: Nick Pironio/Wired
If you're an Android user who likes games, Tuesday was a big day. After seven months as an iPhone app, the wildly successful mobile game Temple Run was finally released to the Android platform, triggering an outpouring of excitement on Twitter and social networking sites. "Temple run is now on my phone. *dies of happiness*," gushed one fan. "Temple run for Android is finally out! Well I know what i'm doing at school today:)" wrote another.
But the successful Android release of the Indiana Jones-like action game marks more than a new way to waste time in class. It's a pointer to the future of gaming, not just on mobile devices, but potentially on computers and game consoles as well. Temple Run has already made its three-person development team untold amounts of money, and it's expected to be one of the most popular and lucrative games on Android too. And it's done it all by being free.
When Apple launched its digital game store in 2008, most games cost a few dollars. The success of 99-cent apps drove prices down. Then in 2009, Apple changed its store to allow free downloads to feature in-app purchases, for the first time making it possible to give away a game and make money later.
Now free is the most lucrative price point. From kids' games like Smurfs' Village to puzzles like Bejeweled Blitz, 15 of the first 20 games on Apple's Top-Grossing Apps list are free. The analyst group Distimo estimates that half of the revenue for the 200 top-grossing apps comes from the freemium model. Everyone from indie game developers to established companies is jumping on the freemium bandwagon.
"A lot of people who care about games are now making freemium games," said Giordano Contestabile, manager of the Bejeweled business at Electronic Arts subsidiary PopCap, at his Game Developers Conference talk in early March.
One of them is Temple Run co-creator Keith Shepherd. A diehard Apple fan, he bought his iPhone on the day the company released it in June 2007. At the time, Shepherd and his wife Natalia Luckyanova were working in Washington, D.C., writing enterprise software for healthcare professionals. It wasn't what Shepherd saw himself doing as a kid, and by the time Apple released the iPhone development kit a year later, Shepherd had already quit his job and was wondering what to do next.
"When I was a kid I got into programming because I wanted to make games," he says. "The two of us came up with a … game called Imangi. We played to our strengths — we're not artists, so we made a simple little word game."
Shepherd and Luckyanova launched Imangi on the day the App Store debuted. It made a few thousand dollars — nothing earth-shaking, but enough to convince the pair to keep going. Christening their company Imangi Studios, Shepherd and Luckyanova created more iOS games over the years, having a few minor hits but no breakout successes.
"If you download my game and delete it, I make nothing."
Then came Temple Run. The game grew out of an earlier Imangi release called Max Adventure, which used icons on the iPhone screen to emulate the dual-joystick setup of game consoles. Max was a "pretty big flop," says Shephard, but it inspired the couple to design its next game to use controls that were more native to the iPhone. Tilting the device made your character lean left and right. Swiping up or down made him jump over gaps or slide under branches. The released Temple Run on the App Store in August for 99 cents.
It did well, at first. "It got a ton of critical acclaim, it got featured [on the App Store menu], people loved it," says Luckyanova. Temple Run was one of the top 50 paid apps. The couple sold about 40,000 copies at 99 cents a pop. But then it started sliding down the list. With little to lose, Shepherd and Luckyanova abruptly changed the price to zero, hoping to make money by getting players to trade real-life cash for virtual currency.
Revenue immediately increased. People told their friends — hey, play this game. It's free. You can grab it right now. By Christmas, it was the top-grossing app on the store. "It snowballed into a viral effect," says Shepherd. The game is now at 46 million free downloads — and Shepherd and Luckyanova estimate that 1 to 3 percent of players wind up spending money on the game.
Publishers have experimented with a variety of tricks to make money from free games. Some have embedded ads in their games, selling eyeballs to advertisers instead of selling games to gamers. Facebook games like FarmVille only let players play for brief periods of time and with limited resources, asking for money at every turn if the player wants to keep going without having to wait.
Temple Run, and games like it, prove the formula doesn't have to be so complicated. There are no ads, no limits on play time. There's just currency. Every time you play, you earn gold coins to spend on new characters or power-ups. If you're impatient, you can pay a few real bucks for an instant pile of gold. That's it.
Freemium games demand a fundamental difference in design. You can easily create a standard game that costs $10, then decide to drop it to 99 cents if it's not selling well. But you can't drop it to free unless there's something in the game that makes money. The games carry the heavy burden of hooking the player psychologically, keeping them playing long enough so that they're willing to pull out their wallets. That's a obligation the standard console game doesn't face.
"In the traditional videogame console business, they think about, 'Is the game marketable?'" says Gabriel Leydon, the CEO of Addmired, maker of top-grossing app store games like Original Gangstaz and Global War. "If I see it on the shelf, do I buy it? They have their 50 bucks right there — even if I walk outside and throw it in the trash, they still make their money. That doesn't happen in free-to-play. [If] you download my game and delete it, I make nothing."
The event horizon when a free player starts spending real money in a game is usually at three to four weeks, says Leydon. If the player loses interest before then, the game is — financially speaking — a bust.
"In console they want you to buy a new game every year," he says. "In free-to-play we don't want you to play anything else."
That sounds hard. But Leydon is a firm believer that freemium games can challenge the standard retail model, and even threaten home gaming machines.
Keiichi Yano. Photo: Jon Snyder/Wired.com
There's also plenty of enthusiasm from the creative side of the industry. "I don't know if the model is good for every game, but for me personally as a creator, it's good," says Keiichi Yano, chief creative officer at Inis. Yano is best known as the designer of high-end console games like Lips and The Black Eyed Peas Experience. But his two most recent games are free-to-play: Infinity Blade Cross is a free version of Epic Games' hit Unreal Engine-based action game, and the upcoming Eden to Greeeen is an original enviro-strategy game for Android.
In Eden to Greeeen your job is to strategically plant offensive and defensive vegetation units to fight off a rampaging armada of machines that are razing the world's greenery. You can add to your garden of plants by buying new ones with real money, or pay for "fertilizer" that levels up your squad.
Since his designs can be off-the-wall — Greeeen was inspired by the Firebird Suite segment in Disney's Fantasia 2000 – Yano likes the idea of putting them out with no barrier to entry, then iterating on the design with free updates.
"Even when you charge 99 cents, there's a bit of a barrier," he says. Eden to Greeeen also has a cooperative multiplayer mode, which Yano will get played more because there's no cost: "It's easier to get your friend into the game if it's free."
Even PopCap is experimenting with freemium. In the 12 years since it launched the first Bejeweled, it has sold over 55 million copies and estimates that half a billion people have played the puzzle game. In 2009, PopCap debuted a Facebook spinoff of the game called Bejeweled Blitz, and last year it launched Blitz as a standalone iPhone freemium app. The game quickly jumped into the number three slot in the Top-Grossing category. Today, it sits nearly 60 slots ahead of the 99-cent standard Bejeweled game. Not only that, PopCap is raking in considerably more money on iPhone than Facebook.
"Every single important metric on iOS is performing two times what it was on Facebook," says Giordano Contestabile. The average revenue per user, or ARPU, is doubled. The percentage of users who pay is larger than on Facebook. To this, Constantabile credits the "always-on, always with me" nature of mobile games, and what he described as Apple's more efficient billing system.
Blitz uses a triad of monetization methods. Players can spin a slot machine to win in-game currency once per day, or pay to buy more spins. They can buy in-game items that give them a temporary edge, or durable items that can be used repeatedly.
"If you're a good player and you don't use them, you will still get better scores than a bad player," Contestabile said at GDC. "There's never a sense that the guy's paying more and you don't win. The single most important thing is that people pay in Bejeweled Blitz because they find it more fun. You never force them to pay; you never punish them into paying."
"We're completely independent, we're doing whatever the hell we want and somehow we're making a ton of money doing it."
If there's one cloud in the freemium game model, it's likely to be consumer skepticism, and a vague sense of shadiness left over from early free games that often courted controversy. It wasn't that long ago that Zynga was largely associated with scammy advertising offers that signed users up for annoying ads or difficult-to-cancel services in exchange for "free" FarmVille currency. When Apple first debuted in-app purchases, it found itself at the center of a mini-scandal over children using their parents' credit cards to buy giant smurfing bushels of Smurfberries in Smurf Village.
Addmired CEO Leydon is adamant that, in the vast majority of cases, gamers aren't being scammed into giving up their money — they're paying because they're enjoying the game.
"There's this whole idea that everybody's tricking people into spending money," he says. "It's ridiculous! Look at the stats on every public company. People aren't paying until they play for weeks. It's not happening."
Skeptics just don't understand that players are getting value for their money, Leydon says. "They're saying, 'How could you spend $100 on Mafia Wars, that game's terrible!' Who are you to tell him that game's terrible? He actually really likes that game."
Even games that sell upgrades that make paying players more powerful aren't necessarily bad, he argues. "There's still millions of people playing this game where they don't mind it," he says.
As lucrative as free can be, Leydon cautions that it's not a magic bullet. It's still tough for games to get noticed in the long, long list of apps. Leydon says that getting featured in Apple promotions equates to "tens of millions of dollars in free advertising." PopCap calls it "apple love" — that steroid shot of visibility that Apple can grant an iOS app just by putting it on the front page of the Apple store. With Apple love, designers are almost guaranteed success. Without it, they can disappear into the giant gaping maw of the App Store, swallowed up by the hundreds of thousands of similar competing apps.
It's easy for massive developers like PopCap to get Apple excited about a strong brand like Bejeweled. But what does that mean for indie players? If awareness is so important to making money off free games, isn't it a risk to give the game away?
Then again, in videogames, what isn't a risk? It's risky to make a triple-A game and sell it for $60. It's risky to sell your iOS game for 99 cents, let alone make it more expensive than that.
For Keith Shepherd and Natalia Luckyanova, a small risk generated huge reward. They've managed to break into the great temple of the Apple gods and swipe the golden idol. Now they're being chased, not by ghouls but by business suits looking to get a piece of the action.
"We've had a ton of people contacting us and all sorts of crazy offers," Luckyanova says. "People wanting to acquire us, make movies, merchandising…. [They] want to make T-shirts, kids' pajamas or shoes with Temple Run on it."
Despite the attention, Imangi is still a team of three people who work out of their homes. Now they're barreling at top speed toward a fork in the maze. Swipe left to sell out. Swipe right to stay indie. "We're completely independent, we're doing whatever the hell we want and somehow we're making a ton of money doing it," says Luckyanova.
The success of Temple Run, Shepherd says, will fund Imangi for "years." Once they get their heads above water, maybe make a few key hires, Imangi can work on a new game. This time, right off the bat, they'll probably give it away for free.
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