how to make money when everything is free

How to make money when everything is free

Nicholas Lovell

Children’s Media Conference

July 6th, 2012

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What do these have in common?

They made a lot of money

• Top grossing games on iOS in 2011

• Estimated revenue >$30m each

How much do players spend?

• What is the average transaction value for an in-app purchase on a smartphone in the US?

$14

Seriously, how much?

• 51% of the revenue comes from transactions worth > $20

• 30% comes from transactions worth > $50

Price and value

So how do we make money?

What are we selling?

One-size-fits-all pricing is dead

PRICE

Demand

Revenue opportunity

Marketing opportunity

Some thoughts on kids

What changes when you work with kids?

• Targeting “whales” has questionable ethics

• Use free to start, become a “trusted brand”

• Cross-promotion becomes ever more important

• Aim to “own a shelf”

• You are not selling product any more. You are building a service and a relationship

• Over-deliver

Morph – a thought experiment

Make a free iPhone App

Incorporate ads for a limited edition, 1,000-only print of the original Morph, framed for your wall for $999

Conversion rate of 0.1% = same revenue (oh, no 30% to Apple)

Make an iPhone App

Offer a Free version and a 99¢ game

Business model 1

Business model 2

It’s all about the curve

PRICE

Demand

Revenue opportunity

Marketing opportunity

Thank you

nicholas@gamesbrief.com

Follow my blog www.gamesbrief.com

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