how to make money when everything is free
DESCRIPTION
How do you make money when everything is free? The secret is in realising that free is only one end of the demand curve: the other end is fans of your work who are delighted to give you money. This short talk covers monetisation, revenue, the ethics of free-to-play for children's content and much more. Slides from The Children's Media Conference, Sheffield, 6th July 2012TRANSCRIPT
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
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