Want freemium mobile games success? Don’t fail to net the whales

Flurry freemium revenues

Flurry's stats show why focusing on big-spenders can pay off for developers

The phenomenon of high-spending players – or whales in industry lingo – is well known to publishers of social games on Facebook. Just 1% of people who play Zynga's games are thought to account for between 25% and 50% of the company's revenues, for example.

Now data published by mobile analytics company Flurry indicates that whales are also a key source of income for freemium games on iOS and Android. The company analysed in-app purchases by 3.5 million mobile gamers, and found that the average transaction value was $14.

If that sounds a little on the high side – the lowest IAP option on iOS is 69p – it's worth digging down into the statistics released by Flurry, for the distribution of transactions and revenues shows how much of an impact whale players are having.

According to Flurry, in-app purchases for less than $10 account for 71% of transactions within the freemium games covered by its research, but just 31% of the revenues. In-app purchases between $10 and $20 account for 16% of transactions and 18% of revenues, meanwhile.

And the whales? In-app purchases of more than $20 account for a mere 13% of transactions, but 51% of revenues. In fact, 5% of all in-app purchases in the games analysed were for more than $50, which as Flurry's general manager of games Jeferson Valadares points out, "rivals the amount paid at retail for top console and PC games".

He goes on to suggest iOS and Android developers working on freemium games should be paying more attention to these high rollers. "Your 'meta-game' should be about whale hunting."

Popular iOS game Pocket Frogs backs up this conclusion. Its developer NimbleBit revealed in September 2010 that whales were its biggest revenue stream from Pocket Frogs.

That game offered three tiers of in-app purchase: $0.99, $4.99 and $29.99. The 99-cent option accounted for around half the in-game transactions but only 9% of revenues, while the $4.99 tier took a 42% share of both transactions and revenues.

The whales splashing out $29.99 per in-app purchase made up just 8% of transactions, but 49% of revenues. NimbleBit fed the whales and prospered, in other words.

This data is highly important for the mobile games industry, particularly on iOS, where freemium games are riding high in the App Store charts.

At the time of writing, 11 of the 20 top grossing iPhone games in the UK App Store are freemium titles. Free-to-play games Tap Zoo, Tiny Tower (another NimbleBit title), Tap Pet Hotel, Happy Park, Zynga Poker and Smurfs' Village are all making more money than Angry Birds. In the US, the trend is even more advanced: 15 of the 20 top grossing iPhone games are freemium.

Back to Flurry, which has previously claimed that in June 2011, 65% of revenues from the 100 top grossing games on the US App Store were from freemium titles, up from 38% in January 2011. It also suggests in its new blog post that only "around 3% of consumers" spend money within freemium games on mobile.

Games industry consultant Nicholas Lovell of Games Brief wrote an insightful blog post about whales in August 2010, suggesting that previous limitations of physical distribution have encouraged content businesses to treat all consumers equally, with single fixed price points.

"This is a rubbish idea. Consumers are all different. Some are heavy spenders; some are freeloaders. Some are grazers and some are avid consumers," he wrote, suggesting that the future of all media – not just games – depends on understanding and harnessing these dynamics."

"It means throwing out the model of selling a single fixed-price of content... It means catering to the 10% of your audience who want to and enjoy spending money with you and allowing them to spend $10, $50, S500 or more. It means allowing 90% of users to experience your content for free for ever."

Flurry and NimbleBit's data, as well as a cursory glance at the App Store charts, show that taking that leap into the unknown can be a lucrative business. Although – and this is the most important point of all – only if it's done well, with games that are a.) really good, and b.) suit the model.

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