Since smart phones hit the market in 2007 the popularity of in-phone applications called “apps” has steadily climbed. Most applications are free to download off the web, but charge a small fee to download. While more people will download the free applications because they do not have to spend money, the companies who own the applications that cost money make their investment in the application up front. Companies who invest in the creation of free applications must come up with strategies to earn their money back. One example of a free application that is making millions of dollars is the game Candy Crush. Candy Crush is a puzzle game that includes elements from Bejeweled and Tetris, and is covered in a glossy candy overcoat. While most free applications make most of their money through advertisements, Candy Crush does not need any advertisements because they make enough money through their in game buy option.
Candy Crush is made of hundreds of levels in which the player must achieve a certain objective within a given amount of turns. If they run out of their given number of turns they are given the option to either start over, or buy more turns or boosts for a small fee ranging between one to three dollars. You would think that not that many people would buy these boosters because when you really think about it, Candy Crush is just a stupid game you put on your phone for free. However, Candy Crush is making its company, King, anywhere between 1 to 3 million dollars per day.
I find this fascinating that so many people value beating Candy Crush at about 1-3 dollars. Applying this to our class, the producer surplus will be any amount of money that the consumers spend since King is supplying the game free of charge. Meanwhile, the consumer surplus is about 3 dollars minus the amount of money the player spends. This will usually result in a non-zero consumer surplus which pleases the consumer and increases the probability of the consumer continuing to play and eventually spend more money on Candy Crush.
When looking at psychological aspects of spending money on a free game we have to look at the value of “success”. Proven by Candy Crush, being “successful” is very important to the average person and they are willing to spend an enormous amount of money to prove to themselves (and possibly their friends) that they are indeed successful.