Free to Play?

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. video.yahoofinance.com@e319e16b-e3d1-3434-9dce-84f7b54e1b53_FULL

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.

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3 thoughts on “Free to Play?

  1. cotterem says:

    You mention that many free apps use advertisements to make money– so I wonder, if Candy Crush replaced in-game buying for advertisements, would there be an increase or decrease in game play? Or would there be a huge decline in revenue? Or, is the game popular enough now that if Candy Crush added advertisements in the current model, would it increase revenue by a lot, or would deter current game players from continuing to play? It interesting to hear that Candy Crush’s model is working so well, and makes me wonder if that is indeed the best way to structure free apps.

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  2. I think this is definitely a smart way to structure free apps. I have apps on my phone that were free to download, but give me the option to pay money for boosts, more game coins, cool effects, accessories, etc. When a game is addictive enough, I am sometimes tempted to buy these extra things to give myself some advantage. But then I remember that I got the game for free, and I snap out of it, although the temptation is great. Some games that I own replenish your “lives” after so much time, which means that, unless I want to spend money to buy more lives, I have to wait in order to continue trying to beat a level. Because our culture is a little impatient, and we want everything as soon as possible, this tests me, and I’m sure it tests other consumers as well.

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  3. I definitely find this interesting seeing as although the app is free, the company still makes money because of player purchases. I think you’ve hit it on the nose, that we live in an impatient society and people want to win right now, they don’t want to wait in order to seek success. Why wait to win when you can easily buy your “lives” and win faster? Another thing that you can look at is the fact that this game is played by all age groups. Kids who are playing this game on their devices might see something pop up on the screen that allows them to get more lives and they can immediately buy their lives because they are connected to their parent’s iTunes accounts. This is a problem with all apps and kids playing on parent’s devices and making charges onto the parent’s accounts.

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