Drew Crawford for Sealed Abstract:
See, in the in-app purchase model actually predates phones. It predates video game consoles. It goes all the way back to the arcade, where millions of consumers were happy to pay a whole quarter ($0.89 in 2013 dollars) to pay for just a few minutes. The entire video games industry comes from this model. Kids these days.
The magic of IAP is it allows a software developer to segment its market; to take in the $.10 in ad spend that the elementary school kid can pay, the $5 that the college student with a side job can pay, and the $100 that the suburban housewife can pay. In fact, something like 51% of all revenue is a transaction over $20…link
The Twitter-verse is currently having a shit fit over a particularly egregious abuser of IAP in EA's Dungeon Keeper, and I agree, it is a nasty piece of work that should be taken out to the woodshed and certainly not highlighted with a ray of Apple sunshine as a featured app in the App Store. But Dungeon Keeper and its pay model exist because there's gazillion games in the App Store right now because everybody and their brother is a developer, because the iOS platform is so ubiquitous, and because everybody and their brother and sister and mom and dad have an iPhone these days. So long as a gazillion games exist, free will always be the lowest price and companies like EA who can afford to research the hell out of consumer habits will figure out how to devilishly IAP the living heck out of games, not by making them fun mind you, but by knowingly manipulating gamers with fiendish psychological manipulation in order to open up thin wallets, especially when going freemium also happens to be a peachy way at ending up on the top 50 chart in the App Store, thus creating more downloads and fueling the urge for other developers to adapt a freemium model to compete. It's painful, but outside people changing or Apple dramatically changing App Store policies, I don't see a way to quickly or easily reverse this trend.