Casual Dictionary – Today: “Freemium”
What is Freemium? Well, obviously it is a combination of free and premium, but what does it describe and how do these two things go together? This question was asked by the Casual Connect Magazine to Josh Larson, President and COO of Mochi Media. In short, freemium means, that you’re giving something away for free and enrich the whole thing with premium-priced value-added services. That’s how many of the casual gaming industries companies do business.
And it works, according to Josh Larson, very well. Look at Big Fish Games, who offer a game for free with an option to purchase the full game. With more than 1 billion game downloads so far, you could say that this model seems to work for them. Another sort of freemium is to offer a game for free, e.g. a browser MMO, and let the users spend money through micro transactions for certain items.
According to Larson, the problem is, that you have to find the right balance of content you offer for free and the things you let users pay for. Besides that, you hav to take into consideration, that there may be some significant costs for every user playing a game, such as server costs, license fees, etc.
That is the reason, why many independent developers not only count on the freemium model, but add advertising, license sales or sponsorships to their business model.
From todays perspective, freemium is a working model and will be around for a long time, accompanied by other forms of monetization.