A well written editorial piece in PocketGamer.biz by Tracy Erickson makes the argument that Freemium (free apps with in-app purchases of digital goods and/or features) is being hyped. To quote:
While this point can be argued with some persuasion, it's far too easy to down the freemium Kool-Aid without recognition of several other factors that point to its designation as an important trend, but not a keystone for the future of the portable gaming.
There are some good points in the article, specifically the issues Ngmoco and others have had with the financial side of supporting these games, but the article ignores the current state of iPhone gaming. Here's today list of the top grossing (revenue) apps in Apple's iPhone App Market:
As you can see the top four grossing apps are Freemium games. Six of the top ten grossing apps are also Freemium apps.
So why is this so? Here's my opinion:
1. Users are more likely to download free apps.
2. Players will stay with a strong free game if it has good game play value.
3. If in-app purchases make the game more enjoyable, a recurring revenue situation can occur which may drive more revenue than just a one time sale would.
Of course "good game play" value is key here ... but I have to say given the market acceptance of this model ... Freemium is here to stay.