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How Do Free Games Make Money?

I’ve Always Wanted To Know:

How do game companies make money giving away free games?


From Facebook games where you’re a virtual farmer to online card games and role-playing games, one trend has taken over within the last few years: companies giving the games away for free. But how does a video game company afford the artists, designers and coders to make these games if they’re just giving them away? Is it really a scam, or is there some secret logic to it?

Let’s start by looking at the gaming business.
The classic model for video game sales is for a game development company to have publishers who advance large dump trucks full of cash (okay, usually it’s a check) in order  for the development company to afford the months or years of development time – and in return the publisher receive a very large share of the profits. This system has worked since video games were introduced, so why change it?

Due to the downturn in the economy, and the proliferation of cheap Apps on phones, the classic model was seeing lower return on investment and more publishers unwilling to lay out the large sums of money on a game that might not sell well. Game studios didn’t stop making amazing games, but they did realize that with prices often $50 and higher, many people refused to give their game a try.

This lead the way to the simple idea: give the game away for free.

So how does giving something away for free make money?
The trick, of course, is what do you give away and what do you get for giving it away. There are a few very smart ideas game companies came up with.

Offer limited number of free tokens/plays. Many online games on Facebook (or online card games) will let you have the game for free, but only with a limited number of tokens or chances to play per day. On the belief that once you like the game you’ll be likely to spend $5.00 for $25,000 in virtual chips, they give you 500 chips, then offer extra for sale for people who want to play more.

Offer premium items/equipment. Some games, especially those which have equipment levels or tiers, will offer premium items or equipment for purchase for real money. Do you want to plow twice the number of fields? That’ll be $2.99. Have a shotgun that can reload twice as fast for zombie killing? Just 99 cents.

Offer gold memberships. This is very popular among online role-playing and multiplayer games, which traditionally had high purchase prices and monthly fees. You get to explore the game and decide if you like it, but to use the best equipment or carry the most items you need to be a paying member.

Collect data. Sometimes there is no charge, except for the information you provide. You’re asked to allow the game to see and contact your friends list or read your Facebook updates. Sometimes it’s a promotional game designed to sell or remind you of a product – like a racing game featuring a car company’s new line of vehicles.

Does this really work, and should you try free games?
Gaming companies who employ free-to-play models have seen a dramatic rise in profits. Though it may seem counter-intuitive, many people are happier spending $10 on virtual items in a game they play “for free” than buying a game for $50 up front and playing it for a year without any other charges. You should be careful though, as not all free games are what they appear to be. Most free games will not require a credit card number, unless you wish to buy a virtual item, so don’t enter it unless you intend to buy something. Be aware that virtual games come and go, too, so your fortune in a macadamia nut crop in FarmLand2012 may disappear if the company closes down or decides to shut down your game.


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