For the past few years a new pricing model has begun creeping into the games industry. Beginning on mobile devices, the so-called "freemium" model gives players a taste of a game for free while plastering the title with ads or holding back crucial gameplay elements or items behind paywalls.
For some developers the freemium model has been a fantastic success. Games such as Candy Crush Saga and Clash of Clans have become cash cows for their developers through sales of optional power-ups or other in-game resources. The Angry Birds franchise grew on the back of large in-game ad banners. And now the freemium model is beginning to show up on PC and console game titles, often in multiplayer titles such as League of Legends.
Despite protests from the traditional gaming crowd that most freemium titles are, by definition, broken and manipulative, the money these titles can bring in tells a different story: many gamers prefer their games to be free. A new report from research firm IHS and website WildTangent today confirmed as much.
The report shows that 86% of WildTangent gamers surveyed by those companies prefer games to be free but with ads rather than pay upfront for a game without ads. Another 79% of those surveyed stated that they "like" receiving virtual items from ad clicks.
The companies using the freemium model are seeing encouraging statistics as well. Value exchange ads in games were seen to increase the number of times players put extra money into a game by 120%. In-game ads are also more interactive, with the survey showing that game ads account for two times as many post-ad actions as live TV ads.
Of course, these results mirror a segment of the gaming community that is already playing freemium games and in many cases does not have much experience with game titles outside of the casual mobile or online titles. Even so, the group makes up a growing contingent of overall gamers that will only grow as growth in the tablet and smartphone markets continues.
“The research shows that gamers embrace value exchange ads, which demonstrates the progress the industry has made with advertising in and around video games,” said Christine Arrington, senior games analyst at IHS. “As gamers become more accustomed to in-game advertising, it becomes essential for brand marketers to find creative ways to use value exchange advertising while developers must ensure gamers have easy access to these offers.”