In app purchases – the good, the bad, and the ugly truth

December 15, 2013

    in app purchases - 1
    In app purchases (or IAPs) have been drawing a lot of ire in the mobile world for quite some time now. Consumers agree that improperly done IAPs are ruining the app and game experience and even tech bloggers are giving otherwise great apps bad reviews because they include in app purchases. With more “Freemium” apps making the headlines than ever before, people are getting nervous. Is this really where our mobile experience is headed?

    The fact is that developers make more money on mobile apps with IAPs than they ever did on the paid app model or the advertising model.

    The answer is a resounding yes. The fact is that developers make more money on mobile apps with IAPs than they ever did on the paid app model or the advertising model. This allows developers to pump out more apps, more games, and earn more money which is both a good and bad thing for consumers. More money means we get more, higher quality games. The bad news is we get to suffer through this growing phase where developers are doing IAPs all wrong. So let’s explore what’s right, what’s wrong, and the facts behind IAPs.


    in app purchases 2

    The facts

    Before we jump down this rabbit hole, let’s take a loot at some of the facts about IAPs.


    In app purchases 3

    The bad

    Now that we’re all up to date, let’s discuss what’s wrong with the in-app purchase model. In theory it’s a great model for both consumers and developers. We as consumers get free games that we can choose to pay for and developers have a revenue stream that’s gaining momentum. However, there is a delicate balance in how IAPs should be done and many developers aren’t hitting that sweet spot. Here are a couple of ways developers are doing it wrong.

    Example 1 – Carpet bombing.
    A recent example is Angry Birds GO. It is a well-done game that any casual gamer could enjoy but the experience of the game is somewhat hindered by a near constant demand for money. After every race, it’ll ask if you want double coins forever. After a few races your birds get tired and must rest but you can pay real money to keep them going. Right next to the unlockable cars are the pay-only cars. Literally everywhere you go in the game, it asks for money. In essence, the game carpet bombs you with in-app purchase opportunities and for many it ruins the genuinely enjoyable game that’s underneath the nonsense.

    Examples 2 – Want to finish? Give me money!
    Mostly used in games, this is by far the most obnoxious and, frankly, most despicable in-app purchase model. In this model, games will become intensely difficult after a short while with the only way to ease things up is to buy special items. You’ve no doubt seen people complaining about this before. They’ll tell you that it is literally impossible to finish the game until you pay for something. An amazing example of this is also the worst mobile game ever called Super Monster Bros. If you want anything in that game (lives, ammo, characters), you have to pay for it.

    There are many other examples but those two are the most common. They either carpet bomb you with IAP offers or they prevent you from beating the game without buying something. Sometimes they do both. In these cases, app developers are pushing that line of ethics in order to make a quick buck and in most cases people take exception as they well should.

    They either carpet bomb you with IAP offers or they prevent you from beating the game without buying something. Sometimes they do both.

    Another very common issue with IAPs is the app’s failure to inform people that it contains IAPs. This isn’t a big deal for adults as we can plainly see the checkout box before we make any purchases. The trouble comes from kids games because parents leave their kids with a game and the kids accidentally rack up charges in an app without the parent’s consent. It’s gotten so bad in some countries that some are considering legal action.

    The landscape for mobile apps and in app purchases is very precarious right now. There are tens of thousands of games and apps that do IAPs correctly but there are just as many who are doing it very wrong. Carpet bombing, forcing payments, and lack of notification almost make such developers seem like con artists trying to steal a buck from their consumers. The worst part is the bad examples cast all IAPs in a negative light, leaving properly-done IAPs open to criticism when they shouldn’t be.


    in app purchases 4

    The good

    It may seem like all is lost with IAPs. They’re everywhere and a lot of popular applications are literally giving away apps with one hand and reaching into your pocket with the other. Thankfully, we can say with certainty that this isn’t, in fact, the end of the world as we know it. There are a number of good things about in app purchases.

    • We get amazing games like Clash of Clans, Dead Trigger 2, BADLAND, CSR Racing, Madden NFL 25, FIFA 14, and many, many more free of charge.
    • We get to dictate how much a developer makes off of us. If you want to play these games or use these apps for free and not pay, you absolutely can. If you think the developer deserves money, you can give them money and they will give you something to make your experience more enjoyable. In theory, everyone wins.
    • This system allows developers to make a lot more money. When they make more money, we get more apps and games. Developers also no longer have to depend on an advertising strategy which has always been shaky at best for apps. Especially when people use ad blocking to prevent the developer from making any money at all.
    • They have the potential to make games more enjoyable. For instance, in Clash of Clans, you can pick up a few hundred gems for a few bucks and get an extra builder. This drastically reduces the amount of time it takes to upgrade your base and it doesn’t affect the enjoyment for others.

    It also helps the case that app developers, the Google Play Store, and analytics companies are currently working on new ways to present IAPs without making so many people angry. In a recent piece by the Wall Street Journal, it was revealed that Japanese game developers are cleaning house on IAPs without making almost anyone angry.

    Some of the information is pretty impressive. These game developers in Japan are hiring statisticians and mathematicians to calculate how, when, where, and why people buy IAPs. Based on the findings, the game devs are able to offer targeted IAPs that people actually want to buy without employing less-than-ethical strategies like the ones we discussed earlier. Instead, they tweak, add, and otherwise improve the game to keep people playing under the idea that if they play long enough, they will actually want to buy something.

    Once larger developers realize the value of putting out a genuinely good game with a more dynamic IAP strategy, the landscape of IAPs will change.

    Under this premise, these highly popular and genuinely good games are cleaning house. In October, one game developer — GungHo Online Entertainment Inc — earned $4.1 million per day. Their apps, which range from a 4.3 to 4.7 rating in the Google Play Store, all have in app purchases. Once larger developers realize the value of putting out a genuinely good game with a more dynamic IAP strategy, the landscape of IAPs will change and that can only mean good things for us, the consumers.

    Lastly, even entities like the Google Play Store are helping out. In a recent update, the Google Play Store was updated to include indicators that apps contained IAPs. Once these sorts of changes roll out to everyone, issues like that pending lawsuit in Australia will be a thing of the past because parents will be able to clearly see if an app contains IAPs before downloading games for their kids or themselves. They also implemented the password PIN during purchases to prevent these very issues from occurring.


    in app purchases 5

    The ugly truth

    The ugly truth is that IAPs are going nowhere and it is our fault. They offer a more stable and lucrative revenue stream than advertising ever has on any platform and that includes PC and consoles (which have had IAPs available for years in the form of expansion packs and DLC). In addition, devs used to charge money for apps (free-premium model) and we never bought them which forced devs to look for an alternate method to put quality apps in our hands and still make money.

    All of the studies and numbers indicate that an in-app billing model will increase dramatically in the coming years. Soon, we will all be awash in free apps and games which only ask for money after we download them. It is happening and there is no longer anything we can do about it because the model is so successful.

    Devs used to charge money for apps (free-premium model) and we never bought them

    Worse yet, things are going to get a little worse before they get any better. As seen in Asphalt 8: Airborne, Angry Birds GO, and almost every EA game available right now, big developers are less bashful than ever when it comes to pandering for money. Even regular applications such as Timely can be highly offensive as they let you skirt the cost of the app if you spam your friends with invite codes. In short, it’s a giant mess.

    The good news is the market is beginning to adapt. The Google Play Store is taking steps to inform consumers if an app has in-app billing so they know ahead of time. Developers in Japan are making huge progress on more appropriate, more effective ways to offer IAPs without offending gamers. In the not-so-distant future, the Play Store will begin to populate with truly awesome apps and games from developers who care about the quality of their titles and IAPs will be reasonably presented.

    In the not-so-distant future, the Play Store will begin to populate with truly awesome apps and games from developers who care about the quality of their titles and IAPs will be reasonably presented.

    Until then, we need to have patience and proceed with a more open mind. There are thousands of apps and games that have IAPs but still deliver amazing experiences and many more are on the horizon. There is a balance where everyone can be happy and the best way to show developers where that balance is located is to find the apps that already have this and use them.

    The mobile app market is no different from others in that it changes and adapts based on consumer purchasing trends. In short, if consumers refuse to download good apps because of IAPs, it’s going to make it all the more difficult for developers to find that balance that makes everyone happy. The balance must be struck – and it’s up to mature developers and consumers to lead the way in exemplifying what constitutes best practices.

    Comments

    • AndroidBoss

      I hate these apps that are free and everything but then when you install and play you discover it’s an IAP. Or even apps that you paid hard earned money and then you need to buy some sht in game in order to keep playing.

      • JosephHindy

        Yes those kinds of apps/games are bad but one of the points I try to drive home is that not all apps operate this way and you should judge apps individually instead of the entire platform as a whole.

        • AndroidBoss

          Well yeah most are that way, that’s why I sometimes just play Emulator games haha.

          • JosephHindy

            I’ve been buying Square Enix games lately. they’re re-releasing the old FF games on Android. pay once, no IAPs…the apps are expensive as hell but they’re all like 30-40+ hours of game play. #worthit

            But you know this is still a new system that they’re trying to work out and if everyone is all like “all these apps suck because of this one thing”, then they aren’t getting any real or valuable feedback from us, the consumer…and hence these garbage apps with terrible IAPs will continue because, well, they don’t know what we want right!

            • AndroidBoss

              Nice I’ll check out Square Enix out.

      • abazigal

        It’s not that bad if they are free. Technically, you haven’t lost anything save some time and bandwidth spent downloading and playing it, then deleting it out of frustration.

        It’s just annoying though. Games like Dungeon Hunter 3 could have been really fun as a cheap diablo clone if the developer had just charged a flat sum for it. Instead, they introduce rather outrageous IAPs, and what’s more mind-boggling is that people are actually paying hundreds of dollars for them! Which just serves to further encourage this sort of behaviour.

      • Thang Fozika

        Or even apps that you paid hard earned money and then you need to buy some sht in game in order to keep playing
        http://noithatkuongthinh.com/bep-ga-fagor-106889.html

    • MasterMuffin

      I downloaded Angry Birds Go and I liked it first. Then came the bird recharging! I guess it’s a nice way to force me to take breaks from playing, but seriously? Without the recharging the game would be a solid 5 stars, I really don’t mind the other smaller IAPs

      • AndroidBoss

        Yeah it got on my nerves I uninstalled that thing.

        • JosephHindy

          Same here gents.

        • MasterMuffin

          I’ll uninstall it when I’ve completed it fully (OCD :D)

      • A googler

        Should be renamed “Angry Birds Go Fxxx Yourself” because that’s the last time I ever install a new app by Rovio!

    • NeedName

      so happy I don’t give a rat’s a$$ about games these days, got that out of my system when I was 13 yrs old :)

      • Arturo Raygoza

        thank you for letting us know. we were very much wondering about your life

    • Santeri

      Rarely THIS well written articles on Android Authority. Good work Joe! Hope to see more of these in future too.

      • JosephHindy

        Thank you very much!

    • Brandon Miranda

      I don’t download any games on my android/iOS devices. On android if I wan’t a game I download it from the internet.

      • JosephHindy

        Yes, that’s called “piracy” and it’s actually not a good thing. Stealing apps is the reason we can’t have nice things.

        • Lisandro O Oocks

          Unless he does it from play dot Google dot com. If so he’s fooling himself.

        • Brandon Miranda

          Sorry Joe but, in this world no body is perfect and I’m not going to pay 6.00$ for an app and have to pay a dollar more for no ads. No thank you.

          • JosephHindy

            Then don’t use the app. You don’t deserve to get paid content for free just because you’re outraged. Stealing is stealing, there is no moral justification for it.

            • Brandon Miranda

              Plenty.

    • jeroen

      Paying for apps. Hey the phones and the phone billings are expensive enough for all app get free. I never bey apps I just surge for torrents. I reviews to let anybody getting a miloinair of making an app. Apps for money are criminal activities

    • A googler

      On every non network dependent app I install I automatically firewall the sucker!

    • James Silva

      Or you could damn use iAP crack for iOS/freedom for Android. Win/win situation :)

      • JosephHindy

        Sorry but there is no scenario where I’d ever condone something like that.

    • Bone

      Never bought anything in-app only the whole app, from Play Store.

    • ichuck7

      My favorite implementation of IAPs is the game Cordy. It let’s you play 4 levels for free then you can pay if you liked the game and want the other 46 levels. I would never want to play a game like Angry Birds Go with constant IAP spamming.

      • JosephHindy

        I’m actually okay with this method as well because it’s essentially the “trial-then-buy” method except you don’t have to go back to the Play Store to get the full version.

    • ichuck7

      Good hard working developers should make money. There are good ways and bad ways to go about it. But shame on anyone who thinks making money is a crime, and shame on the people who steal the apps.

    • Braden

      I hate the apps with wait times for things or recharge times. They let you play for five minutes a day then you have to wait 24 hours for it to “recharge” then a message will pop up saying “don’t want to wait? pay blah blah blah amount and finish now”. Those kind of things are annoying. Also in games where you build things and it takes days for them to finish, or you can pay real money and finish now. It really isn’t needed. Also the apps were it is a multiplayer app with all kinds of boost that cost real money. If you don’t buy any you get ripped to shreds by the people who do.

      • JosephHindy

        Actually the “wait til it’s done” thing is borrowed from PC games. Namely strategy games where you must train troops and build things. That timer function has been around for ages and didn’t start with mobile gaming.

        • Arturo Raygoza

          doesn’t mean it should have survived till now

          • JosephHindy

            Didn’t say it should have survived, just pointing out that what he’s mad it predates mobile operating systems and that his anger is based in a much older market :)

      • Thang Fozika

        If you don’t buy any you get ripped to shreds by the people who do. http://noithatkuongthinh.com/bep-ga-malloca-106894.html

    • abazigal

      In a way, I can understand the allure of freemium games. Few people are going to buy a game which charges $20 or $30 outright, even if it is really well-designed, so it’s easier to nickel-and-dime your customers through tons of micro transactions.

      So has anyone encountered examples of games which they feel have implemented the freemium model properly or fairly, or really fun games that they feel is really worth the huge financial investment? For me, I have two examples.

      First is a collectible card game called shadow era. It’s free, and wholly possible to eventually grind your way to the point where you can assemble a decent competitive deck. Or you could spend a few dollars on the in game currency or support one of the their kickstarters (which likely nets you enough crystals for the rest of your life). I like that the IAP is not being pushed constantly in my face. I buy when I feel ready to, not because I feel compelled or pressured to.

      Second is a ios game called warhammer quest. For $5, you get the basic game with 4 characters. You can unlock additional characters and new areas for extra cash. I have spent about $40 on the game and it’s almost irritating how fun the game is. But it’s clearly in a different league from freemium games that charge you to simply progress to the next level.

      Your thoughts?

      • Marcos Amano

        I have downloaded Reaper a few days ago. You can play it for free until you reach the level 10 than you have to buy it to continue playing(like a trial version). There are 3 editions to choose from, the first and less expensive only removing the level cap and two others with bonus content. I bought the most expensive version for ~USD4,90 and was totally worth it. I think this is the best way to do things, you have the option to start the game to see how it works and only buy it if you like, otherwise you can just uninstall it.

        • JosephHindy

          This is essentially just a mutation of the Free/Premium model. They used to do this all the time you just bought either the unlock key from the Play Store (Titanium Backup, Winamp, and others still do this) or just buy the full APK. What you’re describing is just crunching it all into a single APK and it is one of the better examples of IAP use.

          • Marcos Amano

            Except for the fact that this app, at least, doesn’t have any ads, so the developer won’t get any money unless you buy the app.

            Well, I think that this model is way better, once you download the app you never have to go back to the Google Play(and don’t have to download anything else) to take any action regarding the app, either you buy it from the app itself or you delete it. And I guess that the worst type is when an expensive app has IAP.

            About the hacks, I’m not proud, but I usually download a pirated version of the app(if there’s only a paid version available). If I think that the game is good and I’ll enjoy playing it then I buy it, but I’m not going to expend my money into something that I may not like at all. I know it’s not right, but doing so I can keep the small amount of money I have to support developers when I like the app.

            • JosephHindy

              I meant the old time free-premium model. Where free was a trial/demo then after so much time you had to pay for it ;) I was talking like PC-style :) not apps. My bad I should have differentiated more clearly!

            • Thang Fozika

              I can keep the small amount of money I have to support developers when I like the app. http://noithatkuongthinh.com/bep-ga-napoli-106878.html

      • JosephHindy

        Well there are two things a lot of people don’t think about.
        1. There is a psychology to IAPs. As I mentioned above, the Japanese are cleaning house on IAPs right now because they focus on developing, tweaking, and improving games to keep people playing under the premise that if they keep playing, they’ll eventually buy something and the apps you’ve described seem to fit that same model.

        2. Not everyone are going to like IAPs. No matter how reasonable they become, how cheap they are, or how good the game is, there will always be people who dislike them. Eventually, those people will become a minority but that time is not now.

        Bravo for paying for games that you enjoy :) I enjoy hearing that. I’ve spent $10 on Clash of Clans to buy builders because I enjoy playing the game at a faster pace. I also dropped a few bucks on CSR Racing because there was a pay-only car I wanted to use (I had like 80% of the coins needed and bought the other 20%). I’m usually pretty good with enjoying a game without IAPs because, well, I play them for a living and you get pretty good at them when you play them all day long :D but if there’s a game I like, I have zero compunction paying for it.

        Hell, I’ve spent well over $70 on Final Fantasy remakes from Square Enix. They don’t even have IAPs the games are just really expensive, but they’re really long games with a lot of content and I happen to love them :D

        • abazigal

          I don’t have anything against IAPs themselves, but I agree they really need to be managed.

          For one, a game should not require me to spend on IAPs just to be remotely playable. Some games require me to spend in-game currency to be able to upgrade my gear or level up, currency that can only be purchased (or is extremely rare in-game). IMO, that is unreasonable.

          I feel a case can be made for games that charge IAPs for expansions (such as extra game areas or new material), but it seems that some developers are also starting to abuse this system by breaking up the game into multiple smaller parts and charging individually for them.

          Is there really no reasonable middle-ground?

          • JosephHindy

            That’s just the thing, the middle ground is actually quite expansive. The system is just so new that developers and consumers haven’t exactly found it yet. The developers in Japan have (which is why their apps make more than everyone else while still having a high rate of customer satisfaction) and soon others will follow. One of the points I try to make in the article is that eventually the system will adapt to our needs _and_ their needs and everyone will be happy. We just have to be patient until then and vote with our wallets so developers know what’s right and what’s “too far” :)

    • http://rhythmicnature.com/ Frank Fletcher

      Can we please just require that the app developers publish (and highlight) the fact that they contain IAPs as well as itemize all of the IAPs and their costs… right up on Google Play storefront?

      • Arturo Raygoza

        this.

      • JosephHindy

        Google has already done this, it just hasn’t rolled out to everyone yet. If you look at that picture right above “The good” header above you’ll see what I mean. Our editor Bogdan took that screen shot so that very functionality does actually exist. We just have to wait for it to roll out to everyone :)

        • http://rhythmicnature.com/ Frank Fletcher

          I started to see a notification that the app has IAPs but no breakdown of what those IAPs are for or how much they cost… Did I miss something?

    • Lisandro O Oocks

      I got to say that Asphalt 8: Airborne really sh!+ on their customers by switching from one model to the next overnight. Is not like their app was cheap to begin with. I really think they should’ve run it side to side with the one most of us paid for outright, just like Zepto Lab does with Cut the Rope. Either that, or refund us and hope we give them our money again.

    • http://about.me/jovanphilip Jovan Philip

      Great article and I have to say that I agree with every single point. IAPs are getting way out of hand.

      • abazigal

        In a sense, we as consumers are partly responsible because I believe we encourage such behaviour. People have been trained to not pay more than $1-2 for most apps, which sets an artificial ceiling as to what developers feel they can reasonably charge for their apps.

        Which leads to a problem where a developer may really have spent a lot of time and effort into creating a quality app, but if he charges say $10-20 (which may not be all that unreasonable, depending on its usefulness), reality is that few will buy it. And there is an inherent limit to what sort of quality you can expect out of a $1 app.

        It has also proven to be extremely lucrative. Infinity blade can earn millions of dollars from IAPs. Games like dungeon hunter 3 have IAPs costing over $100, and people actually pay for them!

        Problem is, I doubt these attitudes will change, at least not overnight, so I guess that IAPs is something we will have to put up with for the short run, at least.

        • JosephHindy

          Well the point of the entire “the good” section was to illustrate how the market is already adapting and changing. It’s just happening in Japan first and not wherever we live so we don’t see it yet…but the waves of change are happening right now even if we don’t see it yet!

        • Mike Reid

          Yep.

          Too many want free. And if it’s not free, they’ll pirate it.

          I’m considering a $1 per month subscription option for my app, for those who think that’s better than $10 outright, or let’s them “try” first (despite my anytime refund policy).

          I’d guess among some people that might even be more lucrative than just outright selling an app that is useful and updated for 2-3 years at least.

        • Thang Fozika

          I like Problem is, I doubt these attitudes will change, at least not overnight, so I guess that IAPs is something we will have to put up with for the short run, at least.
          http://noithatkuongthinh.com/bep-ga-giovani-106815.html

    • Marla

      No one mentioned this so I figured I’d bring it up. I have no problem whatsoever buying apps. I think the developers deserve to get paid for their work. I don’t love in app purchases but they’re not terrible if there’s just a handful of them. I, unfortunately, played games that constantly added new items every week, so you were constantly spending money on the game to keep playing it. The WORST was one game I played just randomly abandoned the game (removed it from existence!) so all the money I spent on the game was lost forever. I couldn’t even play it ever again. Total waste. Another game didn’t allow transferring to a new device so when I got a new phone,I lost all of my progress and purchases.

      • JosephHindy

        I actually did bring this up (sort of). One of the things Google is doing is the Google Play Games Services API (which involves achievements, real time multiplayer, and, ta da, cloud saves!). When games start to implement cloud saves on a more massive scale, problems like yours should be gone. I’ve transferred my Riptide GP 2 save data for 5 devices already. It’s a good thing :)

        But yeah, Google has already done something about your very problem. Just have to wait for game devs to add it in :)

      • Gerald

        This is a HUGE problem. I, too, wasted money on in-app purchases when I had to replace my Android tablet. Until developers are REQUIRED to save all in-app purchases in the cloud, to be available when the game is reinstalled, I cannot view in-app purchases as anything more than a greedy way to get us to pay for the same content over and over again. There’s no other justification for cloud-syncing being optional.
        I’d much rather pay full price for a game that includes all content, and is readily reinstalled from Google’s or Amazon’s store, than waste money on in-app purchases that are GUARANTEED to be a wasted when I upgrade the device.

    • Phantom

      At one point i bought angry birds star wars 2, before it was free. It was a fun game, IAPs werent really necessary. Then the game became free and now all i get are ads and the game telling me to buy more stuff. Its rediculous that i bought it and now i get the crappy free version. Its these greedy-as developers that ruin games for money.

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