The “Freemium” Business Model; Under Fire

Those who work in the traditional toy industry sometimes have a greater challenge understanding digital business models than they do the technology of which they are comprised.  One such model is the “Freemium.”

A “Freemium” is a product, typically a digital game, which is initially free but requires the user to pay over time in order to more fully enjoy or even succeed at that game.  This form of selling play can certainly seem exotic to those who sell their products as one time transactions.  If you want to purchase Grand Theft Auto from Best Buy or Toys ‘R’ Us, you simply plunk down your $30 plus dollars, take it home and you’re done. 

FreepremiumThe “Freemium” concept has come under fire (see New York Times article “Free Video Games Say Pay Up or Wait, Testing Players’ Patience” by Nick Wingfield) ) for “fooling” children and naïve adults into becoming “addicted” and as a result investing a series of small purchases (typically 99 cents) in order to fully engage the experience.  In other words, the notion of “free” was really a way of tricking them into spending money they didn’t have.

It’s apparently a serious enough concern that, according to Mr. Wingfield, “Regulators here and overseas are taking a closer look at whether some free games mislead consumers about the true costs of playing them and whether vulnerable players, like children, might be duped into spending money.”

As I have stated before, I think that we do children no favor by protecting them from experiencing the free market at an early age.  How else does a future adult learn, at pretty small stakes, how to detect a potential scam, a bad value or a deceptive message?

And that’s not all; “Freemiums” are really not new.  That in my next posting.


One thought

  1. I think there is a tendency to group all “freemiums” as a single model, but the reality could not be further from truth. There are numerous exploitive freemium models out there, but at he basic idea of free-to-play, paid-to-play-better is wonderful for customers. Not sure if you will like it? Give it a try! There is no difference from free samples at a grocery store.
    But artificial limiters like duration constraints aren’t the best path for a brand customers will embrace in the long haul.

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