(Photo Credit: Anthony Quintano)
Friday morning the maker of the Angry Birds games, Rovio, announced that CEO Mikael Hed will step down in January. The iconic Angry Birds series was one of the first games to achieve mass popularity on mobile and tablet platforms, but has failed to achieve much of anything lately.
Rovio initially created its business by charging a small one time fee to download its games. As time went on the popularity of the Angry Birds exploded, peaked, and subsequently declined. Other games such as King Digital’s Candy Crush and Zynga’s FarmVille were stealing away players with an innovative business model, offering games that were completely free to download.
The freemium model entices users to download games by removing the barrier of a paywall. No credit card information is needed to download the game and get started. Once a player explores the experience the game has to offer, additional content can be unlocked for a price, or a la carte via micro-transactions.
The freemium mobile games model was tremendously successful for quite some time. Rovio even switched Angry Birds over to the freemium model because they couldn’t compete. However the transition was less than fruitful, which is one of the key reasons why Mikael Hed will be resigning from his post as chief.
(Graph from ChartIQ Visual Earnings)
Rovio hasn’t been the only company struggling with freemium mobile games, King Digital and Zynga are both having awful years as well. Since its IPO in March shares of King Digital have fallen from their listing price of $22.50 to just $13.74. Zynga stock has fallen 27% year to date as its revenue continues to slip. This quarter the FarmVille creator bombed its earnings report, revealing revenue of just $175.10 million while contributing analysts on Estimize were anticipating $191.39 million.
So what’s killing freemium mobile games? And why are freemium desktop games raking in the money at the same time? Both answers lie in social.
Online connectivity has exploded recently, both in the availability of WiFi and the number of users enabling mobile data on their smartphones. The result has shaped the behavior of consumers. Five years ago, playing offline games a common way to pass time on a mobile phone. This was the heyday of Angry Birds. Today nearly everyone is connected to the internet, and that has changed the dynamics of the mobile experience.
In 2014, the new time sinks are all online and social. While riding on the train consumers log onto Twitter and Facebook, they Snapchat their friends, and they engage with content on platforms like Reddit and Buzzfeed. The landscape of possible mobile experiences has improved a thousand fold, while solitary freemium pay to win mobile games are largely stuck in the past.
To be fair to the original FarmVille game, it did have a social mechanic built in. FarmVille basically told players, pay us to win, or recruit your friends to play our game and we’ll let you win. It was social, yes, but it was also evil.
By combining either a collaborative or competitive social experience with the freemium games model, several of the big desktop games studios created blockbuster hits. To make the point abundantly clear, 4 of the top 5 most popular games on Twitch are completely free to download and start playing. Every single game in the top 10 on Twitch is designed for a realtime multiplayer experience.
This is not a coincidence. Humans are social creatures and we seek social experiences. In this regard, games like Angry Birds and Candy Crush are way behind the curve.
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