Gameloft freemium model

Free service(s):
• Free, limited version of the game

Premium service(s):
• Upgrades to full games through in-app purchases

• Virtual currency to be more competitive in the game
Facts & figures:

• Gameloft was accused to be copying popular games by releasing very similar games on mobile platforms.

• Studies show that 40 percent of those who have played an upgradable freemium game have made in-app payments. (CNET)

• In-app purchases accounted for $970 million in sales last year, representing 39 percent of all spending. By 2015, that figure could grow to $5.6 billion, or 64 percent of the market. (CNET)

Freemium takeaway(s):

• “We believe the mix of free to play and premium games is really our way to grow our base inside this business,” (Baudouin Corman, Gameloft VP of Publishing)

• “In 2012, it will become increasingly difficult for app stores and developers to justify charging an upfront fee for their products when faced with competition from a plethora of free content. Instead, the apps industry must fully embrace the freemium model and monetize content through in-app purchases.” (Jack Kent, an analyst at IHS)

• Freemium mobile games account for estimated 72% of total App Store revenue (The Economics of Freemium)

Links:

• Gameloft Link

• Gameloft to support both premium, freemium app models Link

• Gameloft Does ‘Farmville’ with ‘Green Farm’ Freemium Farming Sim Link

• Gameloft shifts away from freemium, releases full versions Link

• Gameloft Releases Freemium Football Title “Real Football 2012″ In The Android Market Link

• Freemium games are the ticket to app profits – study Link

• Mobile Games: The Economics of Freemium [Infographic] Link

• Freemium Mobile Gamers Spend Most Money on Items They Don’t Keep Link

FreshBooks freemium model

Free service(s):
• Free account allows you to manage 3 clients

Premium service(s):
• Monthly subscriptions ($20, $30 and $40)
• 25 or unlimited number of clients
• Unbranded emails
• Team reports and timesheets

Facts & figures:

• Freshbooks has over 4.5 million users
• In comparison, they had only 6 paying customers after the first year

Freemium takeaway(s):

• “Just because a customer isn’t ready to buy from you now doesn’t mean they won’t ever be. You need to make sure you stick around for when that time comes.“ (Saul Colt, Freshbooks)

• “It’s grown to 900,000 subscribers using a mix of free and paid offerings. Now that there are so many users, subscribers often wind up sending bills to one another. So the company made it possible to send those invoices within the system directly, bypassing external email. Today, Freshbooks revealed that 20 percent of its subscribers had adopted this new capability — taking Freshbooks from software tool to SaaS ecosystem.” (GigaOm)

• “Freshbooks may not make money from every subscriber — but it can offer compelling new features because of them.” (GigaOm)

• “Once a SaaS provider hits a certain size, secondary business models based on network and ecosystem effects can eclipse the initial business. This makes the economics of running a SaaS provider a bit strange: Too much focus on short-term revenues may undermine long-term success, because free helps reach critical mass, where new models can emerge.“ (GigaOm)

Links:

• FreshBooks http://www.freshbooks.com/

• Plans and pricing http://www.freshbooks.com/signup-box.php?iframe=true&width=841&height=642

• Freemium & The Evolution From a Web App To a Web Platform http://gigaom.com/2009/07/01/when-saas-hits-critical-mass-the-game-changes/

• Marketing Risk: How @Freshbooks Grew to 4.5 Million Users (Interview with Saul Colt, Freshbooks Head of Magic) http://www.firepolemarketing.com/blog/2012/04/26/freshbooks-saul-colt-interview/

• How Freemium Can Work for Your Startup http://gigaom.com/2009/09/01/how-freemium-can-work-
for-your-startup/

• The Psychological Difference Between Freemium & Free Trial Plans http://www.layeredthoughts.com/startups/the-psychological-difference-between-freemium-free-trial-plans

Flickr freemium model

Free service(s):
• 300 MB monthly photo upload limit (30MB per photo)
• 2 video uploads each month (90 seconds max, 150MB per video)
• view the 200 most recent images
• up to 10 group pools
• smaller (resized) images accessible

Premium service(s):
• unlimited photo uploads (50MB per photo)
• unlimited video uploads (90 seconds max, 500MB per video)
• HD Video
• unlimited storage & bandwidth
• high-resolution original images
• up to 60 group pools
• ad-free browsing and sharing

Facts & figures:

• Flickr was acquired by Yahoo in 2005
• It has over 51 million registered members and 80 million unique visitors
• it hosts more than 6 billion images (as of August 2011)

Freemium takeaway(s):

• Free offer enabled Flickr to grow its user base exponentially fast and the strategic pricing of $25 a year provides them with enough customers, especially among photographers and photo enthusiasts, to keep the business profitable.
• Yet, there is a controversy over Flickr upgrades, as Wired article below summarizes many people feel Flickr is “keeping their images as hostages” and choose to pay the fee only to access full-sized originals or some older photo.
• This should be avoided when implementing freemium business model as it can lash back at the company and make it lose users rapidly.

Links:

• Flickr Link
• Plans and pricing Link

• I Won’t Use Flickr Until They Release My Photo Hostages Link

• The Freemium Purchase Decision Link

• Web 2.0: Easy & Free Link

• Not free as well Link

• Freemiums are changing the way money is made online Link

• Flickr – Business Model Link

Starbucks freemium model

Free service(s):
• Free unrestricted Wi-Fi internet access
• Free access to Starbucks Digital Network premium content such as Wall Street Journal, iTunes, The New York Times, etc.

Premium service(s):
• Full-access subscriptions to these content providers
• Coffee

Facts & figures:

• Starbucks introduced this offer at the time when many other coffee shops decided to limit free internet access to prevent people from ordering one coffee and staying in the shop for hours
• Starbucks does not pay to content providers for access – they offer it for free in hope to convert Starbucks patrons into customers
• This is a great value-add since access to these content providers is over $100 a year for an individual

Freemium takeaway(s):

• Starbucks is interesting because it’s more of an example of how to combine different freemium offers from others and use them to improve customer experience and increase profits.
• This is a great example of creating a free offer in a situation when you don’t want to provide your primary product for free (Starbucks doesn’t want to give free coffee)
• “We know that people would pay us for this opportunity. But instead of asking them to pay us, we thought, ‘Let’s aggregate and compile the best content that [Starbucks customers] can’t get any where else,’” (Adam Brotman, Starbucks’s Vice President of Digital Ventures).

Links:

• Starbucks http://www.starbucks.com/
• Starbucks Digital Network http://www.starbucks.com/coffeehouse/wireless-internet/starbucks-digital-network
• Starbucks Free Wi-Fi http://www.starbucks.com/coffeehouse/wireless-internet
• How Starbucks Plans to Capitalize on Free Wi-Fi http://mashable.com/2010/08/12/starbucks-digital-network/
• Free Wi-Fi! The Starbucks Freemium Strategy | AQPQ http://aqpq.org/2010/06/21/free-wi-fi-the-starbucks-freemium-strategy/