The typical freemium or free-to-play app is a free download that uses in-app purchases to produce revenue rather than charging a flat fee for the app. The freemium model has become very popular over the past few years, especially on mobile devices like smartphones or tablets and Internet-connected PC games, especially massively multiplayer online games (MMOs) like Everquest 2 and Star Wars: The Old Republic, which have both switched to a freemium model.
Freemium is a combination of the words "free" and "premium".
How Does Freemium Work?
Free-to-play has been a very successful revenue model. The basic freemium application gives away its core functionality for free and offers upgrades to add certain features. In its most simple form, this is like combining the "lite" version of an app with the premium version, which for iPad apps, can be unlocked with an in-app purchase.
A free app will be downloaded much more than a paid app, and the freemium model works based on the principle that once you have allowed the customer to look at your app and find it useful (or, in terms of a freemium game, finding it fun and engaging), the customer will be willing to spend money within the game.
The Best of Free-to-Play
At its best, free-to-play games offer the complete game for free and focus on cosmetic changes in the store. A great example of this model at work is Temple Run, a popular game that started the 'endless runner' craze. Temple Run's online store allows you to purchase cosmetic changes to the game or take shortcuts on acquiring certain enhancements, but all of the features of the game can be unlocked without spending any money. Players are also not forced to pay for any items to extend their daily game time, which means you can play the game as much as you want.
The Worst of Free-to-Play
Unfortunately, there are plenty of examples of freemium done poorly, with some money grabs leading to descriptions like "pay to win", which refers to players spending money becoming more powerful much more quickly than other players, and "pay to play", which refers to games using some form of time limitation that can only be alleviated by purchasing items in the store. Dungeon Hunter IV is a great example of the freemium model gone bad, with so many restrictions put into the game that it becomes almost unplayable without paying.