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The gaming industry has undergone digital content revolution in the past few years. Considering the outcome, the uses and business models in this industry have also changed, through the effect of disintermediation, changes in the pricing structure, and deﬂated production costs. From the supplier perspective freemium games is one of the preferred routes, as it holds the majority of download volume. The dynamic nature of gaming industry has also brought significant change to the consumer mind sets, while the game developers are compelled to update themselves. The game developers not operating upon the freemium model have suffered loss of their market share, in the recent years.
The major market for the freemium games are video gamers, casual gamers, and the social gamers. In the past few years, the increasing demand of freemium games from some of the other non-traditional gamers, such as educational and cultural institutions have also boosted up the freemium game market. In freemium games, the basic game version is available for the consumer for free; however the consumer has to pay for extra features, or unlocking the levels. In freemium games, the design aspect plays an important role, as consumer should not feel that the stage where he has reached in the game is either too tough to proceed, or too easy to clear. The freemium games developer earns a large part of their revenue from advertisements, in app purchase and virtual item sale. The majority of revenue comes from app purchase, which accounts for 70% to 80% of the total revenue of the industry. The virtual item sale (also referred to as micro transaction) is other important revenue generating model in the freemium game market, which allows consumers to play basic version of the game at no cost, but pay for the advanced part, or buy some game related virtual items, which is part of the game itself.
The increasing affordability of smart phones, along with the growing internet penetration accounts for the major drivers, of the freemium game market. The availability of open mobile platform, such as Android “Play Store” is providing significant market opportunity for small and medium size freemium game developers. Moreover, the freemium model is very much suited for the startup game developers, as the cost to market can be saved. On the other hand, issues such as data privacy and graphical interference limitation of mobile devices, remains major roadblock for the market expansion.
The global Freemium game market can be segmented on the basis of consumer age group as below 18 years, 18-35 years, and above 35 years. Based on device on which the freemium game are played, the global freemium game market can be broadly classified as PC, tablet, smart phone, TV/console, Web games, and others.
Asia Pacific had been the largest and fastest growing market of freemium games, in 2014. A Spur in the internet connectivity, along with the increasing affordability of smart phones due to the growing middle class population in developing countries, such as India and China are driving the Asia Pacific freemium game market. India and Japan are expected to be the fastest growing markets of freemium game in Asia Pacific, during the forecast period. The North American and European market has witnessed remarkable growth in last few years. India, China, Japan, South Korea, Brazil, U.S., Canada, Germany, U.K., France, Italy, and Spain are some of the major markets for freemium games.
Some of the competitors in the freemium games market are Electronic Arts Inc., Zynga Inc. Nintendo Co. Ltd., Activision Blizzard Inc., King Digital Entertainment plc, and Machine Zone Inc.