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How do you make money when everything is free? The secret is in realising that free is only one end of the demand curve: the other end is fans of your work who are delighted to give you money. This short talk covers monetisation, revenue, the ethics of free-to-play for children's content and much more. Slides from The Children's Media Conference, Sheffield, 6th July 2012
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How to make money when everything is free
Nicholas Lovell
Children’s Media Conference
July 6th, 2012
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What do these have in common?
They made a lot of money
• Top grossing games on iOS in 2011
• Estimated revenue >$30m each
How much do players spend?
• What is the average transaction value for an in-app purchase on a smartphone in the US?
$14
Seriously, how much?
• 51% of the revenue comes from transactions worth > $20
• 30% comes from transactions worth > $50
Price and value
So how do we make money?
What are we selling?
One-size-fits-all pricing is dead
PRICE
Demand
Revenue opportunity
Marketing opportunity
Some thoughts on kids
What changes when you work with kids?
• Targeting “whales” has questionable ethics
• Use free to start, become a “trusted brand”
• Cross-promotion becomes ever more important
• Aim to “own a shelf”
• You are not selling product any more. You are building a service and a relationship
• Over-deliver
Morph – a thought experiment
Make a free iPhone App
Incorporate ads for a limited edition, 1,000-only print of the original Morph, framed for your wall for $999
Conversion rate of 0.1% = same revenue (oh, no 30% to Apple)
Make an iPhone App
Offer a Free version and a 99¢ game
Business model 1
Business model 2
It’s all about the curve
PRICE
Demand
Revenue opportunity
Marketing opportunity
Thank you
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