Inside Social Games

Way back in March, Pinch Media CEO, Greg Yardley, broke down the potential monetization methods for iPhone games. The question, at that point, was: Do you sell the app or make it free with advertisements? The general consensus, then, was that it was wiser to sell the app cheaply, as most users did not continue to play after a few days of ownership, thus making reliance on advertisements moot.

October turned this whole concept on its head, however, when Apple changed its policy to allow the sale of virtual goods within free applications. Previously, this was limited only to paid apps. And now, we’re seeing free-to-play games showing up in Apple’s “Top Grossing” charts.

Capitalizing on the new virtual goods features, iPhone developer ngmoco launched the social, multiplayer first-person shooter (FPS), Eliminate Pro. Via the company’s social platform, Plus+, this good-looking app not only has strong game play and social outlets, but is free and sells virtual items called “energy packs” in order to make its revenue.

Taking a page from Facebook games, energy is a consumable resource needed to do things such as upgrade equipment or level up. The energy would slowly replenish over long periods of time, but in order to allow players to avoid waiting, said packs could be purchased for immediate use. Suffice to say, this model, combined with addictive social play, has this FPS sitting at #36 (as of 11/29/09) on the charts.

Previously, the game was ranked and #28 with another free-to-play title, Papaya Pro 3.0 which was at #21. While the latter is no longer within the Top 100 grossing apps, it goes to show the potential of this business model for the iPhone. Based on these titles’ success, it is likely to see a lot more developers make use of this new (for the iPhone) freemium model.