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NPD: 40% of ‘Freemium’ Gamers Purchase an Upgrade

24 Apr, 2012 By: Erik Gruenwedel

With consumer access to video games expanding beyond physical media, game publishers increasingly are offering new titles online for free with the belief that unfettered access will lead to purchasing the updated editions down the road.

“Freemium” games (combining "free" with "premium") have grown in popularity, with 85% of gamers aware of the platform engaging in the free trials, according to The NPD Group's recent report “Insights into the Freemium Games Market.” Unlike movies, video games are played repeatedly with relatively high trade-in values — a reality that has resulted in packaged media retail pricing not seen in the movie industry since the early days of VHS.

Regardless, free online access to select games comes at a time when the game industry continues to face double-digit sales declines in software and hardware — the former due to a dearth of new franchise releases, among other factors. Microsoft recently revealed that more than 40% of Xbox 360 users don’t use the system to play games.

The Port Washington, N.Y.-based research giant said 40% of gamers (mostly male) who played an upgradable freemium game made an in-game payment to extend or enhance the game. Interestingly, females are significantly more likely than males to have played a freemium game, but are less likely to pay for an upgrade.

The report found that male gamers — representing the core gamer audience — are not as engaged in the freemium option due to their gaming experience traditionally revolving around consoles, handhelds or PCs.

“For these gamers, a freemium game would provide a different experience, like a snack versus a full meal,” said Anita Frazier, industry analyst with The NPD Group. “The majority of freemium gamers who opt to pay to upgrade their experience do so within the first month of playing a particular game. When designing a game, it’s important to consider features that would drive quick conversion to pay.”

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