Mastering freemium game mechanics series: discounting alerts

Matt Tubergen heads Recharge Studios, a wholly owned subsidiary of W3i. Recharge Studios is an iOS investment fund that subsidizes the development and marketing/distribution of freemium iOS games.  W3i is a market leader in distributing and monetizing mobile apps, social applications, web applications and browser add-ons. Recharge Studios is part of a suite of expanding mobile solutions offered by W3i.

In February, analytics firm Localytics released data that indicates nearly 30% of users trying a new app will only open the app once, and never return again. User retention is a key issue for all apps, particular freemium games that depend on progressive game play and lifetime value to achieve fiscal success. The market for freemium has expanded tremendously from January 2010 to today.

A growing percentage of the top grossing apps, particularly in the Apple App Store, are operating a freemium business model, usually powered by virtual goods. The virtual goods market is expected to be a more than $2 billion industry in the U.S. alone in 2011. With all that pressure, now’s the time to master freemium game mechanics and position your app to take a bite of the pie.

Posts on our corporate W3i blog series have already covered topics that include: Planning an effective reward schedule, avoiding inadvertent in-app purchases and when to use alerts and for what.  This week, we look forward to including the Mobile Orchard audience in our discussions on mastering freemium game mechanics. Continuing our series, we look deeper at alerts beginning with discounting and provide practical advice.

What are discounting alerts?

Discounting alerts are an outstanding way to drive users back into a game, or entice them while already there. There are a variety of things that can be discounted and potentially trigger an alert, for example:

• Virtual Currency Discounts ( ex. “Receive half off all bundles of dolphin bucks today only)
• Virtual Good Discounts ( ex. “Today only build stockpiles for half off”)
• Time Discounts (ex. “Today only harvest in half the time”)

When and how often to use alerts.

In our post on when to use alerts we discussed how far a developer can push, the use of push notifications. Our experience has been that three notifications a day is a maximum threshold.  With that understanding daily discounts would eat up one of your three potential alerts. A schedule of alerts would be beneficial to ensure you don’t inundate your users with notifications about: free this, rotting that and visits from so-and-so.

Under that premise, the question of when or where can result in a couple different scenarios.

Regarding when, it depends on the timeliness of your promotion. The reasoning here is the longer a consumer has to consider the offer the bigger window of time to make a decision. Additionally, a sense of urgency helps speed that decision process. Messages such as “Today Only” and “For a Limited Time” are musts in your alerts.

Regarding where, you’re faced with two options: a notification upon opening an app or within the app (local), and a notification that pre-empts the opening of an app (push). Depending on the offer, it may be large enough of a carrot to push a notification and drive a user back into the app.

Alerts are a must.

Whatever you decide that works best in your schedule, make sure you have one. Alerts are an absolute must in driving the success of your freemium games. Next week we’ll examine threshold alerts. Do you have a question about freemium gaming or a topic you’d like us to explore? Let us know in the comments or catch us on twitter @rechargestudios or @w3i.