Posted by David Price 07 February 2014
Why apps need to be more expensive
I was involved in a Twitter discussion recently with a couple of tech fans who I won’t name to avoid causing embarrassment to the parties involved. Twitter User A recommended an iOS game. Twitter User B tutted that it “looked expensive”.
Is it possible that smartphone and tablet users, of whom Twitter User B is a typical example, have developed something of an entitlement problem? It’s hard to think of a time when good-quality software has been more widely available or cheaper, but this has made misers of us all, skinflints who purse our lips when asked to cough up the price of half a pint for an app that took months to create. Caveat emptor is all well and good, but this is ridiculous.
The race to the bottom; Or, why are apps so cheap?
When did we get so tight with money? Or, to approach it from another angle, when did software developers get so generous?
It hasn’t always been this way, and in certain segments prices have remained relatively stable. During the home console wars of the 90s, it was normal to spend around £40 for a brand-new game for the SNES, and we’re in the same ballpark today: Super Mario 3D World for the Wii U is currently £39 on Amazon.
Desktop software varies wildly, and far more software is now distributed for free - Apple, for example, lets Mac users upgrade to Mac OS X Mavericks for nothing - but there are still plenty of higher-priced exceptions. Adobe charges more than £1,000 for the latest version of Creative Suite. And triple-A PC games cost £30 or so when they first come out. It’s not like we’re afraid to spend money on software. It’s just that when it’s called an ‘app’, the wallet shrinks with fear.
And in fact, the App Store wasn’t always the bargain hunter’s paradise it is today. When Apple opened the service in 2008 many of the offerings were ports from other platforms, and the publishers barely dropped the prices in the process. But as the number of apps rocketed and supply outpaced demand, market forces cast their spell, and prices dropped.
Other than insane competition between hundreds of thousands of apps, developers are encouraged to pitch their prices low by the importance of the charts; if you can get to the top, success becomes self-perpetuating. For this reason it makes more sense for devs to aim for a huge number of low-margin sales than a sensible number at a sensible price. But not everyone can be Rovio, and for every Flappy Bird there are thousands of zombie apps that never get downloaded at all. It’s a brutal and unforgiving environment.
How much does it cost to build an app?
We asked some developers about current prices on the various app stores, and if they are enough to make back the costs of an app project.
Garry Partington, CEO of Apadmi, stressed that app development shouldn't be viewed as a 'get rich quick' scheme. "With app productions costs averaging at £30k-£60k it takes a lot of downloads at £1 to £3.50 to recoup the costs," he pointed out. "Hit apps obviously recoup their costs and more, but there are an enormous amount of ‘zombie’ apps that will never make a profit."
Is the answer to cut corners in the development process? "Developers in Silicon Valley/San Francisco are known to be notoriously expensive," Partington added, "but the counter argument is that you get what you pay for with app development!"
The truth is that, despite the much-heralded lower barriers to entry that accompanied the rise of mobile, creating quality software is just as costly as ever. And lower development spending is likely to result in a drop in quality, as we will see later.
A risk-averse market
Bargain-basement prices may not be good news for developers, but why should we care? I could have written a column about fairness - and I don’t see how anyone could seriously argue that 69p is a fair price for a fully realised game - and the effects on small development companies of the brutal price wars on the App Store and Google Play. These are legitimate concerns. But this affects all of us. It’s a question of the sort of apps market we’re creating.
Limbo for the iPad
Dino Patti, the CEO and co-founder of Playdead, believes that developers are pricing their wares about right, but argues that pricing trends in the mobile market make its games unlikely to ever match the experience you can get on PC and console.
"The lower pricing is causing most developers to do projects with a low financial risk," Patti explains. "And the result of that is what we see now in the app stores. I hate to be a judge, but the fact is that I have never had an experience which are even close to the experiences I've had on a PC or console. These two things are almost not comparable.
"Is this sustainable? If you are making free-to-play and small games suitable for mobile devices it's very sustainable. If you are trying to make a quality experience on a bigger budget you wouldn't aim for this market in the first place."
Making good software is expensive, and hard, and above all risky, because you don’t know if anyone is going to like what you’ve created. And when the returns are so thin, there’s little incentive to innovate.
The mobile games market is notoriously prone to cloning, with a tendency to unoriginality that runs the gamut from respectable homage to outright plagiarism, and this is at least partially attributable to the low margins in the app market. Developers like Zynga and most recently King.com churn out carbon copies of existing games - sometimes their own, sometimes others’ - because making groundbreaking software isn’t worth the effort. Unoriginality afflicts PC and Mac software too, but the scale of the problem on the App Store and (beyond all others) Google Play is unprecedented.
And the mobile games that aren’t thinly veiled copies of previous successes are free-to-play abominations. Freemium, which I’ve written about elsewhere, is the logical endpoint of a market in which nobody is allowed to charge a realistic price up front. If you won’t spend money on app downloads, you force software makers to find other ways to get your money. And in the case of freemium, that means games that totally subvert the very idea of gaming in the name of profit.
Let’s take an example. The current (and deserved) punching bag for mobile gamers is EA’s desecration of the beloved 90s classic Dungeon Keeper. Dungeon Keeper on mobile is free to play, but absolutely everything is done to hamper and slow down your experience until you crack and pay for the in-app purchases.
Instead of trying to make the game as fun as possible, so that you buy future releases by the designers, and tell your friends how good the game is so they buy it too, freemium designers aim to make your life as unpleasant as possible. It's gaming as a chore. (For an entertaining take-down of Dungeon Keeper's ponderous money grubbing, try this expletive-peppered video.)
This is what we get if we don’t pay. We get crap, and we end up paying anyway.
Dungeon Keeper for the iPad - an example of everything that's wrong with freemium gaming
One solution to the lack of adventure among developers is porting. Take Playdead’s Limbo, for example - an astonishing artful and visually ambitious game that couldn’t be further from the world of Candy Crush Saga. Limbo made its name on the PC, a market where prices are higher and innovation is more likely to be rewarded. Once it succeeded in that environment, Playdead made the transition to iOS at a price of £2.99.
That, coincidentally, is where Curve Digital pitched Stealth Inc, another superb PC game that made its way to the App Store.
Rob Clarke, Curve’s PR and marketing manager, comments: "Stealth Inc started life as a PC game, moved to the PlayStation and came to iOS most recently as a premium game with a single piece of IAP. We’ve always priced the game differently in different markets, but as is ‘expected’, the iOS version works out about half the price of the PC version.
"We’re new to the App Store as a publisher, but I think we got the price right. We stuck with a premium model because we feel that freemium games only really work if that’s your goal from the design stage, and we’re glad to see that there’s a healthy appetite for premium titles that have a fairly ‘hardcore’ appeal on the store.
"We didn’t feel the need to join the sort of ‘race to the bottom’ prices you see on the App Store, but at the same time, we didn’t want to be charging £4.99, and it seems to have worked out for us!"
What a tragedy to hear £2.99 referred to as ‘premium’, by the way.
Stealth Inc for the iPad
The upward curve
What’s the future of app pricing? As Garry Partington puts it, “consumers have now been conditioned to expect the current price point for mobile apps and will, most likely, not be prepared to pay prices more commonly associated with desktop software”. Is this a market that can only go downward? Once the price drops, will anyone pay a ‘fair’ price again?
Well, maybe they will. Anecdotally, we’ve noticed the beginnings of an upward trend on the iOS App Store at least in the past six months to a year, with more and more games willing to stretch to £2.99 or so - Limbo, Stealth Inc, The Room 2 - and a couple of notable examples going all the way up to a tenner: each of the two Baldur’s Gate remakes was £10.49 at launch (although the first has now dropped to £6.99), while the marvellous XCOM: Enemy Unknown is £13.99. Hopefully these games will be successful, although it's noticeable that most of them originated on other platforms.
Trent T. Oster, director of business development at Baldur's Gate publisher Beamdog, believes brand recognition helped his games, but his story makes me feel optimistic.
"We've been lucky," he says. "By bringing such well known games as the Baldur's Gate series to the iPad we managed to get a great deal of attention despite our 'premium' price of $9.99 for the first game and $14.99 for the second [£6.99 and £10.49 in the UK]. We've moved down in the standings since our launches, but the initial attention got us into the top 10 and was very positive for sales.
"Our subsequent sales were strong and now we're settling down. Our daily numbers are wonderfully stable as fans, old and new, continue to discover our work. When you look at it from the big picture, between the two apps, we're offering a massive package of more than 200 awesome hours of RPG entertainment, for less than you pay to go a few movies or a decent dinner out. I feel we represent a great and clear value to game fans."
It baffles me that gamers would rather put up with intrusive adverts or a hobbled user experience rather than cough up a few quid, and it strikes me that it would be win-win if the market could be given a nudge upwards.
And make no mistake: if the nudge is to come from anywhere, it has to come from buyers. As long as we pick the free alternative, even when it's horribly flawed, app designers are going to be motivated to race to the bottom.