Freemium - and a £1,700 iTunes bill

Zombies vs Ninja

How much can it cost to play a free game for a few hours? As one family in Bristol found, the price can be more than £1,700.

The Kitchen family are getting their money refunded after five-year-old Danny somehow managed to buy a huge haul of virtual goods in a game called Zombies vs Ninja. But the story highlights a change in the games industry's business model that some find disturbing.

The case is obviously a wake-up call for parents - you should treat your iTunes password or any others that unlock payments online as securely as you would the PIN on your debit card.

Would you hand that to your five-year-old and let him pop out with it?

Then again, I was taken aback when I took a look at the Zombies vs Ninja game by the huge amount that you can pay with a click. The in-app purchases menu offers some 69p options - but you can spend as much as £69.99 on 333 keys or "ecstasy bombs".

But when you first find the game on Apple's App Store, you have to look quite closely to understand that danger, and Apple may come under pressure to force developers to display a health warning.

Some do this already - the makers of Dragonvale warn you about in-app purchases and explain how you can switch them off (see below).

Dragonvale consumer warning

But this issue is only going to get bigger because the "freemium"model - where you get the original product for free and then pay for extra content - is sweeping through the games business and online media industries.

The idea has spread from China and South Korea, where it has been the standard way for publishers to make money from games. In a world where piracy is a big threat and consumers are reluctant to pay for anything, this business model seems to work.

Even a couple of years ago, the Chinese were spending $5bn (£3.3bn) on in-app purchases - in a country which has been seen as an impossible place to make money because of copyright theft.

And the model is also generating serious cash in the US, where the average in-app purchase is $14 (£9.30) and developers are finding significant numbers of people willing to spend $50 or more.

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The "freemium" model - where you get the original product for free and then pay for extra content - is sweeping through the games business”

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Those figures were given to me by the games industry consultant Nicholas Lovell who is writing a book about the freemium model and its impact on various media industries.

He says there are two views about freemium:

"One camp says we are providing a brilliant entertainment experience and if adults want to spend $80 a month on it, they should be allowed to do that. The other view is that you are taking psychological manipulative tricks that have been proven to work in the gambling industry and using them on poor unsuspecting victims."

Mr Lovell believes that although we're in something of a "wild west" period right now when anything goes, this way of selling games will prove its worth for both the industry and its consumers. He says the days when you could charge £40 for a packaged game are numbered.

"In a world where there is an enormous amount of content it is really hard to find a customer. Once you've found a customer you don't want them to give you one amount of money and never pay again. "

Some companies are trying to have it both ways, expecting customers to pay for the original product and then also make in-app purchases:

"I don't think that's morally wrong but I do think you then have a different emotional relationship with fans - they can think they're being price gouged."

Mobile gamers The "freemium" model - gamer beware?

This change in the way the industry is funded is already proving controversial.

Real Racing, a popular game that used to cost somewhere around £4.99 is now going to be free - but you will have to pay quite substantial costs to keep your car on the road, with some in app purchases costing as much as £69.99.

Some fans have reacted angrily. "I'd pay for a full featured game rather than having my money squeezed this way," says one reviewer on the App Store.

And this phenomenon is not restricted to Apple's platform.

One of the most popular games on the Google Play store for Android devices is The Simpsons Tapped Out. You can play it for free, but are encouraged to make in-app purchases to make the experience better.

But when you first launch the game you find Homer playing a game on a tablet, and quickly racking up a $1,000 bill.

It is all played with typical Simpsons humour - but for parents and for some adult gamers, freemium is a joke that is already wearing thin.

Rory Cellan-Jones Article written by Rory Cellan-Jones Rory Cellan-Jones Technology correspondent

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  • rate this

    Comment number 134.

    I'm not sure who coined the phrase" No free lunch". But, very few things in life are truly free. Free online games, free e-mails and many of things often touted as free, come at a price. Anyone that take these offers, are either paying in real money or knowingly and unknowingly giving these companies treasure trove of their personal information which in turn, are sold to telemarketers for cash.

  • rate this

    Comment number 133.

    @131 - I don't think that @130 CAOxonian was referring to all of the internet or every computer. The debate is clearly around games for reward (with pay per use options as a bolt on, as you go) , aimed mostly at kids, but also at gamers of all shapes & sizes.

  • rate this

    Comment number 132.

    This online gaming is the same as oldtime carnival games.They let you play for free til you are hooked,then when you need a new gadget to keep playing you pay a small amount.The next thing you know you are spending your food or rent money to "play'. Best to stay away from this stuff.

  • rate this

    Comment number 131.

    @130 CAOxonian: " about we all put down those 'silly electronic fetish-items' ... and go out and live real lives?"
    You've just posted that reply in the comments on an online news story... using one of those 'silly electronic fetish-items'. Seriously? I give up...

  • rate this

    Comment number 130.

    I know this comment will be received by many as hopelessly old-fashioned but... how about we all put down those silly electronic fetish-items with their addictive Poisson distribution rewards and go out and live real lives? The world is amazing - get out there and enjoy it. All you need is a pair of walking shoes. Why waste your life playing someone else's silly game?

  • rate this

    Comment number 129.

    @126 my opinion it's a bit sad for an adult to live in a virtual world as a "serious gamer"; that any parent who isn't is irresponsible or lazy. I check everything my kids do online, don't allow them games that aren't suitable. As @127 points out, probably better than I did - the largest co. in the world making shed loads of $$ marketing games like this to small children is morally indefensible.

  • rate this

    Comment number 128.

    @127: Dourscot. The father entered his iTunes Store username & password, left his 5 year old son un-monitored with the device and the account still logged in for 15 minutes (+). The parents 'dismissed' the receipt emails. Apple promptly refunded them after they were notified by their credit card company...
    Would you leave a 5 year old alone and logged into your digital banking account?

  • rate this

    Comment number 127.

    A business model that allows children to spend extraordinary sums of money inside the application is fundamentally dishonest.

    Apple should never allow such bogus applications inside their app stores, end of story.

  • rate this

    Comment number 126.

    @124.David - And in case you hadn't noticed "serious gamers" come from all walks of life and professions. So quit with the insults regarding gaming - go and do some research about your kids devices so you know as much, if not more, about them as they do, lest you fall foul of things like the family in this case did.

    Don't rely on the BBC/RCJ to shut the stable door for you.

  • rate this

    Comment number 125.

    @124.David - your attitude towards gamers does nothing to help you make your point (which I assume is this family are victims?). You have no right to denigrate one for enjoying a hobby you know nothing of.

    As for your parenting - I know only what you've written here. Which comes across as the typical lazy parent who give devices to kids with minimal knowledge and cry foul when it goes wrong.

  • rate this

    Comment number 124.

    @123 - I'm well aware of the pay-for extras games online - was not that these were on App store games no.

    And as for the insult - you know nothing about my parentut g, b. One thing I agree with you about - God help any adult who becomes ia "serious gamer". For an adult "serious gamer" is an oxymoron

  • rate this

    Comment number 123.

    @122. David - You're happy to know this now? Do you really need RCJ (virtually a luddite) to tell you this?

    Again, lazy parenting - 5 minutes on Google could yield far more info than RCJ has given in the article above.

    Oh and nice try with the insult, the old well worn "gamers don't have a life" attitude is it? God help your kid if he becomes a more serious gamer and has a hobby he enjoys.

  • rate this

    Comment number 122.

    @121 - I'm happy to know about this because I can pre-warn my son, I'll buy you this for the game but no more.

    And it sounds to me from both your moniker and your postings that you're one of these people who spend their entire life online playing games - 30 steam games - have a look at yourself and get a life in the real world.

  • rate this

    Comment number 121.

    @119.David - Sounds to me like you're another one of these lazy parents who can't be bothered doing the slightest bit of research so you don't end up like the family in this case - take some responsibility instead of bleating "I don't know".

    And RCJ may be doing his job, but he's just capitalising on this families error to justify an article that has nothing new in it.

  • rate this

    Comment number 120.

    For those advocating software piracy:
    If you jailbreak your iOS device, pirate games or other software then connect to any online apple accounts (GameCentre, iTunes Store or iCloud) then Apple knows what you've done and has stats available to devs about what you've done.
    Apple has not taken legal action against any such users. YET.
    But your actions are being recorded. :)

  • rate this

    Comment number 119.

    @116 - you, as before, didn't read what I wrote. I didn't say RCJ was doing anyone a favour, I said he was doing his job. It's self evident that everyone is not aware of this, and I for one don't have time to check every aspect of an iPod game my son wants me to sign him up for. And as I do other things in my life rather than talk to gamers and play games, then yes I think that's useful.

  • rate this

    Comment number 118.

    @112: Look again at #111 mate, the hard proof is right there in front of your eyes. They all went out of business because already tight margins got cut by rampant piracy. Through analytics software, devs can get reliable stats on the level of piracy in online connected games. That data is private.
    Encourage or admit to piracy and you get reported. Piracy is theft.

  • rate this

    Comment number 117.

    @115.David - oh and another thing, these people are not defenceless as you put it.

    One would assume they have some intelligence, and they can simply not give their kid an iPad which has their payment info on it and then give out the password.

    If "exploitation" exists in such cases it does so because parents/individuals are too lazy/stupid/careless to learn and police what their kids do online.

  • rate this

    Comment number 116.

    @115.David - No, what is hilarious is that you think RCJ is doing us all a favour.

    He's rehashing info that has been known for at least a decade, since the micro payment business model first started, using this family's error as justification for it.

    You don't need RCJ to tell you the little he knows about gamers getting ripped off - go ask a gamer, there's plenty, and they know more about it!!

  • rate this

    Comment number 115.

    @103. of course I don't give out passwords, and R C-J is only doing his job - broadcasting to average people with kids with iPods who sign up for apparently cheap games that are actually very costly. By your perverse logic, defenceless people should be fair game for exploitation by big companies, and presumably criminals alike, and that only hard core gamers should be using games. Hilarious!


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