Gigaom is running a fantastic editorial about how App Store sensation ngmoco changed its business model from conventional to unconventional, how it was forced to transform or die.
As the story goes, the studio was had a traditional game-making approach -- spit out a premium game and move on to another. As time went on, ngmoco discovered that this wasn’t a model that it could use to become a million-dollar developer. The rush to the bottom and the volcanic nature of the App Store’s charts both aren't conducive to this. So, the studio made the hard and reasonable choice: move to ‘freemium.’ The thinking was that, in order to become a multi-million dollar company, ngmoco needed to put several games on the charts for around a year -- and that's in addition to enticing people to keep paying for the same product over and over.
Speaking to Gigaoam: “Games are not built for a fleeting moment in the charts, but are built for an (ongoing) relationship with the customer, “ ngmoco CEO Neal Young said. “The longer you can maintain that relationship, the longer the opportunity.”
Moving to this model wasn’t a hit among the hardcore base -- like our own here -- but it did score ngmoco a sweet buy-out opportunity from DeNA. End of the story is that ngmoco succeeded in its switch and is flourishing as a developer. Not that this is new information or anything -- but it's interesting to see the company reflecting on its own history.
Really, I guess the thing you should take home from this isn’t that ngmoco are sell-outs, conceptually and game-wise. Nah, the thing to take home is that ngmoco wanted to be a company that could support itself and, as a result of the App Store climate, freemium was the only way that it could.
Broken or not, the App Store is evolving at a rapid pace, with freemium now becoming the model most big companies are tackling post-ngmoco success. I wonder if we'll still be nodding our heads in understanding at this piece just a few years from now, or if the App Store will oscillate in the opposite direction and will be driven by premium titles instead. We'll just have to wait and see.