The Impact of Consumer Payments on Long-Term Sales in Freemium:
An Empirical Analysis in Mobile Game Industries
2016 Volume 34 Issue 3 Pages 69-79
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2016 Volume 34 Issue 3 Pages 69-79
Freemium is a new business model in information and communication industries: a basic service is provided free of charge, but money is charged for virtual goods or other value-added functions. The number of freemium services is increasing rapidly. Particularly, mobile games that do not set a flat-rate charge but which charge for virtual goods have high profitability and a high growth rate. However, we do not deeply understand the freemium business model because there are few empirical studies. In this paper, I discuss the impact of consumer payments on long-term sales in mobile game industries. The results showed that ARPPU (average revenue per paid user) from the previous term (t-1) has a significant non-linear effect on sales for the current term (t). Furthermore, sales(t) became the maximum value when ARPPU(t-1) was about 11,754 yen. Therefore, it is suggested that firms should operate ARPPU at approximately 11,754 yen from the viewpoint of long-term sales maximization. In addition, non-flat-rate charge freemium has received wide attention as a successful technique. The results of this study may be applicable to other industries besides mobile games.
