This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

"Freemium" apps and their strangely effective business model

By Robbie Citrino for Kapitall.

The mobile gaming market, according to The New York Times, reached $9.5 billion in 2014, with a whopping 95% of revenue coming from purchases made within the app. That’s a lot of extra lives. 

The "freemium" model, where users download the apps for free and pay for things like power-ups in the app, has paid off for companies like King (KING). King, maker of the most downloaded app of 2013, Candy Crush, is up 6.5% since its IPO in March, drawing virtually all of its revenue from in-app purchases. And with $568 million in 2013 profit, it seems to be paying off.

Electronic Arts (EA) operates its mobile gaming under a similar model, allowing free downloads for some games while charging $1 for others, and, in both cases, relying on in-app purchases and advertisements to add to their top line. According to their 10-K, mobile gaming revenue increased 30% in 2013, helping them offset decreasing console sales and sending the stock up over 300% in the past two years.

The "freemium" model’s triumph, however, could link to game developers’ downfall. As more users rely upon mobile devices to fill their time, companies that rely heavily upon console and PC users, like Ubisoft (OTCMKTS:UBSFY), Activision Blizzard (ATVI), and Nintendo (OTCMKTS:NTDOY), could see huge drops in revenue in the coming years.

Can the two models of gaming coexist, or will one crush the other?

Click on the interactive chart to view data over time. 


1. Activision Blizzard, Inc. ( ATVI, Earnings, Analysts, Financials): Publishes online, personal computer (PC), console, handheld, and mobile games of interactive entertainment worldwide. Market cap at $16.23B, most recent closing price at $22.67.

Sales declined by 16.20% quarter-over-quarter.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%
YHOO $36.60 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs