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New Mobile Games Perfecting the Freemium Business Model (OTCMKTS:NTDOY)

The freemium business model is the most common business model for startup companies, but it is also continuing to ramp up in the mobile gaming industry. In case you are unaware, the freemium business model allows a user to start the service or application for free and charges a fee or a subscription for increased functionality or advanced features. That said, the advertising on the site is the main source of revenue and users that are converted is extra. For example, in streaming video, Hulu employs the freemium model successfully by allowing free user certain content that includes advertisements and commercials, but provides additional and more premium content to paying subscribers with little to no advertising. “Candy Crush”, created by King, owned by Activision Blizzard, Inc. (NASDAQ:ATVI) is a model of this business model in the mobile gaming industry. The user gets a certain amount of attempts or lives, but can pay for another play rather than wait thirty minutes for another attempt.

Besides King, there are numerous companies that are rising in mobile gaming using the freemium model. Glu Mobile Inc. (NASDAQ:GLUU) is a company with huge potential in the industry. GLUU has popular games like “Gordon Ramsay Dash”, “Kendall and Kylie”, “Britney Spears: American Dream”, “Rival Fire” and “Kim Kardashian Hollywood”. The company just rolled out their Gordon Ramsay game as they smartly attempt to capture the food-as-sport audience. Glu Mobile’s stock is on the rise as they create games that are geared toward younger demographics and they are especially strong at creating mobile games for young girls.

“Pocket Starships,” currently published by SPYR APPS, LLC, a wholly owned subsidiary of SPYR, Inc. (OTCQB:SPYR), is a game currently performing well above the average revenue in the freemium market. “Pocket Starships” is a very rich game (it has its own Wiki) that is a game that allows you to explore and build characters, but also provides action and fun. The game is one of the highest grossing in the Massively Multiplayer Online (MMO) game set allowing gamers from all over the world to play at the same time. The game is one of few that works across platforms and is destined to star in the billion-dollar eSports arena, where gamers battle in a tournament style in front of a live audience.

Another model in this genre is by the now famous Pokemon Go, which is owned by Nintendo Co. Ltd (OTCMKTS:NTDOY). The game has been in the news since its release and has spurred stampedes in Central Park and smaller disruptions as people wander around looking for Pokemon characters. The mobile game has even prodded business owners advertising their place of business as Pokéstops screenshotting pictures of creatures on restaurant tables and the like. The game also has a freemium model to it as well that allows players to buy eggs and bypass taking long walks by using their credit card.

The freemium model in the mobile gaming community is now the standard and allows many companies a real chance to rake in revenues with very little overhead. Not to mention, as eSports grows in popularity and moves more and more into the mainstream through live tournaments on television and Youtube, the freemium model could lead to billion dollar companies.

Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.

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