Rohit Dadwal
Apr 23, 2012

Paying for “free”: why companies like Facebook and Zynga are willing to buy nothing for a lot of money

The recent high-value acquisitions of DrawSomething’s parent company (OMGPOP) by Zynga, and Instagram’s acquisition by Facebook represent a stunning change in the way that software companies think ...

Paying for “free”: why companies like Facebook and Zynga are willing to buy nothing for a lot of money

The recent high-value acquisitions of DrawSomething’s parent company (OMGPOP) by Zynga, and Instagram’s acquisition by Facebook represent a stunning change in the way that software companies think about their clientele.

Up until the very recent past, software developers and publishers were focused on crafting products intended for the highly-profitable markets of desktop personal computers, and (in the case of games) home consoles, like the Sony Playstation and the Nintendo Wii. Portability was not a major concern, except in the case of gaming, where some of the content for the console might have been translated into content for their smaller handheld console cousins. For example, there are several versions of Grand Theft Auto for the PlayStation Portable, and one of the showpieces for the new Playstation Vita is a scaled-down handheld exclusion Uncharted adventure.

With the advent of the smart phone and the modular application of apps, software producers found themselves in a unique position. They had existing, valuable intellectual properties in the form of their powerful desktop programs, and the public was clamouring for portable versions of those apps. People wanted to be able to do their office work on the go, so scaled-down office suites became available. Other applications soon followed, and once the notion had firmly set in that you could do pretty much anything with a smart phone, provided you had the right app, well, the flood gates were opened. More and more software found its way onto the mobile platform – not only because of improved computing power and amazing portability, but also because today’s mobile devices are connected, making the handling of information, especially the transfer of files to and from the device, much much easier.

None of this is particularly new. Most people who use smart phones are aware of all of this – it’s almost ancient history by now. Some of these developments are the very reason why mobile phones and other mobile devices have become so pervasive, and have been pointed to as the basis for treating mobile as the next great mass media (and rightly so), and in fact one that has communication built into its very fabric.

But the great change represented by DrawSomething and Instagram is something completely different – and something that would have been unthinkable even a few years ago. For the first time, apps have proven to have great value – not a best-selling game cartridge for a home game system, not a must-have word-processing program for a home computer, not even the latest version of an operating system, a must-buy for anyone who wants to keep their PC up to date. No, both these apps were developed for, and sold completely, on mobile platforms. (Both DrawSomething and Instagram are available for iOS and Android.)

And, actually, they weren’t sold on mobile platforms. Both Instagram and DrawSomething are available FOR FREE.

Absolutely free.

Gratis.

No cost at all.

There is a paid version of DrawSomething that disables the in-app advertising, and offers some coins (the game’s in-app currency for purchasing add-ons), but that’s about it.

So, from making high-priced software for desktop machines, the software industry has come to the point where the two biggest newsmakers in recent times are free apps for mobile devices. The implications are many: connectivity/social is a powerful force, mobile is the way forward, free is not bad (because free to the consumer doesn’t mean no money or no profit for the developer). There are bound to be others, which may only make themselves visible in the days to come. For now, one thing is for certain – these are interesting times, and if it’s this exciting today, imagine what it’s going to be like tomorrow?

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