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Please Pay for Lunch!

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20 September 2010

We continue our rotating Startupbootcamp blog series - our ten teams take turns sharing their thoughts and experiences on their Startupbootcamp adventure.

This entry is by Jesper Wendel Thomsen of 3Djam.

 


To Pay or not to Pay?

Earlier this year, I went back to school for a semester. While writing a strategy paper one evening, I needed a snazzy looking business model to illustrate my point.  Google to the rescue: A quick search revealed a ton of free stuff out there and after just a few minutes, I had found a site that exactly suited my purpose. I started working on this model adjusting it to my needs and after a short while, I wanted to save it but easier said than done: A payment window popped up; not part of the plan at all! It was a very nice looking tool and it really did fit my purpose but was it really worth US$ 29.95 to me? After a bit of contemplation and some more Googling, the answer turned out to be no. I found another tool - very similar to the first and almost as good and more importantly, it was FREE.

So how did it get to this? Well, let me make this assumption: The majority of you reading this who are older than 30 remember the old days. And I mean, the really old days when Commodore 64 ruled, we first encountered computer gaming and spend up to 15 minutes loading a game from a tape player. If that wait was not enough, it sometimes also required some "creative adjustments" in order to ensure that the stripes on the screen came out looking just right. Yep, I am sure you remember those good ol' days.

The problem was however that even in those days, the industry struggled with that group of people who believed that software should be free readily available and hence helped to create the perception in users that games and software rightfully should be free and since then, the world has seen an ever increasing influx of free games and software that has changed the user's approach to the whole idea of paying for games and software.  

Commoditization?  

Allright: It probably does not make sense to talk about online freemium as a commoditized market or industry except for one thing: pricing. When it comes to actually having to pay for goods it does share a lot of the traits found in a commoditized industry: Large number of suppliers and products, products that can relatively easily be substituted and a growing unwillingness to pay what may even be a very reasonable price.

Truth be told, none of us truly really likes the thought of whipping out that credit card when it comes to purchasing games and software, however we have no problem using that same card to pay for the restaurant bill, the groceries or whatever other expenditures we encounter in our daily lives. I mean, who walks into their local supermarket, picks up a liter of milk and a loaf of bread and when approaching the check-out counter knowing what is waiting ahead, starts to cringe of the thought of having to pay? I know it's different but at the end of the day, that non-physical piece of software we are enjoying online was not magically created by little elves; it is the result of a lot of hard work from a lot of people.

We TOO like the Free Stuff! 

Yep, free stuff is great. We think so too - at least until we started to commercialize our product and really got a feel for the enormous market for online gaming and apps. Why do we care about that? Well, we are the proud creators of Roozz - a piece of software that can convert existing games and apps to run in any browser - an excellent tool for  hose who spend time online, playing games, using business applications, 3D graphics, word processing etc. We like to believe that we are helping end-users discover more software applications and games, as Roozz can convert them to run online in the browser. This makes us part of the solution - but ironically also part of the problem as we help increasing the supply of games and apps online.

RENT!

What is the solution? Supply is certainly not going to diminish - on the contrary. Through new gaming engines, cloud computing and the increasing size of servers, more and more people are getting access to more and more software and games online and with more and more game and software titles being made available online, users are likely to want to explore more of those and buying a title at up to US$50 may not be the way forward any longer.

We are going to hang our hat on a rental market popping up - an easy and very cost-effective way of trying a larger variety of titles - old as well as new - and only pay for what you use; exactly like when you rent a movie online or through your cable tv box.

A New Beginning

Oh yes, the Commodore 64 era is long gone, however the legacy of that time seems to live on. The clouds may be grey but it is not all gloom and doom. Both software and game developers alike are starting to apply new ways of thinking - forced to do so from massive losses in recent years. Bandwidth is improving hence making way for opportunities to grow brand new markets in otherwise un-accessible geographical locations through browser based gaming and use of applications and possibly an increasingly common way to pay for these : rental fees. 

The sentiment that the lunch really should be free has continued to grow, but it's time to apply a new mentality. After all, who cannot afford to pay 2 bucks to play a game for a day and enjoy that and should you be hooked, you can always buy it.

And as far as I'm concerned, had that business model for my strategy paper been available to use for one day at the cost of US$ 2.99 I would have bought it - but that was just not an option... 

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