"The Riff" with Byrne Hobart and Erik Torenberg E50: Freemium Apps, Restaurants, and Search with Patrick McKenzie
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Oct 17, 2024 
Explore the intriguing world of freemium apps and their monetization strategies, using gaming as a prime example. Delve into the evolving landscape of restaurant websites and how software accessibility has transformed the industry. Discover AI's role in gathering restaurant data and enhancing customer insights. Engage with the concept of humanized chatbots, pondering cognitive parallels with children. Finally, examine the waning quality of search engines like Google and how AI might reshape the future of information retrieval.
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Freemium Game Economics
- Freemium games use in-game currency exchange rates to encourage spending.
- The pricing grids offer bulk discounts, but these are not linear and often discourage large single purchases.
Freemium Game Spending Patterns
- Most freemium game players spend little or no money; a small percentage spends large amounts, sometimes thousands per month.
- The initial transaction is often small (e.g., 99 cents) to encourage first-time spending.
Whales and VIP Systems
- High-spending "whales" in mobile games receive personalized attention similar to casino hosts.
- This VIP treatment encourages repeat spending and higher transaction values.