"Why pay premium in freemium services?" A study on perceived value, continued use and purchase intentions in free-to-play games. (April 2020)

• Record Type: Journal Article
• Authors: Hamari, Juho; Hanner, Nicolai; Koivisto, Jonna
• Is Part Of: International journal of information management. Volume 51(2020)
• Publication Date: 2020-04
• Subjects: Business model -- Freemium -- PERVAL -- Video games -- Virtual goods; Social sciences -- Information services -- Periodicals; Social sciences -- Research -- Periodicals; Information science -- Periodicals; Management information systems -- Periodicals; Knowledge management -- Periodicals; Sciences sociales -- Documentation, Services de -- Périodiques; Sciences sociales -- Recherche -- Périodiques; Sciences de l'information -- Périodiques; Systèmes d'information de gestion -- Périodiques; Information science; Management information systems; Social sciences -- Information services; Social sciences -- Research; Periodicals; Electronic journals; 025.52068
• DOI: 10.1016/j.ijinfomgt.2019.102040
• Languages: English
• ISSNs: 0268-4012

Abstract

Highlights: Perceived value, continued use and purchases are studied in freemium games. Enjoyment has positive effect on continued use but negative effect on purchases. Social value has positive effect on continued use and purchases. Quality value has positive effect on continued use but not on purchases. Economic value has positive effect on continued use and mediated effect on purchases. Abstract: Freemium has become de facto business model for games and many other online services. We investigate how consumers' perceived value is associated with their intention to use freemium services and to purchase premium content. We employ data gathered through an online survey (N=869) among players of freemium/free-to-play games. Firstly, we find support for the "Demand Through Inconvenience" -hypothesis proposed in this study, indicating that the higher the enjoyment of the freemium service, the lower the intentions to purchase premium content but higher intention to use the service overall. Secondly, social value is found to positively affect freemium use and premium purchases. Thirdly, the quality of the freemium service does not seem to be associated with premium purchases although it has a positive association with freemium use. Fourthly, the economic value of freemium services is positively associated with freemium service use and via increased use also has a positive effect on premium purchases. The findings of the present study highlight the peculiarity of the freemium business model: increasing perceived value of the freemium service (i.e. enjoyment) may both add to and retract from future profitability via increased retention on one hand, reduced monetization on the other.