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

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"Why pay premium in freemium services?" A study on perceived value, continued use and purchase intentions in free-to-play games. / Hamari, Juho; Hanner, Nicolai; Koivisto, Jonna.

In: International Journal of Information Management, 26.11.2019.

Research output: Contribution to journalArticleScientificpeer-review

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Hamari, Juho ; Hanner, Nicolai ; Koivisto, Jonna. / "Why pay premium in freemium services?" A study on perceived value, continued use and purchase intentions in free-to-play games. In: International Journal of Information Management. 2019.

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@article{a445ef4bf83e4e6f9ff99dad8a687065,
title = "{"}Why pay premium in freemium services?{"} A study on perceived value, continued use and purchase intentions in free-to-play games",
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.",
keywords = "Business model, Freemium, PERVAL, Video games, Virtual goods",
author = "Juho Hamari and Nicolai Hanner and Jonna Koivisto",
year = "2019",
month = "11",
day = "26",
doi = "10.1016/j.ijinfomgt.2019.102040",
language = "English",
journal = "International Journal of Information Management",
issn = "0268-4012",
publisher = "Elsevier",

}

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TY - JOUR

T1 - "Why pay premium in freemium services?" A study on perceived value, continued use and purchase intentions in free-to-play games

AU - Hamari, Juho

AU - Hanner, Nicolai

AU - Koivisto, Jonna

PY - 2019/11/26

Y1 - 2019/11/26

N2 - 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.

AB - 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.

KW - Business model

KW - Freemium

KW - PERVAL

KW - Video games

KW - Virtual goods

U2 - 10.1016/j.ijinfomgt.2019.102040

DO - 10.1016/j.ijinfomgt.2019.102040

M3 - Article

JO - International Journal of Information Management

JF - International Journal of Information Management

SN - 0268-4012

ER -