“Tap Tap Revenge 3” launched in October for 99 cents, because at the time, Apple did not allow free apps to include in-app purchasing for virtual goods.
More recently, Apple changed its mind and started allowing free apps to support in-app purchasing, giving app makers a way to generate revenue from free apps. It was only a matter of time before Tapulous made the switch, and now it is.
For the uninitiated, “Tap Tap Revenge” is a music rhythm game similar to “Dance Dance Revolution” or “Guitar Hero,” which lets you buy packs of songs to play along with in the game (and starting soon, more virtual goods like in-game weapons).
Tapulous CEO Bart Decrem tells us today that his company has sold more than 1 million songs so far via in-app purchasing, and that “Tap Tap Revenge” has had 20 million total downloads — across all versions of the game — since launching in 2007. Decrem tells us there are currently about 4 million people playing the game every month, though many are still playing old, free versions of the app.
All of those numbers should shoot up higher as “Tap Tap Revenge 3” becomes a free app, because free apps are several times — maybe around 10 times — more popular than paid apps. Any company trying to make the bulk of their revenue in virtual goods and advertising has gone with free apps, and it makes sense for Tapulous to do the same.
What does the switch mean for Tapulous’ revenue?
In the near-term, it will probably take a revenue hit: Hovering in the top 25 list of paid iPhone apps, Tapulous is probably generating around $5,000 in revenue per day just in app downloads. The disappearing 99-cent purchase price means that revenue stream will vanish.
But if going free means a user base that’s up to 10 times as large — especially with Christmas coming up, and lots of new iPhone and iPod touch users about to visit the App Store for the first time — virtual goods sales could grow significantly over the next several months.
Speaking of Tapulous’ revenue, a Reuters article on the topic made the rounds this week, boasting: “Tapulous says its sales have approached $1 million a month.”
That is probably too high an estimate. (Decrem tells us that Tapulous has never announced its revenues and probably won’t, so we’re not entirely sure where they got the number.)
From our estimates, we think that Tapulous’ actual revenue — which perhaps, indeed, approached $1 million a month or two — is closer to $500,000 per month on average. Not bad, but still a way to go before it’s a $1 million-every-month company, especially as Tapulous dials back on sales today to make its biggest app free.
How does it eventually plan to get there?
Beyond in-app purchasing, Tapulous is also ramping up its advertising push via an exclusive display ad partnership with AdMob, the ad network recently acquired by Google. For the first time, Decrem tells us, “Tap Tap Revenge 3” will start displaying interstitial video ads in the next few days, a 7-second preroll campaign for Microsoft’s Windows 7.
And Decrem tells us that next year, it’s possible his customers — who tend to be younger, and may not have iTunes accounts or credit cards — may be able to earn in-app credits (and generate revenue for Tapulous) using “offers” services similar to those that have made a lot of money for Facebook games makers Zynga, Playfish, etc. this year.
In general, it should be an exciting year for Tapulous and its rivals as the iPhone becomes a more popular, powerful outlet for social gaming and virtual goods commerce.