For gamers of all ages, few properties elicit more excitement than a certain Italian plumber in a red cap and well-worn overalls. Gaming juggernaut Nintendo was banking on this in December when it released Super Mario Run, its second foray into the cutthroat world of mobile gaming.
In many ways, the effort paid off. After all, the mustachioed mascot hit 25 million downloads after only four days in the iOS App Store, according to data from Sensor Tower. Despite this impressive performance, fan backlash was extreme, with widespread complaints that the company’s approach to releasing the game was deceptive to its audience. One simple decision caused the company to take a hit in the stock market and potentially cost millions in potential revenue.
So, what caused a surefire hit like Mario to falter, and what can other entrepreneurs learn from Nintendo’s mistake? It all starts with the question of what classifies a mobile app as “free.”
"Freemium" isn’t free
Super Mario Run is listed as a free app in the App Store, but users who downloaded it were quick to discover that this distinction applies to only the first three levels of the game. Everything else the platform has to offer sits behind a $9.99 paywall -- with extra in-app purchases required along the way. Hence, the cries of deception that rang out.
Sure, the app is free. And yes, you can get some enjoyment out of that trial period, but unlike other “freemium” games, this one offers no path to completion or full experience if the user isn’t willing to pay a price that is high by industry standards.
Nintendo built up the fanfare for Super Mario Run for months, starting in September during Apple’s iPhone 7 launch event. Nintendo could have saved itself from the eventual user blowback by being up-front about what would be available. Secrecy can build anticipation, but it becomes a double-edged sword when expectations don’t line up with reality.
In addition to pricing, one of the most widespread complaints was the game’s odd requirement that users connect to the internet before launching. Nintendo, as a company, has feared piracy since the internet's advent, and that fear has continually led to odd solutions with regard to networking, file transfers, game ownership and other online situations.
Nintendo’s trepidation that Super Mario Run would be pirated was so high that it limited the game's audience by ensuring that the game didn't work in areas with bad internet connections or on devices children might be using that have had their cellular data usage turned off.
Although the initial download numbers were still impressive, these drawbacks hurt Nintendo’s stock and scared investors by creating an atmosphere where the company seemed disconnected from users in our increasingly mobile world. For someone looking to bank on the future of a company, an inability to move wth the ebb and flow of the future could be an arguably valid reason to abandon an investment.
"Run" the other way
Certainly, Nintendo can flourish, even with some negative reviews. However, for indie developers and entrepreneurs, low ratings can be a death sentence. Before you yourself attempt to navigate the pitfalls of the mobile kingdom, make sure these points are addressed:
1. Pull no punches. Be forthright with your customers and users about what they’re getting -- and what they’re not -- with each price point. While this can be a frightening prospect for some, the benefits of this approach are more tangible than you might think.
In a 2014 study, Harvard Business School researchers looked at transparency in the restaurant industry by creating a scenario in which the customers and chefs could see one other throughout the entire dining experience. The study concluded that the visual connection caused a 17 percent rise in satisfied customers and even led the chefs to work 13 percent faster.
2. Show off the goods. If you’re going down the freemium path, make sure users have a satisfying experience. You can leave them wanting more by creating an app that’s exciting, engaging and addictive.
In most freemium apps, the conversion rates aren’t all that impressive -- even the hugely successful Dropbox converts only about 3.5 percent of users. Because of this, any work done on the back end to keep production costs low will make it easier to earn back your investment.
3. Charge for the perks, not the package. Freemium add-ons are better as shortcuts or time-savers. When they become the only real way to experience the breadth of the product, you’re not offering a freemium application -- you’re offering a “limited usage demo.”
Every free user is a potential paying user. Not only that, but even free users who never convert can offer up to 25 percent of the value a paying user does through referrals, according to a 2014 Harvard Business School analysis. By providing an outlet for those who don’t shell out the dough themselves, you keep open a potential brand advocate who will sing your praises and net you more customers.
4. Don’t double down. Paywalls and in-app purchases are completely different revenue models, and they often don’t mesh well. If you’re going to charge a price that’s significantly higher than the market standard, don’t further insult your users by tacking on lots of in-app purchases. That creates a feeling of being “nickel and dimed,” and no one likes that.
No matter what size developer you are, if you’re building a product whose features are severely limited absent payment, don’t broadcast it as a “free” app, and don’t hide the limitations from your users. Let them know what they’re going to get for free and what they’ll get if they do choose to pay.
Sure, this may limit your app's total downloads, but it will also save you from having hundreds of one- or two-star reviews that are hard to overcome.
After all, even Mario needs a power star once in a while.
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This article originally appeared on Entrepreneur.com. Minor edits have been done by the Entrepreneur.com.ph editors.