The developers behind the iOS game Hungry Shark recently released some statistics showing just how powerful the freemium model (in which customers download an app or game for free, and then support it with in-app purchases) can be. While the game floundered as a paid app, it's gotten much more popular after going free, and actually increased its revenue by five times over. Currently, says Future Games, the average in-app purchase is as high as $3.26, and that's in addition to having a daily active user base of 250,000 people. Clearly, the freemium model, when combined with the right game and the right audience, works very well.
But what's the other side of the equation look like? Mobile advertising firm Flurry also released a report recently, and said that almost overwhelmingly, the main items sold in a freemium game are a "consumable" -- a boost or temporary ability that a customer can use up. That's opposed to a "durable" item, like a new weapon that stays around, or a "personalization" item, like a name change. Flurry says that since consumable items can often directly affect the game, consumers are much more interested in spending money on them, sometimes in surprising amounts.
Now, I'd argue that beyond all of this data, it still depends on just what game and which items you're talking about. If a game is terrible, it's far from guaranteed to make any money no matter what model you're using. And I know for a fact that some consumers will backlash against a consumable item that affects gameplay too much, like a double-damage token in a multiplayer game, or anything else that could be seen as cheating.
But for the right games, and for items used and sold in the right way, freemium can support an app and even a whole developer with significant amounts of revenue. Angry Birds has been cited before as a great example of how to implement freemium content, with its Mighty Eagle consumable item. And there are a number of other games out there that have figured all of this out, and have the monetary rewards to prove it.