DEC. 14, 2010 • Developer Pocket Gems, best known for its Tap Farm iPhone game, secured $5 million in investment led by Sequoia Capital. The Tap series of games is free to play and has generated millions of dollars in micro-transaction revenue. Pocket Gems intends to use the funding to expand its engineering team and to develop additional mobile content.
Impact: It has only been a year since Apple allowed for a free-to-play micro-transaction model. Previously Apple did not allow companies to give away product and then try and upsell the consumer. Obviously it has been proven with PC games that you can give the initial product away for free, or very low cost, and get people to then buy items that expand their experience. Bringing that proven business model to mobile platforms is the obvious next frontier. However, outside observers need to be clear that the scale of success for this type of platform is much different than it would be for a console or PC game.