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Advertising standards agency ruling may hit app industry hard

4 July 2014

The ASA has ruled that an email advertising the Electronic Arts Ltd app ‘Dungeon Keeper’ as free was misleading.

Dungeon Keeper is one of many ‘freemium’ apps. The successful freemium business model allows the app to be used, usually in full, for free, but requires the user to pay to remove limitations.

A recent study found that freemium apps made up 98% of revenue on the Google Play store in May 2014.

The ruling found that, on the basis of Electronic Arts’ advertisement, users would expect to play the app for free without limitations that significantly impact on gameplay. An advertisement must make clear the limitations of free gameplay and role of in-app purchasing with regard to speeding up gameplay.

It will be interesting to see how the app industry deals with this development. They will either need to reduce the limitations on freemium apps, or make the role of in-app purchases clear. For a business model built around drawing users in before charging them, both strategies create challenges.

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