Because of the nature of IAP-based game design, I don't believe this is really about the revealed preferences of gamers. There's widespread hate for IAP among gamers. Zynga or whoever was first discovered a way to exploit players. There's a level of deliberate manipulation in the design of these games that just can't be paralleled with charging up front. Companies even update the game in response to the telemetry they're collecting, trying to find ways get players to spend more. The dynamics can't really be compared to the honest exchange of a product for money. I think that's why it engenders such hate. I realize people weren't too happy with $60 games, but as far as I could see, great games always did very well.
What people hate is paying money. Full stop. Oh sure, there's always the "I'd pay for that if..." or the "I don't mind supporting stuff I like" (as though this were charity), but this is talk and talk - like bullshit - is cheap.
In reality, the vast majority of people won't pay unless they absolutely have to, with "absolutely have to" meaning "you'll go to jail on criminal charges if you don't." So assuming you're in a situation where people really must pay, the question becomes "How seamlessly can you integrate payment extraction into your providence of value?" In the case of airline tickets, groceries, and auto repairs, the answer is "Pretty easily, actually". As a result, payment extraction is a solved problem.
With the non-negotiable inevitability of payment accepted, and the means to pay made as frictionless as possible, people don't think twice about handing over their credit cards the moment a demand is made. When people expect to pay, producers can expect to get paid. It's just that simple. Businesses compete for the custom of those who accept the system and it call the cops on the tiny minority who don't.
The problem with IP is that the legal system that protects every other viable business has imploded. And it's not about "just inventing another business model" since the unsolved problem of human nature means having to produce a new law enforcement structure to back that model up. Devolving to private enforcement (e.g. the Mafia) is an obviously unacceptable outcome, so instead of telling IP producers that it's up to them to "just invent new models" it's really time for people to recognize that law and law enforcement are the responsibility of citizens, not corporations.
If you want a smooth and efficient market then come up with the laws and enforcement mechanisms that (a) this kind of market requires and (b) you can live with as a society. In the meantime, expect suboptimal solutions from producers who have been left to squeeze whatever cash they can from the teeming hordes of assholes who think payment is debatable.
This looks like a bunch of baseless assertions. Good games sell. I'll just pull one example out of the air - Portal 2. Relatively recent. PC version sold over 2 million copies. And iOS games are harder to pirate than that. As far as that goes, mobile Minecraft has sold more than 15 million copies, and it's priced at $7, a price point I bet a lot of people would think is high for a mobile game. I think what a lot of people see as gamers not forking over money is really game developers with delusional expectations of pushing a lot of uninspiring shit games.
Times change. Converting demos into premium purchases used to be a viable business model, but it's not anymore. Selling premium games on the app store used to be viable. It's not anymore. You've got access to balance sheets - would you disagree?
Re: "widespread hate for IAP among gamers", that only applies to gamers, who compose a negligible part of the overall population. Any company that's trying to target the wider market ("people" instead of "gamers") is right to ignore what gamers think, because gamers are not the ones playing Candy Crush, Bejeweled, Farmville, etc.
IAP can be done well, IMO, but it requires game designers to accept and embrace the model. If they view their target market as exploitable simpletons, they'll neither make a good game nor make much money, and this happens too often (as I'm sure you're aware). This doesn't need to be the case, though it does require some care to do it well and make sure that the free experience is valuable to players while still providing compelling opportunities for people willing to pay to do so.
Re: updating games in response to telemetry, why is that any worse than when a website A/B tests different calls to action? Or do you think games should not optimize to be the most profitable businesses that they can be?
I'm almost out of energy for repeating myself on this point. Every good game that I can think of offhand made plenty of money. Right up to the present day. Selling a game for money is still a plenty viable business model. Now, ok, yes these freemium Skinner box things are not games in the same sense I and other gamers are used to. Just like slot machines have nothing to do with Grand Theft Auto, this new breed of F2P 'games' have nothing to do with Portal. What's unfortunate is that companies that used to make good games are selling out, in the very essence of the phrase. In my opinion, it's not because what they were doing before isn't viable, it's because their management is that admirable combination of greedy and risk-averse.
