Making Money from Free Cellphone games? How?

Here's an interesting article from the Mainichi. I've wondered about this....

How do firms make so much money from free cell phone games?

Despite Japan's continued recession, companies that offer free cell phone game platforms like Mobage and Gree -- are raking in tens of billions of yen annually. If the games can be played for free, where is all the money coming from?

At the Roppongi headquarters of Gree Inc., employees in their 20s and 30s tap away at the several hundred computers lined up in the huge office.

"I'm always thinking about what might make people want to fish," says a 27-year-old male employee on the development team for Gree's leading product, a fishing game called Tsuri Suta. He stares at his computer screen.

Making money from a free online fishing game called "Tsuri"? But how? Aha! Fishing supplies? Really?

With Tsuri, for example, players are free to participate in fishing events with other players, but fishing poles can become so worn out that they break. The user is then given the opportunity to continue using the free pole, or select a more user-friendly pole for 100 yen or more. Among the available tools are 1,000-yen poles with lures that enable players to catch big fish, and the "ultimate" pole at 2,000 yen.

Computer games that charge players for additional tools existed before cell phone games appeared on the scene, however. So what's the difference?

I decided to experiment with cell phone games for about three weeks. At first, I couldn't understand what about them drew people in. But as I made friends and exchanged short letters on the way, I found myself looking into my phone during my commute to work.

"Put simply, it's just a way to pass the time," says a 27-year-old man in Tokyo's Itabashi Ward who began gaming on Mobage Town three years ago and has continued to play during breaks at work. Indeed, the convenience is what DeNA says characterizes their product.

"It's a new form of entertainment that can be used in those 'in-between' times," says a DeNA publicist.

The article goes on to state that 5 ~ 10% of players will pay for extra tools. That's a great conversion rate!

Now you know how they make money with "Free" games!