At The Top Of Its Game, And The App Charts, Ngmoco Bets Its Future On In-App Purchases

On Monday, ngmoco released worldwide its latest game for the iPhone and iPod Touch: Eliminate Pro. It’s been downloaded 500,000 times so far at a rate of about 25,000 an hour, currently making it the top free app in iTunes. The top paid app, Skeeball, also happens to be affiliated with ngmoco through its Plus+ social game network. ngmoco has had it’s own top paid apps as well, like Rolando, but CEO Neil Young says that Eliminate Pro is more “representive of where we have been moving our business—free applications, that we monetize with in-app purchases.”

Ever since Apple opened up in-app purchases for free apps two weeks ago, it’s been catching on. In general, free apps are downloaded 10 to 20 times as much as comparable paid apps. Now, says Young, the payments can be “built into the compulsion loop of the game.” In other words, developers will get consumers to try their apps and then ask them to pay only once they are hooked.

This model works particularly well for games. Eliminate Pro easily could have been a paid app for which ngmoco could have charged $7.99 or $9.99. It is the first multiplayer first-person-shooter for the iphone. You play against other people on their iPhones around the world, and can connect to the server-based game via WiFi or the 3G cellular data network.

In order to advance or level up, your battle suit needs to be powered, and you need to buy power cells to charge up your suit. Power cells are the currency of the game. The game comes with 30 free power cells, and then you can buy them in increments going from $0.99 to $39.99. You can still play the game without buying power cells, and your suit gets trickle-charged, but some people are really impatient and they’d rather pay to play.

It only takes a small percentage of hardcore gamers who opt to pay for their power-ups to exceed the revenues ngmoco could have made with an all-paid app being bought by fewer people. Ngmoco has three more games it is planning to release before Christmas, and they will all follow the same freemium model. “We think at the end of the day this is the best way to build a big business on the iPhone,” says Young.

Both Eliminate and Skeeball are also part of ngmoco’s Plus+ social gaming network, which allows players to send out game challenges to their friends via push notifications on the iPhone 9the most effective method), as well as Facebook and Twitter. Add the multiplayer aspect to Eliminate, and what we’ve got here is a realtime game on the iPhone. No wonder it’s so popular.

Ngmoco is part of Kleiner Perkins’ iFund portfolio of iPhone startups. The company also announced today that back in July it acquired another iPhone game developer, Miraphonic, creator of the Epic Pet Wars game.