I think they screwed up offering a free game, but not because free with IAP is bad — because free with IAP and no sense of greed is bad. IAP only works if you nag or tell each user about it by locking them out of what they want. Otherwise people will make what they get for free work for them.
This is hard for most developers to understand: you have to create a pain point as costly as the IAP upgrade for the users, or else they won’t upgrade.
The cost of free should be in lack of necessary features, or in annoying notifications. Either way, paid or free, the user should be paying or else you won’t make any money.