Free Player Retention Guide Get Now
Free-to-play mobile games can be an enormous source of revenue for game developers. They have a low barrier to entry for new players, and effective monetization strategies can provide a consistent source of revenue from customers across a game's entire life cycle.
The free-to-play mobile games industry is now worth nearly $85 billion as of 2024. However, while the potential for revenue generation is huge, it’s also worth noting that nearly 83% of all free-to-play mobile games fail within three years of launch.
Furthermore, estimates say that only 2.2% of all free-to-play mobile game users engage with monetization options. Consequently, mobile game developers must balance maintaining and increasing their profitability without driving away their key users.
The process of players dropping off or stopping their engagement with monetization options and In-App Purchases is known as churn. While, to an extent, it is a natural process over a mobile game product life cycle, the higher the rate of churn in a free-to-play mobile game experience, the harder it can be for developers to create a consistent source of revenue.
As a result, developers face a problem: balancing monetization options that generate revenue while not making them too invasive to the point that it causes loyal users to stop playing.
Player Churn is a crucial metric that mobile game developers use to assess their games' health and revenue generation potential.
For example, if a mobile game has 100,000 monthly active users (MAUs), While the game is free, only 3% of players make in-app purchases (a common industry benchmark). This means the game has 3,000 paying players.
If the average revenue per paying user (ARPPU) is $20 per month, the game's total monthly revenue would be:
3,000 paying players × $20 ARPPU = $60,000 per month.
However, if the game has a 5% monthly churn rate among paying users, it will lose:
3,000 paying players × 5% churn = 150 paying users lost per month.
This results in a $3,000 monthly revenue loss (150 × $20), reducing the MRR (monthly recurring revenue) from $60,000 to $57,000. Over a year, this would lead to a total revenue loss of $36,000.
If this churn rate were to double, the mobile game would lose $72,000 in revenue annually.
Customer churn on free-to-play mobile games can occur for several different reasons. Some of it is natural, such as players no longer having time to play or shifting priorities. Sometimes, players simply lose interest.
However, some things cause excessive churn and cost mobile game developers crucial revenue sources.
Something as simple as a poor user experience can result in significant churn. For example, if menus are difficult to navigate and confusing, or if the game’s controls are hard to understand, players will grow frustrated and leave the game. This can occur before a player engages with any In-App Purchases, significantly affecting overall revenue.
Players can also abandon free-to-play (F2P) mobile games due to a lack of engaging content. Even if a game initially has a strong player base, engagement levels will decline without regular updates, fresh gameplay experiences, and compelling long-term progression systems. This drop in engagement directly impacts monetization, as disinterested players are less likely to make in-app purchases (IAPs) or watch rewarded ads.
While monetization options are crucial in generating revenue from free-to-play mobile games, if these tactics are too aggressive or create an unbalanced in-game economy, players may become frustrated, feel like they need to “pay to win,” and ultimately leave the game.
For example, if a game requires a certain in-game currency for the player to continue progressing, the player will likely stop playing relatively quickly.
IAPs should feel like an extra that enhances the player experience instead of something the player needs to engage with to succeed.
Ultimately, free-to-play mobile games must balance revenue-generating options and features that enhance player retention. Too much of either can result in a game failing. For example, if players don’t feel the need to engage with IAPS, the game will likely not generate enough revenue to stay afloat.
Conversely, if players experience intrusive ads, constant paywalls, and the feeling that they need to engage with IAPS, the churn rate will likely be too high, and they will ultimately begin to leave the game.
It’s all about providing value with your monetization options without ruining the user experience for free users. If the core gameplay is still accessible to non-paying users, they will continue playing and, therefore, be more likely to engage with IAPS in the future.
To prevent churn, in-app purchases in your mobile game should enhance the player experience, not hinder it. If players feel that the core gameplay simply won’t function without them putting their money down, they will likely stop playing.
Implementing monetization strategies that avoid hard paywalls and high prices for in-game purchases can all help reduce the churn rate.
For example, PUBG Mobile, a popular free-to-play shooter, monetizes its app through optional extras such as weapon skins and battle passes. This helps PUBG generate revenue without increasing its church. In fact, PUBG Mobile has a retention rate of about 23%, which is significantly higher than the industry average.
Ads are common in free-to-play mobile games, and most users expect them. However, how you introduce these ads significantly impacts player retention.
For example, intrusive ads, such as forced pop-ups interrupting gameplay or banner ads, can affect the user experience. Furthermore, if users feel they have to sit through these ads to experience gameplay, it can lead to frustration and, ultimately, churn.
Instead, rewarded ads, where players receive rewards like in-game currency or additional bonuses, can make the player feel there is some value in watching ads. Furthermore, if these are optional extras, where a player can actively choose to watch the ad for a reward, they can enhance player satisfaction.
Moreover, strategically placing these ads to prevent interaction with core gameplay mechanics can also reduce churn. For example, if an ad comes up at the end of a level or game, players will perceive it as less of an interruption.
Subway Surfers, an app with over four billion lifetime downloads, leverages rewarded ads by allowing players to watch an ad to continue a player's run if they fail, making ads feel less intrusive.
Subscription models can enhance retention by incentivizing players to keep playing the game. These models can take many forms, such as battle passes (where players progress over a certain period to unlock rewards) or annual VIP passes, which give players access to exclusive deals and consistent rewards.
Players are incentivized to log in daily to claim rewards, complete battle pass challenges, or maximize their VIP benefits, and often see cheaper long-term subscriptions as a better deal than a large upfront payment.
Furthermore, subscribed players are less likely to abandon a game because they’ve invested money in its progression and rewards.
Free-to-Play shooter Call of Duty Mobile regularly hosts seasonal battle passes available to both free and premium users, allowing players to work through progression levels and unlock exclusive rewards.
Game developers can also reduce churn by analyzing in-game data. If you can see exactly when players drop off, then you can offer personalized rewards or retention options, which may keep players in the app and eventually increase their likelihood of engaging with IAPs.
This can also prevent players from quitting games early and increase their session time, which will help improve retention rates as players begin to feel more invested in the game.
For example, suppose the data indicates a significant player drop-off around a particular level. In that case, it may be worth considering either lowering the difficulty or offering free premium rewards, which can help players.
Angry Birds, one of the world’s most popular free-to-play apps, recently introduced AI that can adjust the difficulty of certain levels in real time if a player is struggling, helping prevent churn.
While focusing on implementing monetization without decreasing retention rates can be tempting, the user experience is still important, especially when onboarding new players.
Free-to-play mobile games experience their highest churn rate from day 1 users. Even a 5% decrease in churn can massively affect revenue, so the way players first experience your game can have a huge effect on its lifetime value.
The onboarding process should demonstrate the key gameplay features and refrain from bombarding first-time users with monetization to incentivize them to keep playing. Players should also get to see the most rewarding mechanics first.
For example, Pokemon GO allows users to experience the feeling and rewards of catching a Pokemon when they first log in.
Providing first-time users with additional rewards and premium features for free will also help demonstrate the value of IAPs and incentivize players to engage with them in the future.
Once a player completes onboarding, the next crucial step is giving them a reason to return beyond the basic gameplay mechanics.
Well-designed engagement loops such as daily rewards, missions, or social features can help keep players returning to games. For example, a simple daily log-in incentive that gives players an in-game currency bonus just for logging in provides an incentive for players to keep on engaging with your game.
The popular soccer game Dream League Soccer provides daily bonuses through in-game currency, which players can use in its virtual transfer market.
If you want to implement a monetization strategy without increasing churn, please contact Sonamine. Don't miss any of our data in games insights, sign up for our monthly newsletter.
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