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Game monetization is one of the most important factors in deciding how much revenue a mobile game can generate. Whether free-to-play or even paid, in-game monetization features have become the bedrock of the mobile gaming revenue generation strategy. In fact, game monetization alone generates $183 billion in revenue yearly.
A well-executed monetization model can provide mobile games with a sustainable business model and enhance player engagement by providing an incentive to return to games. However, a poorly executed monetization model can lead to frustrated players and a high churn rate and ultimately cause people to leave the game.
Ultimately, the most successful mobile games provide players with a balanced experience between monetization options and player enjoyment. If monetization tactics are too aggressive, players will feel pressured to spend money and likely become frustrated and ultimately quit the game. However, if mobile games are too generous, players will not feel any incentive to engage with monetization options and will likely not generate any revenue.
Things like overly aggressive ads and the feeling of pay-to-win can all lead to player frustration and, ultimately, them quitting the game. Similarly, if In-App-Purchase (IAP) options don’t provide enough value, then it’s likely that players will simply not engage with them, harming the potential for the game to generate any revenue.
Monetization isn’t easy to get right, as successful strategies rely heavily on context. Strategies that work for one game may not work for another. For example, customizable skins could work for multi-player games. However, they would provide little value in a puzzle game.
But, there are a few common challenges that most mobile games will face when implementing a successful monetization strategy.
The first major challenge many mobile games face is a low conversion rate on their In-App-Purchase options. In fact, on average, only 5% of a game's user base will engage with IAPs. Games heavily rely on a small user base to generate revenue.
As a result, it’s common for mobile game revenue sources to fluctuate wildly as this 5% of players’s spending will often change from month to month. Furthermore, if IAP conversion rates are low, overall revenue will be lower, posing significant issues if mobile game development and marketing costs are high.
For free-to-play mobile games, developers commonly rely on ads to generate revenue. It makes sense; they provide a monetization option that doesn’t require players to make payments.
However, if these ads are too frequent, unskippable, or intrude on players while engaging with core gameplay, it’s common for players to feel frustrated. This can reduce engagement and session time and ultimately lead to players uninstalling the game.
Consequently, the number of players using the game will decrease, and the actual revenue potential from these ads will decrease. However, these ads still need to be seen to generate in-game revenue, making it difficult for developers to find a balance.
Another common challenge that many mobile games face is balancing the fairness of their in-game economy. For example, suppose players who do engage with IAPS have an unfair advantage over those who don’t in a multiplayer setting or even on a social leaderboard. In that case, non-paid players will feel it isn’t worth continuing to play.
Given that players will often only engage with monetization options after a significant amount of engagement with a game over some time. Developers must find the sweet spot between the value paid players receive and making the game fun for non-paid users.
While the cause of these monetization challenges can be difficult to identify, there are a few common mistakes that game developers make that could be causing issues.
Depending on a singular revenue stream can harm the revenue potential of mobile games. It may seem obvious, but one source of revenue has a much lower potential for generating income than multiple.
Overreliance on a single model can also greatly affect monetization options' success. For example, if a mobile game solely relies on ads, then to generate enough revenue, ads will have to be more frequent and, therefore, more intrusive. Ultimately leading to more player churn.
Poorly optimized In-App Purchases can also affect the success of a game's monetization strategy. If prices are too high, for example, then most players will likely not want to engage with IAPS, significantly affecting the amount of revenue they can generate.
Similarly, if IAPS doesn’t offer enough value to the player, where they can’t see it enhancing their in-game experience, it’s also likely that they won’t engage with potential purchase options.
Another common error many mobile games face is failing to offer subscription-based monetization options. Subscription offers provide the potential for consistent, long-term revenue for loyal players through things like battle passes or premium memberships.
Without these options, mobile games rely on their players engaging purchases and ads, which fluctuate depending on their engagement. This can make it difficult to have a reliable and predictable source of revenue, which means they have to rely on more intrusive options to generate revenue.
A blanket approach to monetization options can generate less revenue for mobile games. Monetization should be unique to each player. For example, compare a player who has been playing for 30 days versus a day 1 player. They will likely respond to different monetization options.
A day 1 player will be more likely to engage with an IAP that offers a discounted starter package, which helps them progress quickly and get up to speed. A day 30 player is likely to care more about cosmetic options such as new skins or new content that helps keep them engaged with the game.
The challenges of implementing a monetization strategy can be difficult to overcome, and it goes without saying, but having 100% of your users engage with monetization options is almost impossible. However, developers can implement a few strategies that help convert non-paid players and retain paid players as a revenue source.
Limited-time offers can help to create a sense of urgency for players. Things like seasonal sales or even daily discounts will trigger impulse purchases as players want to take advantage of an offer before it disappears.
The free-to-play puzzle game Royal Match offers holiday-themed purchase options, such as Christmas-themed offers that expire after the holidays.
By customizing the monetization options available to each player, mobile game developers can increase the likelihood of players engaging with them. As previously mentioned, a day 1 player will be looking for different things than a player who has been on the game for 30 days plus.
Similarly, purchase options should be customized to player behavior. If a player is struggling with a specific level, for example, a customized limited offer to bypass the level or receive premium items will be more enticing.
Coin Master developed an algorithm that sorts high-engagement players into VIP statuses. These VIPS will receive customized offers that appeal to them, specifically increasing the relevance of IAPS.
A critical part of boosting a game's revenue from monetization options is ensuring they don’t interrupt core gameplay. While it may be tempting to lock everything behind a paywall, providing non-paying users with a satisfying and engaging experience is important. As these users become more familiar with the game, they will likely engage with IAPS because they feel it will enhance their experience.
Apex Legends Mobile notably ensures that players don’t feel games are pay-to-win by only monetizing cosmetic options such as player skins, which don’t give an unfair advantage during gameplay.
Ads can easily become intrusive for players, as they are usually unwanted. This can lead to players skipping them or stopping their play sessions entirely, ultimately harming their revenue potential.
One method is to implement rewarded ads. In this method, a player receives a reward for watching an ad, such as in-game currency or the option to continue an in-game run or match.
Monetization options' success and revenue potential are often directly correlated with a mobile game's number of engaged users each month. As a result, having advanced engagement options such as a subscription model or an overall game leaderboard that offers progression keeps players engaged beyond the initial core gameplay experience. This can increase the revenue monetization options generated by retaining more users.
In fact, according to one survey, 67.1% of respondents said that progression options would be the number one reason they kept playing a mobile game. Given that the engagement rate directly correlates with IAP engagement, this can hugely increase the revenue that monetization options can generate.
Monetization options aren’t easy to master. However, when optimized properly, they have a huge potential to generate revenue. If you’re interested in implementing a monetization strategy for your mobile game, please contact us.
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