The average mobile user spends around three hours a day using their gadgets browsing the Internet and playing games. Mobile games, in their turn, account for a stunning 80-90% of revenues generated inside mobile app stores across platforms.
On the App Store, as well as on Google Play, you can find millions of mobile games, but only a small cluster of them is destined to see commercial success without a proper monetization strategy.
Today mobile games can operate on a paid or subscription model and gain profits from in-app purchases or advertising. Before launching the game on the marketplace, it is important to contemplate the limitations and benefits each strategy provides, think over the gameplay, and determine whether you can combine several ones described below.
Is a traditional way to monetize an application. It is very popular among indie game developers and small studios featuring limited budgets. If the game has starred in reputable listings and was recommended by authoritative media resources, a high installation rate is almost guaranteed. Also, the model will be suitable for the games in the non-competitive niche, or when the game doesn’t have any alternatives.
The bonus of such monetization model is that users install the mobile game, receive the complete functionality and access to the future updates once and for all. The obvious advantage for the developer is quick money, which is technically obtained even before the game installation begins.
Like any other model this one has limitations. Taking into account that 70-90% of apps in mobile stores are free, it will be hard to achieve a good installation rate for an unknown paid mobile game. This model can be a mistake for developers who have not gained a greater recognition on the market yet.
For some apps it will be optimal to use a subscription model planning to launch the game on IOS. Established last year, 30% revenue fees were recently reduced by Apple to 15% for developers who will be monetizing apps via subscription.
Subscription monetization model is considered to be one of the most universal and beneficial because it is able to pay off in the long run. For instance, GameMine is going to generate over $20 million revenues by the end of 2018 while offering customers hundreds of mobile games running on a subscription fee basis.
Subscription has several benefits: the user receives access to their favorite game for a specified period and doesn’t have to overpay in the case it is no longer used. The developers, meanwhile, are dealing with constant cash flow which allows them to obtain higher profits and invest those profits in further game development.
The limitations of subscription is that, in general, it will require investing more time and resources in game maintenance and development to ensure high retention rates.
In-game purchases and freemium
IAP monetization method is enormously popular among mobile game developers. The average CPI across genres is generally balanced on the level $3 – $4.
The mobile game users are far more likely to commit IAP purchases if they already belong to the fan base. For instance, the user wants to dress the character in a new gear or buy a new weapon to proceed in the game. For this, they go to the game’s store and obtain virtual goods for real money.
The game monetized via freemium model can be installed for free but the functionality of it will be limited. If the users want to access the full version they buy it in the store. Both IAP and freemium models are exceptionally profitable. Nevertheless, these models will work out only when the user’s involvement is high. If not, it might need more retention efforts.
Advertising is one of the most common ways to monetize applications that can be used for free apps or combined with the above-mentioned methods. The mechanism is simple – the developer integrates SDK into the game through which the ads are delivered. The payment is transferred to the developer, when the users view the ads or click on them.
Online advertising doesn’t have to be limited to boring full-screen banners. In fact, a variety of trending in-game formats today help to gain higher yields and better user retention — rewarded and playable are among them.
Rewarded videos. The concept of rewarded ads is in incentives the gamers receive every time they voluntarily chose to watch the ad. As a rule, such incentives include game bonuses for IAP purchases, in-game currency, hints, etc. Over 52% of developers favored ads in 2018 for the high $30+ eCPM rate, which in no way, is compared to banner $0.15-$2.00 or $2.00-$5.00 of interstitial.
Playable ads. These ads are highly interactive – the videos pop up on the screen at certain game moments and suggest to try the demo version of another mobile game in real-time. Using playable ads, developers typically achieve $15.24 CPM and 40% higher retention rates. When it comes to users — they have a chance to try the gameplay prior to installation.
Rewarded ads and playables are the rising stars of 2018, such interactive formats may also help developers gain insights on customer performance. The creatives enable to track how users interact with creative and investigate potential problematic spots. These two formats can also be applied in turns during the gameplay. Their placement, format and display frequency developer can adjust individually in the supply-side ad platform dashboard.
As a rule, mobile developers combine several monetization strategies in one game that won’t interfere with each other and drive even more yield. The monetization of mobile games should be built on the foundation of progress and complement the user experience. In order to do this, developers don’t have to go the extra mile as interactive creatives already make ads feel like a part of the game.