Decoding game monetization: finding your perfect model

In the ever-evolving mobile gaming market, monetization strategies have become more than just a way to make money; they are a critical factor in a game's success. To maximize user engagement and ensure sustainable profitability, the gaming industry is exploring various monetization approaches.

In this blog post, we'll take a look at the game monetization model trends in this rapidly changing industry, and how you can create a strategy that maximizes the value of your game.

What is mobile game monetization?

Game monetization is the process by which game developers generate revenue from the games they create. This process allows developers to fund ongoing game updates and support, which is essential for maintaining and developing their games' sustainability, quality, and competitiveness. Understanding your game's nature, target audience, and market trends is crucial to finding the most suitable monetization model.

The types of game monetization models

1. In-App Purchases (IAP)

This is exactly what it sounds like: a model that monetizes purchases made within the game. Typically, you distribute your app as a free-to-play game and drive additional in-game purchases. It's a way to generate ongoing revenue as users pay for specific items, events, or content, such as extra lives, coins, weapons, moves, or boosters, as they progress through the game.

2. In-App Advertising (IAA)

A revenue strategy that monetizes the sale of in-game advertising space. Ads can be displayed as interstitials or banner ads, provided they do not interrupt the user's gaming experience. The most common ad formats used in mobile games include:

• Interstitial ads: An ad that suddenly appears across the screen during the game. After viewing the ad (e.g., 10 seconds), the user can exit the ad and return to the game, but it can have a negative impact on the game experience.
• Rewarded ads: Unlike interstitial ads, users can choose whether or not to view an ad. Users will receive a reward for viewing the ad.
• Playable ads: This ad format allows users to experience your game through a one-minute video before installing it. They are effective for retention and keeping users engaged.
• Banner ads: An ad format that appears at the top or bottom of the screen during gameplay.
• Offerwalls: An in-app ad format that acts like a mini-store in your game and allows you to reward users for engaging with your ads.

3. Subscription

A type of in-app purchase that gives users access to additional content. They come in a variety of formats, including "Pass" subscriptions that provide access to a desired product or additional service for a set period of time, "Remove Ads" subscriptions that remove in-app ads from your game for a fee, and "VIP" subscriptions that provide a series of exclusive benefits over a set period of time. They foster long-term user engagement.

4. Paid games 

This model charges users at the time of download, allowing access exclusively to those who purchase it. It's effective for generating initial revenue. However, it's crucial to demonstrate the game's value upfront to ensure buyer satisfaction.

Creating an effective game monetization strategy

Hybrid monetization model strategy

You don't have to rely on one monetization model to monetize your game. Considering a hybrid monetization model allows for the combination of various strategies described previously. Common combinations include in-app ads + in-app purchases, in-app purchases + subscriptions, in-app purchases + in-app ads + subscriptions, and more. Adopting a hybrid approach lets you simultaneously target both paid and free-to-play users, opening up multiple revenue streams.

Implementing a game monetization model doesn't happen overnight. It's common for developers and publishers to delay forming a monetization strategy until after game development is complete. This can lead to a lack of integration between the monetization model and the game itself, which can be jarring for users. To avoid this, having a detailed strategy for your monetization model before or concurrently with the start of game development is crucial. This approach ensures the monetization is implemented as naturally as possible, enhancing rather than disrupting the player's experience.

Finding the right monetization model mix for your game

Depending on the genre of your game, the monetization model that works best for your game can vary. Games in the RPG or simulation genre are designed to keep users playing through various stages, so in-app purchases to keep them playing are a popular way to keep them engaged. On the other hand, games that are casual and free to play, such as hyper-casual games, are more likely to be monetized with in-app ads, especially rewarded video ads. 

Yet, there's no one-size-fits-all solution; the optimal strategy requires a thoughtful analysis of your game's genre, narrative, and the preferred playstyles of your target audience to balance the mix of ads and in-app purchases effectively.

Data-driven testing is essential 

Once you've chosen the right ratio and strategy, you need to make sure that the model is generating the revenue you expect. Particularly if you decide to use in-app advertising as your monetization model, setting key performance indicators (KPIs) for ad performance and accurately measuring them is essential. It's important to run A/B tests with different scenarios to ensure that you're placing ads effectively and making quick decisions based on the data you derive. 

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Airbridge provides the Retention Report, a statistical report that measures how often users return to your service, and Predictive Lifetime, which allows you to predict when users will return to your service. We also offer the  Revenue Report that allows you to view various metrics about the revenue generated by users in your game, including revenue, ROAS (Return on Ad Spend), ARPU (Average Revenue Per User), ARPDAU (Average Revenue Per Daily Active User), and more. 

The Revenue Report also provides a Predictive LTV (pLTV) metric that predicts the lifetime value of a user based on historical data, giving you an estimate of how much revenue a user will generate in your game over their predicted lifetime. Being able to predict the future value of a user, rather than simply measuring performance based on the new users you acquire through advertising and their spending within a specific period, represents a critical strategy for cost-effective marketing.

Due to the rapidly evolving nature of the gaming industry, monetization strategies are becoming increasingly diverse. If you're looking for more creative and effective monetization strategies to capture the attention of the gaming market and its users, consider consulting our marketing experts!