Mobile games are becoming more sophisticated as the hardware they run on improves. The scope and cost of producing these games still lag behind the PC and console gaming markets. All the same, mobile games generated 50% of the revenue in the global gaming market in 2022.
Most mobile games are free to play or cost just a few dollars to download, so how do they make so much money? The answer is an effective monetization strategy.
Monetization is the process of generating revenue from games. The monetization process involves nine key elements.
Player engagement is a measure of how much immersion and enjoyment players experience while playing your game. It also measures how invested players are in your product. Engaged players tend to play longer sessions and spend more total hours in game than other players, which leads to better retention, increased lifetime value, and more revenue.
Player engagement is the foundation of effective monetization. However, a poor monetization strategy can harm engagement, creating a vicious cycle where developers’ efforts to boost revenue actually hurt their profit margins. For this reason, developers must balance monetization efforts to ensure they capitalize on an engaged player base without hurting engagement.
Player retention goes hand in hand with engagement. Retention measures how long players continue to play a game after their initial login. Retention is vitally important for monetization in free-to-play games because the majority of revenue comes from frequent small purchases and ad revenue, rather than one big purchase.
Traditionally, video game producers charged players an upfront fee similar to buying a DVD or a board game. However, the digitization of video games and the ability to update games with new content on the fly has led to free-to-play models largely replacing the traditional pay-to-play model, particularly in the mobile games market.
Free-to-play games generate revenue through microtransactions and ad revenue.
Pay-to-play games mostly exist in the AAA market where games have high production values and accompanying high production costs.
However, even in the AAA market, a monetization strategy that includes microtransactions can be beneficial due to player resistance to paying higher prices for games as development costs increase. Freemium games blend the models by offering free or low-cost games with basic features and the opportunity to purchase a full version at a higher cost.
Subscription-based games charge players a monthly fee for access to the game. This model is most often used in massively multiplayer online games. The subscription model provides developers with a steady stream of income. However, developers must continuously update the game to keep players interested, and subscriptions are one of the first things players cancel during rough economic times.
Microtransactions are a monetization strategy that involves selling in-game currency, items, powerups, cosmetic items, and access to new features, characters, or levels for real-world money. Microtransactions are one of the primary sources of revenue for free-to-play games. However, overusing them can create player resentment, particularly if players believe the items give a competitive advantage in the game.
To be effective, developers must design items that add value to the game for players to purchase and balance resources and sinks to motivate players to make purchases. Additionally, developers can drive demand by creating limited-time offers and exclusive deals to create a sense of urgency.
Most players don’t buy anything in free-to-play games. Ads and sponsored content are a way to include these players in your monetization strategy. However, disruptive ads can backfire and lead to player churn.
Ad types include interstitials, banner ads, and rewarded video ads. Players tend to prefer rewarded video ads because they are more engaging and players receive something for the time they spend watching the ads.
Some games also contain sponsored content, such as billboards or branded products. Whichever types of ads developers use, they must choose ads that are relevant to players’ interests and place and time them in ways that do not disrupt gameplay.
Time-limited events create a sense of urgency and excitement that motivates inactive players to return to the game and increases engagement for all players. Boosting engagement helps drive purchases and getting more players to log in improves both ad and microtransaction revenue.
Events are also an ideal time to introduce limited-time offers, such as event-themed items or access to new areas. However, developers must avoid overusing events because players can become fatigued and events may no longer seem special if they happen too often.
As player attitudes and interests change, your monetization strategy must also change. Solicit feedback from players and use the insights you gain from data analysis to tweak your monetization campaigns.
Players expect to encounter monetization in games. However, it is important to:
Additionally, you must ensure your monetization efforts comply with all applicable privacy, data protection, and other laws.
Monetizing your game is a big job that can consume a lot of internal resources. Sonamine provides engagement, retention, and monetization strategies that boost revenues without overwhelming your internal team. Contact us today to learn more about how we can help you improve your monetization strategy.
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