How Can Developers Utilize Game Monetization Models?

February 26, 2024
February 26, 2024

In the early days of gaming, almost all games made money by charging players an upfront fee for access. Today, free-to-play games dominate the mobile games market, and games on other platforms are increasingly turning to other monetization models as development costs continue to rise and players become more resistant to higher purchase prices. What are these other game monetization models, and how can you utilize them?

Key Takeaways:

  • Game developers are always creating new ways to monetize games, but most rely on one of four game monetization models.
  • Ad-supported models work well for monetizing players who do not want to spend money on games but can increase churn if they become too disruptive.
  • Freemium models rely on in-app purchases. Developers must balance offering items players want to buy with avoiding the perception that players must buy something to enjoy the game.
  • Subscription models work best with highly engaged audiences and can offer a variety of premium perks to appeal to different kinds of players. However, subscriptions are one of the first things players cancel when they need to reduce spending.
  • Blended models utilize elements of the other three monetization models to best match monetization strategies with the game and player types.

Types of Game Monetization Models

Developers are always creating new ways to monetize games. However, most use one of these four monetization models.

Ad-Supported Model

With ad-supported games, players can download the game for free and developers generate revenue by placing paid ads in the games. Industry experts expect ad revenue for games to reach $100 billion in 2025.

Ads can be banner ads that display on the top, bottom, or side of the screen, interstitial ads that appear between game screens, native ads that feature branded content within the game, video ads, or playable ads. Some ads incentivize players to watch, such as a small amount of in-game currency.

Ad buyers find purchasing these ads attractive because they can target their ads to the specific demographics of the players of the game they advertise in. Many in-game ads are ads for other similar games.

Freemium Model

With a freemium game monetization model, players can download and play the game for free, but developers offer them the opportunity to purchase additional content. The content may be gameplay advantages, such as an extra life, hint, or power-up.

Many games sell cosmetic enhancements, such as skins or items that allow players to customize the appearance of their in-game characters. Some games sell resources, such as in-game currency or the ability to complete tasks without waiting for timers, that players can earn for free but may prefer to purchase with real money to save time.

The freemium model has the advantage of flexibility. Developers can sell a variety of different types of items at different price points. The main disadvantage is that some players dislike the idea of microtransactions and accuse developers who use them of implementing pay-to-win mechanics.

Screenshot of microtransactions in "Angry Birds 2"

Subscription Model

With a subscription model, players pay a recurring fee to access a game. This model is common with persistent world games, such as massively multiplayer online games. Some games offer optional subscriptions with perks such as removing ads or providing access to exclusive events, levels, or other content.

Blended Model

Blended game monetization models combine two or more elements of other monetization models. For example, many games have both ads and in-game purchases. Blended models provide developers with multiple revenue streams and the ability to monetize different types of players.

How To Use Different Monetization Models

Whichever monetization models you choose, start incorporating them from the earliest stages of development, but prepare to adjust your strategies based on analysis and feedback. Make your monetization efforts as seamless as possible and avoid disrupting gameplay.

Ad-Supported Model

The key to a successful ad-supported model is to choose ads relevant to your players and make them as unobtrusive as possible. Place ads on loading screens and other areas with a natural pause in gameplay.

Offer rewarded ads that entice players to engage by giving them something they want. Consider including playable ads. These ads have high conversion rates and can increase player engagement rather than taking players out of gameplay mode.

Conduct A/B testing to determine how to best use ads in your game. Solicit player feedback. Disruptive ads can increase player churn. It is important to stay on top of players' issues with your ad strategy so you can make corrections before retention rates drop.

Freemium Model

To succeed with a freemium game monetization model, you must offer items that enhance players' enjoyment of your game without creating the perception that players must buy something to get the full gameplay experience. Communicate the existence of in-app purchases from the start so you don't lose players' trust.

Tailor your offerings to what your players crave the most. For example, if your players crave progress, offer items that help them progress, such as power-ups. If they want to express their creativity, focus on items that help them customize their characters.

Be strategic about pricing. Offer items at various price points to take advantage of players willing to spend more while monetizing players who can't or won't spend much money on your game.

Subscription Model

The subscription game monetization model works best for games with highly engaged player bases. Subscriptions are often the first thing players cancel when money gets tight, so make sure you offer real value.

Consider a variety of subscription types, such as removing ads, providing premium gameplay experiences or VIP access, and battle passes that allow players to earn rewards. Provide clear and transparent cancellation policies and research the optimal price points.

Screenshot from "Fortnite" showing an example of a battle pass subscription

Blended Model

Decide which model will be your primary model and then choose secondary models that complement it. Match models with the type of game and the target market.

For example, hyper-casual games usually rely more on ads because players are not very engaged or motivated to make purchases. Mid-core and hardcore games tend to generate their primary revenue from in-app purchases, with ads secondary, and casual games rely on ads and microtransactions equally.

Where To Get Help With Game Monetization Models

Sonamine's game monetization services can boost your revenue generation, no matter which types of game monetization models you choose. Contact us today to get started.

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