How Do Mobile Games Make Money?

June 23, 2023
June 23, 2023

Mobile games generated more than half of all gaming revenue in 2021. However, with about 85% of gaming revenue coming from free-to-play games, you may be wondering, “How do mobile games make money?” Mobile game developers utilize a variety of monetization strategies.

Key Takeaways:

  • Making games is a resource-intensive process, so mobile games need to generate enough revenue to cover development costs and produce a profit.
  • Because players prefer free-to-play games, developers must incorporate a variety of monetization strategies to generate revenue from mobile games.
  • Whichever monetization strategies you choose, you must constantly analyze how well they are working and tweak them to continue maximizing profits.
  • Sonamine can help you maximize revenue by incorporating strategies to build an engaged player base and incentivize players to spend money.

How Do Mobile Games Make Money?

Video games are about entertainment, and most developers place their focus on making games fun for players. However, the game development process requires a substantial investment in time, effort, and resources.

Games must generate revenue to cover the costs of development and generate profits. Your monetization strategy impacts how profitable your game will become and how long it will take to achieve profitability. Most games generate revenue by using multiple types of monetization strategies.

Bar graph showing how much revenue mobile games make by year
https://www.bankmycell.com/blog/mobile-gaming-industry-revenue-statistics/

Microtransactions

Microtransactions involve players exchanging real-world money for in-game items. Microtransactions are the most popular way mobile games make money, with 79% of mobile games incorporating this strategy.

Items sold through microtransactions usually offer players some type of gameplay enhancement. Common examples include extra lives, in-game currency, weapons, and boosters. Microtransactions can also be cosmetic items, special privileges, or access to new levels, characters, or skills.

Incorporate microtransactions into your games thoughtfully. Avoid creating a pay-to-win scenario where players must buy something to complete your game. Create safeguards to prevent accidental purchases or purchases from minors who do not have their parents’ permission.

Avoid overusing microtransactions. Players who feel you are pushing them too hard to buy things may quit. Focus on selling the items your players most want to buy and time your offers to coincide with the times when players are most likely to want to make a purchase.

In-Game Ads

In-game ads are the second most popular way mobile games make money, and 71% of players say ads are their preferred way to “pay for” free-to-play games. Ads come in various types, including rewarded videos, offerwall ads, banner ads, and interstitials. Most ads feature other games or mobile apps.

Advertisers pay developers when players engage with ads by viewing or interacting with them. Engagement rates are often the highest for rewarded ads because players receive a tangible reward for engaging with the ad.

To get the most out of in-game ads, ensure you target them to the interests of your players. Avoid overusing ads. Players expect to see some ads in free-to-play games, but if you overuse them, players may become frustrated and quit playing. When you use ads correctly, though, they are an effective strategy for monetizing the large percentage of players who do not make in-game purchases.

Graph showing different types of ad formats and platforms
https://appgrowing.net/blog/en/q1-2023-mid-hard-core-report/

Upfront Payment

Upfront payments are becoming an uncommon way for mobile games to make money due to the rise of the free-to-play model. However, some developers still utilize this method.

Parents prefer upfront payment games to those that incorporate microtransactions because it removes the fear that children will make unauthorized purchases while playing the game. However, many players dislike upfront payment models because they expect to be able to try out games for free instead of paying for a game they may not like.

Upfront payments can be a one-time purchase or a recurring subscription model. This monetization method works best for games with a strong value proposition and few competitors, such as AAA titles with established player bases.

Freemium

Freemium games make money by offering a free version and one or more paid versions. Paid versions may contain additional levels, characters, features, and other perks that players cannot access in the free version of the game.

Some developers also offer players the option to pay for an ad-free version of the game. You can use freemium strategies to monetize players who are resistant to making in-game purchases or interacting with in-game ads.

Licensing and Merchandise

Popular games and games with devoted niche followings can make money by selling licensed merchandise, such as toys, clothes, and television or movie rights. You can generate revenue by either producing and selling merchandise yourself or selling the rights to make merchandise based on your game to third parties.

Data Monetization

Gaming companies can learn a lot about players by analyzing the way players interact with their games. Some of this information is valuable to other companies.

Data monetization involves selling player data to third parties. This is one of the more controversial ways to monetize games, and if you decide to do it, make sure you are aware of and compliant with the privacy and data collection laws in the countries you operate in. You should also inform players that you may sell their data to third parties and allow them to opt out.

What Are Ways To Make More Money on Mobile Games?

You can’t just set and forget your monetization strategy and expect to keep generating profits. You need to choose the right mix of monetization models and continuously analyze and improve your monetization strategy. These tips can help.

Plan Your Monetization Strategy From the Start

Don’t try to figure out how to make money on your mobile game after you finish making it. Instead, plan your monetization strategy at the start and develop your game with that strategy in mind.

Focus on Player Retention

The longer players play your game, the more likely they are to spend money. Focus on improving your retention rate to drive up revenue.

Match Monetization Strategies to Your Players

Different monetization strategies work better with different types of players. Make sure you know who your players are and choose the strategies that are the most likely to appeal to them.

How Do Mobile Games Make Money With Sonamine?

Sonamine can help you answer the question, “How do mobile games make money?” through our monetization, engagement, and retention services. We can help you build an enthusiastic, long-term player base and incorporate strategies that encourage those players to spend money on your games. Contact us today to get started.

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