Is Mobile Game Development Profitable?

February 2, 2024
January 22, 2024

As powerful smartphones and other mobile devices became common in households worldwide, the mobile games market experienced significant growth. What was once a niche pastime is now one of the largest markets in the entertainment industry.

However, this rapid growth has not come without challenges. Massive titles, such as “Fortnite,” generate billions in revenue, but not every game is “Fortnite.” Is mobile game development profitable for the average developer?

Key Takeaways:

  • The mobile games industry is outpacing entertainment industry giants with its rapid growth. However, not every game is profitable.
  • The large user base, monetization opportunities, low barriers to entry, longer lifespans, and growth potential of mobile games help to make the mobile games industry profitable.
  • Developers face many challenges, including intense competition, rising development costs, and the need to keep up with rapidly changing technology.
  • An effective engagement, retention, and monetization strategy will help developers overcome challenges and take advantage of opportunities.

Is Mobile Game Development Profitable?

Consumers are increasingly seeking out digital experiences over traditional entertainment options, such as going to the movie theater. As a result, the mobile games market has been outpacing the music and film industries.

The growing number of households with smartphones and high consumer demand for immersive interactive experiences has fueled mobile game growth to an $89 billion industry in 2023, which should reach $125 billion by 2028. “Fortnite” alone generated $26 billion in revenue in its first five years.

These success stories suggest there is an opportunity to profit by developing mobile games. However, not every game enjoys the same level of success.

Pie chart showing Fortnite’s revenue statistics for 2018-2022
https://www.demandsage.com/fortnite-statistics/

Which Factors Make Mobile Game Development Profitable?

Several factors have driven the recent success of the mobile games market.

Large User Base

Billions of people own smartphones and tablets. While not all smartphone users play games, most phones have an easily accessible app store where users can download games for free.

Even people who have not played games in the past play mobile games because they are so accessible. Users don’t need to buy any special hardware, and there are many different genres to appeal to a large number of interests. In particular, the mobile gaming market has courted nontraditional game players by offering casual games that anyone can play.

Opportunities To Monetize

Most console and PC games rely on selling copies of games with some secondary revenue streams from downloadable content. Mobile games generate profits through a variety of revenue streams.

Few games charge an upfront fee, but most monetize through a combination of ads, subscriptions, premium features, and in-app purchases. This revenue model works because many consumers are more willing to make frequent small purchases than pay $60 to $100 once to purchase a console or PC game.

Mobile games also make use of social features that extend their lifespans, providing developers with more opportunities to monetize. Technological advances, such as blockchain, may make it possible to create real-world value for in-game assets, opening up new potential revenue sources.

Few Barriers to Entry

Making a profitable game isn’t just about revenue generation. The lower cost of developing mobile platforms means mobile game developers don’t need to generate as much revenue to turn a profit. Additionally, the development tools and app stores for mobile games are more accessible to small developers than other platforms.

LiveOps

Traditional games have a limited lifespan. Players generally play the games until they have completed most of the content and then don’t play them again. To earn any money beyond the initial sales price, developers must produce and sell significant upgrades or content packs.

Developers of mobile games can utilize liveops services to keep players interested in their games long-term. This allows developers to continue to generate revenue over the life of the game rather than relying on revenue when the game first goes public.

Growth Potential

Smartphone manufacturers continue to add new capabilities to their devices, which open up new opportunities for game developers. 5G technology is becoming more available around the world, allowing more people to play online mobile games, which increases the size of the user base.

Additionally, increasing smartphone adoption by young people in emerging markets, such as Southeast Asia, is expanding the market for smartphones and mobile games.

What Challenges Do Mobile Game Developers Face?

While there are many opportunities for game developers to make a profit, there are also challenges.

Competition

The ease and relatively low cost of entering the market have created a glut of competition. This makes it more difficult to get noticed on the app store. Additionally, the influx of low-quality, low-effort apps caused consumers to be leery of games from new and independent developers. To be profitable, developers must effectively market and monetize their games.

Development Costs

Gamers expect more complexity from their games. Keeping up with this demand requires a significant investment in game design and hardware expertise. Governments are imposing stricter privacy regulations, which drive up the cost of compliance and reduce the opportunity to generate revenue from player data.

Despite headline-grabbing revenue generation, many large developers are laying off employees due to the high cost of development. Some developers may mitigate this challenge by employing more generative AI tools to shorten development times.

Graphical representation of factors that affect mobile game development cost
https://www.tekrevol.com/blogs/mobile-game-development-cost/

Rapidly Changing Technology

Rapid advancements in technology create opportunities for developers but can also shorten the lifespan of existing games. Developers must spend money to train staff on emerging technologies, such as augmented and virtual reality. Additionally, it costs money to adapt games to work on new platforms.

How Can You Make Your Mobile Game Development More Profitable?

In the hyper-competitive mobile games industry, it is more important than ever to have an effective retention, engagement, and monetization strategy. Sonamine offers all the services you need to get a leg up on your competition and make your mobile game profitable. Contact us today to get started.

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