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An average indie game costs $50,000-$750,000 to make, and AAA titles can cost upwards of $100 million. Despite these high costs, free-to-play games rule the market. Monetization is how game developers cover the cost of production and generate profits even with the proliferation of the free-to-play model. What is game monetization and how do you get started?
Key Takeaways:
Game monetization describes the process gaming companies use to generate revenue from games. Gaming companies use a variety of monetization strategies to cover their costs and earn profits from their games.
With a one-time purchase model, developers charge an upfront fee to purchase a game and players can play the game as long as they want. One-time purchase is the traditional monetization strategy that companies used when games were exclusively sold on physical media.
This strategy still exists, mostly for AAA titles on PC and console, but the free-to-play model is now more common, particularly for mobile games. Because the free-to-play model is so popular, games must offer players substantial value to justify an upfront fee.
The one-time purchase game monetization model has the benefit of generating predictable revenue when the game releases but does not provide a steady stream of long-term revenue. Gaming companies can earn additional money by selling downloadable content, but these opportunities are usually limited to a few additional releases that require significant additional investment to develop.
In-app purchases involve selling currency, power-ups, cosmetic items, and other digital goods to players through an in-game store. Most free-to-play games utilize in-app purchases to generate revenue.
Monetizing with in-app purchases makes it possible to allow players to try your game without an upfront cost while still generating revenue. The benefits of this model include a steady stream of long-term income and an opportunity to add fresh content to your game.
The main drawback is that most players will never purchase anything. Additionally, because in-app purchases are usually microtransactions, you must generate many of these sales during the lifetime of your game to earn substantial revenue.
Subscription game monetization models are similar to one-time purchases except instead of paying one up-front fee, players pay a recurring fee, usually monthly. If players cancel their subscriptions, they can no longer access the game.
Subscriptions generate a steady stream of long-term, predictable revenue but are vulnerable to economic changes. When players face budget pressure, subscriptions are often one of the first things they cancel.
To combat player resistance to paying for games, many subscription-based games offer a free trial period. This monetization model is popular for persistent world games, such as MMORPGs, and requires consistent new content to keep long-term subscribers interested in the game.
Many publishers of free-to-play games generate revenue from a combination of in-app purchases and in-game advertising. In-game ads can be rewarded video ads, interstitial ads, banner ads, or native ads.
The primary benefit of ads is that they monetize players who don’t make in-app purchases. However, ads that are too disruptive can lead to player churn. Developers must be careful with the format, quality, placement, and frequency of in-game ads.
The advent of MMOs led to players selling in-game assets, such as currency or unique items, for real-world money. Some developers discouraged the practice while others embraced it.
Today, many popular MMOs feature community markets where players can sell or trade in-game items and digital currencies and the gaming company receives a commission on each transaction. Community marketplaces allow developers to monetize an activity players were engaging in anyway. However, this strategy can lead to gray markets and legal issues.
Now that you understand what game monetization is, you may need some help getting started with your monetization campaign. Keep these tips in mind.
Whichever monetization strategies you intend to use, develop your game with your monetization campaign in mind from the start. Attempting to add monetization features to a completed game may limit what you can do or require you to go back and rework the code.
There is no-one-size-fits-all approach to monetizing games. For example, hyper-casual games usually rely on ad revenue because players are not invested enough in the game to make in-app purchases.
Mid and hard-core games have a more dedicated player base and generate most of their revenue from in-app purchases. Casual and hybrid-casual games usually rely on a balanced mix of ads and microtransactions.
Image Source: https://www.gamerbraves.com/ancient-battle-a-hybrid-casual-strategy-game-for-mobile/
Alt Text: Title screen of the hybrid-casual game “ Ancient Battle”
Hybrid monetization models, such as combining in-game ads with in-app purchases, allows you to monetize different types of players. Hybrid strategies also allow you to hedge your bets by combining models that work best in different conditions so that when one is not doing well, the other makes up for it.
A monetization strategy that works today may not work tomorrow. You must carefully monitor the market, analyze player data, and solicit player feedback. When economic conditions or player behavior changes, be ready to shift your monetization strategy.
Sonamine offers monetization, engagement, and retention services to help you build a loyal fanbase and effectively monetize it. Contact us today to find out how our comprehensive approach to game monetization can help you meet your revenue goals.
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For a limited time until June 2024, Sonamine is offering a 60 day money back guarantee to Braze customers. Come experience the ease and simplicity of the First Time Spender Nudge package and watch your conversions soar.
