World of Gaming — Game Monetization Models

Knocking the ball out of the park in game development so people make space for a new game on their mobile phones or computers is challenge enough but making money off it is a whole new ball game altogether.

So, how do games really generate profitable revenue? Or any revenue at all? Like everything else in the gaming niche, there’s no straight answer to that. It’s a lot of learning, unlearning, testing, refining, reiterating before the game starts cashing in. There are many monetization models to choose from, but not all of them work for everyone. Let’s dive deep!

Premium Model

Source: Wallpaper Abyss — Alpha Coders

In a Premium Monetization model, players pay a one-time fee to purchase the full game. The full game functionality is available to the users, with no restrictions. Since there is only one chance to monetize, developers use marketing effectively and focus on the store conversions. Premium is a tricky business, as developers can monetize on it only if the game has a unique value proposition and has minimal competition offering the same gameplay or experience in the genre. A big chunk of players is accustomed to ‘engagement first, purchase later’ behavior but when a brand is established and associated with high standards, such models work well for games with a strong brand following or one with a large marketing budget backing it.

A good example of this is a game that needs no introduction: Minecraft, a title that has made its way to the top-grossing games in the App Stores list.

Paymium Model

Source: Touch Gameplay

In this model, players pay a one-time fee to purchase the game. The full game functionality is available to the users, but they can pay more money to get extra features, chapters, skin, customization, etc. There are more chances to monetize, so developers focus on marketing, store conversions as well as in-game promotions. As the name suggests, it’s essentially a blend of Premium and Freemium modes. Paymium is a relatively new model and games are testing the waters with it.

A popular example is Kingdom Rush Origins HD, which is listed in the iTunes App Store’s top sellers in several countries.

Free Model

Source: TECHBIGS

Players can download the full game for free, but it’s not so free. Let me explain how. Developers typically monetize by displaying advertisements. This will continue to be the big monetization trend in the coming years due to its effectiveness and a win-win scenario. Players enjoy the game for free, while the developer earns revenue from mobile ads that show up in the game and the advertisers are happy to show their ads to a niche audience and acquire new users. What’s interesting is that users remember the ads they view 47% of the time, and 50% of the users find mobile ads visually pleasing.

According to a study by ironSource, in 2022, the focus will be user experience — users don’t want to be subjected to intrusive ads or ads that are irrelevant. So, developers got to strike the right balance between the quantity of ads and the quality of them. In-game ads come in different formats, and these are the 5 most important ones:

• Rewarded ads
• Playable ads
• Native banner ads
• Interstitial ads
• Offerwall

Everything said and done, here’s a little secret: Rewarded video ads should be the focus of Ad monetization. The concept is simple: the user chooses to watch the video ad in exchange for an in-app reward. Not only that, but a study has also shown that in-app video ads get 56% better CTRs than banner ads.

As the game is free, getting installs will be easier than Paid/Paymium models, thus the focus is primarily on store conversions, as well as on creating a good Ad experience.

This model is popular with the recent trend of hyper-casual games. Hunter Assassin is one such game that offers up all its features free of cost and generates the entirety of its revenue solely through Ads or by offering to remove Ads altogether in exchange for a subscription.

Freemium Model

A game that is free to download but instilled with in-app purchases at clever turns of the game is called a Freemium Model. Players can download the game for free and the full game functionality is available for the players, but they can pay extra money to speed up the progress, buy battle passes, unlock exclusive chapters, skins, customization, etc.

Strategic placement of in-apps and pricing is the key to nailing this pricing model. Limited-time offers and bundles are very popular along with subscription-based purchases — this creates a FOMO among players and elicits a ‘bang for a buck’ feeling.

As the game is free, getting installs will be easier than Paid/Paymium models, thus the focus is primarily on store conversions and identifying high-paying players who will repeatedly monetize over their lifetime.

Our flagship title, the Star Chef franchise, has adapted the freemium model and the multi-layered opportunities for in-apps are still unfolding.