How can mobile game developers devise a winning game monetization strategy?

Maintaining the proper balance across monetization models is the key to successfully monetizing mobile games.

In brief

• Developers should embed monetization strategies within the gameplay at the inception stage.
• Monetization models must be seamlessly tied into the gameplay without disrupting the experience and must offer relevant boosts to gamers.
• Developers must implement agile monetization models based on customer insights obtained through monitoring performance metrics.

Mobile game downloads surged at a growth rate of 8% in 2022 and for the first time ever surpassed the 90-billion mark. However, this growth didn’t translate into consumer spending, as spending on mobile gaming saw a 5% decline to US$110 billion as consumers became more frugal with their purchasing decisions due to rising inflation and the overall macroeconomic environment. As the economic turmoil settles and with an ever-increasing user base of mobile gamers, a well-drafted mobile game monetization strategy has greater potential to turn a mobile game into a real revenue generating product.

Effective mobile game monetization enables game developers to secure more revenue from their gaming apps. Two of the most crucial aspects that developers should consider before commencing mobile game development are how to monetize it and which models to implement. It should be a top priority to plan and integrate the monetization strategy from the very beginning as developers draft the blueprint for the game.

As we discussed in our recent article on in-game advertising, it constitutes one of the key monetization models leveraged by game developers. In this article, we’ll explore other prominent and emerging mobile game monetization strategies and how developers can tap into different monetization approaches and strike the right balance.

Let’s explore some of the most popular and effective ways to monetize mobile games:

There are a few other noteworthy models as well that can also be explored by developers in order to generate additional revenue and give their overall monetization strategy an additional boost. Affiliates and sponsorships (monetization of games through direct contracts with other businesses), app data monetization (selling user data to advertisers with user consent), branded content (promoting brands organically within the gaming content), merchandising (selling game-exclusive accessories), and paywalls (requesting payment from users after offering trial version of game).

A hybrid monetization strategy enables game developers to tap multiple revenue streams

Hybrid monetization enables developers to leverage the combination of any two or more strategies including in-app ads, in-app purchases, and subscriptions. Hybrid monetization helps developers tap into multiple revenue streams and monetize more players and maximize earnings per player. When combining the monetization models, developers are tasked with identifying the best strategy for each individual game as well as making sure that one of the models is the centerpiece of the monetization strategy and that the others serve merely as supplemental revenue streams.

Maintaining the correct balance while leveraging the different models based on game genres is the key

Developers need to be mindful while deciding on the major and secondary monetization models for their games. For hyper-casual games, revenue is driven by in-app ads (roughly 95%) as opposed to in-app purchases (around 5%), as the player is not heavily invested in the game and is less inclined to purchase game content. For mid-core and hardcore games, however, in-app purchases constitute a major revenue stream accounting for 85% and 95% of revenue, respectively, and in-app ads serve as a secondary revenue channel. For casual games, both in-app ads and in-app purchases are equally important, and one can become the dominant stream (with a 20% fluctuation) based on insights obtained during the testing and development phases.

“Hybrid-casual games” is an upcoming and trending genre to watch out for, which helps to maximize hybrid monetization avenues.

In hybrid-casual games, developers can mix two or more genres with various meta layers and other features added to the core game for the purpose of creating a richer gaming experience. As opposed to hyper-casual games, which suffer from low engagement and retention due to a very basic core gameplay, hybrid-casual games offer a simple core loop with mid-core elements like competitive social features, collection systems, or a complex game economy. Players have long-term goals in hybrid-casual games in addition to the core gameplay, which results in higher retention rates and opens doors for additional monetization opportunities. Hybrid-casual games allow developers to cater to a broader player base, to get the most out of the core genre as well as a meta layer, to stand out from competitors, and to show superior engagement and retention, thus giving rise to more successful monetization.

To reap the maximum benefits from hybrid monetization strategies, developers need to thoroughly understand their users, rigorously test their games, and continuously measure the performance while striking the right balance:

Key recommendations for developers looking to maximize monetization for their games

• Mobile games and the monetization strategy should complement each other well
• Developers must incorporate the monetization strategy as part of their design in the early phases of development
• The primary and secondary/supplementary monetization strategies should be drafted based on the game genres, and it should be ensured that none of them ruins the gaming experience
• Continuous performance monitoring and game testing to be carried out in the beta phase in order to capitalize on the positives and improve on the negatives
• In hybrid models, pursuing a balanced approach and maintaining the proper mix of each strategy is the key to successfully monetizing mobile games across genres

Stay tuned for our upcoming articles, in which we will explore how 5G, cloud gaming, and mobile eSports are transforming the mobile gaming experience and unlock new growth opportunities for businesses.

Acknowledgments

We would like to thank Sandeep Gupta - EY Global Media & Entertainment Analyst, Christian Plesca - EY Senior Consultant and Shrikant Gosavi - EY Global TMT Analyst for their valuable contributions to this article.