Mastering mobile game monetization: Strategies for success

What is mobile game monetization?

Mobile gaming monetization refers to the methods through which developers generate income from their mobile games. Mobile gaming itself refers to playing video games on mobile devices such as smartphones and tablets. 

App marketers use five main monetization strategies to capitalize on user engagement:

• In-app purchases: Involves selling virtual goods, upgrades, or premium content within the game. Players can enhance their gaming experience by buying items or features.
• In-app advertising: Integrates advertisements into games, generating revenue through ad views or interactions. It includes display ads, video ads, or incentivized ads where players receive rewards for watching.
• Subscriptions: Players pay a recurring fee for premium content, additional features, or an ad-free experience.
• Paid: Users pay an upfront cost to download and access the game. This model is straightforward, requiring players to make a one-time payment to enjoy the full game.
• Hybrid: Combines multiple monetization strategies. For example, a game might offer in-app purchases alongside advertisements, or provide a paid version with additional benefits.

We’ll be covering these strategies in more detail later in the article.

Considering your monetization strategy early in the development process is crucial. Your choice will influence your game’s design and user experience, ensuring a balanced approach that benefits both you and your users.

In-app purchases

In-app purchases (IAPs), also known as microtransactions, represent a key monetization model in mobile gaming, allowing users to make paid transactions within the app after downloading. This means you can keep your app free to download — helping you attract new users — and monetize once players are engaged. 

Types of in-app purchases

Consumables

Consumables are products that can be used or “consumed” once, and then need to be repurchased. Examples include:

• In-game currencies: Virtual currencies used for in-game transactions.
• Boosters/gems: Items enhancing gameplay, such as power-ups or special abilities.

Non-consumables

Non-consumables are products purchased once, with no expiration date, that remain permanently available. Examples include:

• Premium content: Exclusive content or features enhancing the overall gaming experience.
• Unlocking levels: Purchasing access to new levels or chapters.
• Character purchase: Buying additional characters or avatars.

Auto-renewal subscriptions

Auto-renewal subscriptions involve recurring payments, ensuring a steady income stream. Think: streaming services like Netflix, Spotify, or popular meditation apps.

Non auto-renewal subscriptions

Non auto-renewal subscriptions run for a fixed period, allowing manual renewal after expiration. Examples include magazines, physical product subscriptions (such as coffee or wine deliveries), or access to specific sporting events.

In-app advertising

In-app advertising is the strategic display of paid ads within a mobile app, enabling you to monetize platforms by selling advertising space. There’s no cost to the player, as you’re getting paid by the advertiser for views or particular actions.

Successful in-app advertising hinges on delivering the right ad, in the right way, at the right time — with a focus on enhancing the user experience rather than overwhelming them with ads. 

The good news is, there’s a diverse mix of in-app ad formats to choose from, depending on your audience and campaign goals. The following tactics can help you monetize your app in a balanced, flexible way while maintaining a positive user experience. 

Banner ads

Banner ads are small images displayed at the top or bottom of the screen during gameplay, which may be either static or dynamic. They have a continuous presence throughout the gaming experience, without being too intrusive. This makes them ideal for raising brand awareness and testing creatives for user acquisition.

Native ads

Native ads blend seamlessly with the game’s content, matching your app’s look and feel. They offer a non-disruptive approach, integrating promotional content in a way that feels organic to the user experience.

Interstitial ads

Interstitial ads appear between different game screens or levels, often covering the entire screen and showing up during natural pauses in gameplay. They offer a more immersive and visually impactful experience, providing higher engagement opportunities. But these ads should be handled with care, as users can perceive them as disruptive and annoying.

Offerwall

An offerwall presents users with a list of tasks or offers to choose from (such as downloading sponsored apps or completing surveys) in exchange for in-game rewards. This app strategy diversifies monetization by tapping into user engagement beyond traditional ads.

Playable ads

Playable ads allow users to experience a brief interactive preview of another game. This immersive format enables players to engage with the advertised content before deciding whether to install the showcased game.

Paid games

Paid mobile games involve a one-time, upfront payment for users to access the entire game, bypassing the need for in-app purchases or ads. 

This monetization model caters to gamers who prefer a simple, one-off payment for an uninterrupted and comprehensive gaming experience. Some players appreciate the transparency and simplicity of a single payment, particularly if they’re uncertain about in-app transactions.

Minecraft is a shining example of a paid gaming app, securing a spot among top-grossing games in app stores despite the prevailing trend towards free-to-play models with in-app purchases.

While the paid model has become less popular over the years due to the dominance of freemium and ad-supported games, it remains a profitable and user-friendly choice for certain scenarios. It could work for you if your users appreciate upfront payment for a complete gaming experience without in-app purchases. 

Subscriptions

When it comes to mobile game monetization, subscriptions are more than just a familiar concept associated with platforms like Netflix or YouTube. In gaming apps, subscriptions operate as a type of in-app purchase, offering players ongoing access to special content, ad removal, and exclusive benefits in exchange for regular fees. 

Types of subscriptions in mobile games

• Battle pass: Users purchase a plan that grants them access to rewards they need to earn through gameplay within a specified period, typically lasting 15 or 30 days. This model is available in both free and paid versions, providing players with diverse experiences.
• “Remove Ads” subscription: Games that rely heavily on in-game ads may give users the option to eliminate these (temporarily or permanently) by paying a fee. So users can enjoy an uninterrupted gaming experience, and you don’t lose out on revenue.
• VIP subscription: Subscribers receive a curated set of exclusive benefits, including daily rewards, ad removal, and a stash of in-game currency. This enhances user experience for a specific duration, creating a sense of VIP treatment within the gaming community.

Hybrid model

In mobile game monetization, the hybrid model stands out by combining multiple monetization strategies simultaneously. You can blend in-app purchases, in-app ads, and subscriptions, tapping into various player segments and maximizing revenue streams. This way, one model serves as the primary revenue stream, with other models complementing it.

How to combine monetization models

Let’s take a look at the most popular ways to mix-and-match your strategies for a hybrid approach to mobile gaming monetization.

• In-app purchases + In-app ads: In-app purchases take the lead, complemented by in-app ads that cater to both paying and non-paying players. The emphasis is on opt-in formats like rewarded video ads to preserve user experience.
• In-app purchases + Subscriptions: Focused on paying players, this model centers around in-app purchases for enhancing gameplay. Subscriptions provide additional benefits, appealing to engaged players seeking added value.
• In-app purchases + In-app ads + Subscriptions: A comprehensive approach combining all three models, targeting a wide player range. In-app purchases remain the primary strategy, while ads and subscriptions act as supplementary revenue streams, requiring a careful balance.

Understanding user behavior and preferences is key to tailoring the hybrid approach effectively. Focus on monetizing a wider range of players while maintaining a balanced and engaging gaming experience.

Mobile app KPIs to measure

When evaluating the success of your mobile app’s monetization strategy, these KPIs provide the most valuable insights:

1 — ARPU (Average revenue per user)

ARPU calculates the average revenue your app generated from each user, providing crucial insights into the effectiveness of your monetization strategy. 

Here, you must also account for outliers or “whales”: users who spend well above the average and can therefore distort ARPU data. Achieving a balance is key — make the most of your whales, while ensuring a positive and inclusive experience for the majority of users (who collectively contribute substantial revenue). 

2 — LTV (Lifetime value)

LTV represents the total revenue a user is expected to generate throughout their entire lifecycle within your app. It’s a critical metric for assessing the long-term profitability of your user base. Comparing LTV to acquisition costs will show you whether your monetization strategy is sustainable.

3 — Time to purchase

This metric measures how long it takes a user to make their first in-app purchase. A shorter time to purchase often indicates a more effective onboarding process, and makes your strategy more likely to succeed. Tracking this metric helps you refine strategies and encourage quicker conversions.

4 — Cost per install (CPI)

CPI measures the cost of acquiring a new user through app installation. A lower CPI indicates more cost-effective marketing campaigns, contributing positively to your overall monetization strategy.

5 — Retention rate

Retention rate gauges the percentage of users who continue to use your app over time. A high retention rate indicates higher user satisfaction and engagement, both of which are essential for long-term monetization success. Regularly measuring retention helps you identify areas for improvement in user experience and content.

6 — User segmentation metrics

Segmenting users based on behavior, demographics, or other criteria provides deeper insights. Analyze KPIs for different user segments to tailor your monetization strategy to specific audience preferences and behaviors.

How to choose the right monetization strategy for your app

A successful app monetization strategy requires a thoughtful approach that considers your unique context and audience. Here are the essential steps to support your decision making:

1 — Understand your target audience

Conduct thorough market research to identify your target audience’s preferences, behaviors, and spending habits. Consider demographics, interests, and geographic locations to tailor your monetization strategy to their specific needs.

2 — Define clear goals

Clearly outline your app’s goals, whether it’s maximizing revenue, user acquisition, or fostering long-term engagement. Align your monetization strategy with these goals to ensure a cohesive approach.

3 — Identify and apply monetization models

Choose monetization models that align seamlessly with your app’s content, enhance the user experience, and resonate with your target audience’s preferences. 

Then, implement your chosen model (or a combination) based on your research and goals. Your approach should integrate naturally with your app to enhance, rather than hinder, the overall user experience.

4 — Get feedback

Collect user feedback through surveys, reviews, and analytics to understand how users perceive your monetization efforts. Use feedback to make informed adjustments and improvements.

5 — Test, test, test

Continuously test different aspects of your monetization strategy, including pricing, ad placements, and subscription offerings. A/B testing can provide valuable insights into what resonates best with your audience.

6 — Adapt and evolve

Stay agile and be willing to adapt your monetization strategy based on changing market trends, user behavior, and feedback. Embrace a dynamic approach to ensure long-term success.

How to increase your mobile game monetization

Next, let’s discuss some proven strategies to help increase revenue from your app.

1 — Offer personalized in-game experiences

Enhance user experience and increase in-game spending by personalizing the gaming journey. Use data on player behaviors, patterns, and preferences to deliver targeted in-app purchases, personalized rewards, and dynamic pricing strategies, fostering a sense of unique value for each player segment.

2 — Sync up acquisition and monetization

As part of your user acquisition campaigns, you’ll have spent time identifying your audience’s interests and demographics. Use that insight to develop relevant ad content that improves engagement and boosts revenue. For best results, integrate your ads into the user experience and place them strategically: you want maximum visibility without disrupting gameplay. 

3 — Drive urgency with limited-time offers

Create a sense of urgency and stimulate immediate revenue through limited-time promotions. Whether it’s exclusive items, discounts, or special bundles, capitalize on the fear of missing out (FOMO) to encourage transactions and maintain ongoing player engagement.

4 — Cultivate social engagement and community

Encourage players to connect, compete, share achievements, and engage with each other through features like leaderboards and in-game chat. Reward players for community participation, creating a positive cycle of engagement that can translate into increased spending. 

Additionally, make the most of social features for viral marketing, expanding your user base and, consequently, potential revenue streams.

5 — Implement seasonal events and rewards

By aligning in-game content and promotions with holidays, festivals, or thematic events, you create additional monetization opportunities while keeping the gaming experience fresh and dynamic. Offer special seasonal items, limited-edition rewards, and festive discounts to entice players to spend more during these periods and maintain high engagement levels.

6 — Provide ad-free subscriptions for a premium experience

For ad-supported games, offer users the choice to subscribe for an ad-free experience. Some players prefer a seamless gaming environment, making this monetization strategy an additional revenue stream that caters to diverse player preferences. And a positive user experience soon translates into higher overall retention.

7 — Integrate gamification

Gamify the monetization process with loyalty programs, achievement-based rewards, or virtual economies. Creating an engaging environment within the app not only stimulates user interaction, but also encourages in-app spending. Players are more likely to invest when they see spending as an enjoyable part of their gaming journey.

Key takeaways

• Mobile game monetization is the art of generating revenue from a mobile app. For digital and app marketers, the toolkit consists of five primary monetization approaches: in-app purchases, in-app advertising, subscriptions, paid models, and hybrid models.
• With in-app purchases, users buy virtual goods, upgrades, or premium content to enrich their gaming experience. These purchases may be consumables (single-use items) or non-consumables (permanent items).
• In-app advertising strategies include banner ads, native ads, interstitial ads, reward video ads, offerwalls, and playable ads. Each serves a unique purpose in creating revenue, while aiming to enhance the user experience rather than disrupt it.
• Paid games require a one-time, upfront payment for users to access the entire game, providing transparency and a comprehensive gaming experience. While less prevalent than freemium models, paid games remain relevant for specific audiences.
• Subscriptions in mobile games offer continual access to special content, ad removal, and exclusive benefits for regular fees. Battle pass subscriptions, “Remove Ads” subscriptions, and VIP subscriptions are common types.
• The hybrid model, a dynamic combination of in-app purchases, in-app ads, and subscriptions, strategically maximizes revenue streams, appealing to diverse player segments. 
• Critical KPIs for mobile app monetization include ARPU, LTV, time to purchase, CPI, and retention rate. Remember to account for your  “whales”, whose high spend can skew your data. 
• To choose the right strategy for your app, you first need to understand your target audience and set clear goals. Then, apply your model(s), collect feedback, and keep on testing and adapting.
• To increase your monetization, offer a personalized app experience with relevant, strategically placed ads. Gamification and limited or seasonal offers can boost spend, while social engagement and ad-free subscriptions lead to higher retention — making your strategy more likely to succeed.