In the early days of mobile gaming, developers only had two options to monetize their user base; they could sell their game for a one time purchase price through an online app store or they could negotiate with a device carrier or original equipment manufacturer (OEMs) to get their game preloaded on a device. Neither of these choices was very easy to do. As app stores and other mobile distribution channels began to mature, providing streamlined and quick solutions; mobile games began to flood the market. As competition grew, devs began competing on price, dropping their prices lower and lower until they had no choice but eliminate the one time purchase price and give their games away for free. Even if they eliminated the barrier to entry by removing the price, developers still had to make money. This was the beginning of the popular free to play model (F2P).
In this model, the game is downloaded and played entirely for free while offering users in-app purchases to enhance the playing experience. This model is very popular, though not without challenges. 95% of users will never buy an in-app purchase (IAP) — and even that’s generous. The freemium model also relies heavily on acquiring users which is costly, especially since only 5% of users will monetize by buying IAPs. Today it’s critical to use a mix of monetization strategies to target all users who have the potential to engage. Even Candy Crush Saga which uses a classic F2P model is now introducing mobile ads as another way to monetize. It’s time to stop using only one model to monetize and start maximizing revenue.
Plan the monetization strategies from the start
There are so many different ways to monetize F2P so it’s very important to identify all possible monetization strategies in the design phase. For example, if a developer chooses to monetize through mobile ads, they will need to decide on which ad network partners they would like to work with, choose the different ad format(s), decide where the ads will be placed in the game, and how they will be triggered. It is very hard to implement monetization strategies effectively after the game is already released. Other possible strategies to consider could be in-app purchases, subscriptions, native ads, or rewarded video ads.
Use segmentation to monetize different user behaviors
After you have your different monetization strategies identified and planned, start thinking about how you’ll segment your audiences from the beginning. Leveraging analytics will allow you to target specific behaviors and apply the most relevant monetization strategies. Some users will spend a lot of money on IAPs to support their gameplay. I recommend not interrupting these types of users with interstitial video ads. Other users will play for hours on end and never purchase anything. For these users, it might be best to offer a subscription or show them native ads which are non interruptive and built into the design of the game. If they aren’t going to buy IAPs, at least you will be able to monetize them through other means. By tracking and understanding your users’ behavior, you will be able to target them with different monetization strategies to push your revenue.
Use monetization strategies that complement
Now that you have your plan and your targeted audiences, make sure these new strategies are complementary. For example, in-app purchases designed to enhance or speed up the gameplay are intentionally gated. Users who won’t pay to bypass the gate may never come back. Instead, you can introduce rewarded videos as a complementary monetization option that allows users to watch videos to earn currency to keep playing. The user gets to continue to play and the developer makes revenue every time a video is viewed. These two strategies complement each other seamlessly. Another example of complementary strategies would be incorporating video interstitial ads with the option to purchase an IAP that disables ads when using the app. This might force a user who is annoyed by having to watch ads to make an IAP purchase to stop ads all together. When setting the price of an IAP that disables ads, it is important to set a price that is close to the amount you would normally earn if a user watched ads over their lifetime using the game.
Devs who plan ahead, take the time to understand their users, and implement multiple complementary monetization strategies to target all of their users, will stand to make the most revenue.