2023 Mobile Game Monetization: Boost Your ROI With These 10 Key Findings
by Game Marketing Genie, on 03-Jan-2023 09:00:00
Numerous games are getting added to the gaming industry, and it shows no sign of slowing down. Never before has there been greater access to games that people can play almost instantly than in recent years. The increasing adoption of innovative game-creation technologies and smartphone usage significantly contribute to market growth. Experts predict that during the period 2021-2030, the global mobile gaming market is expected to grow at a CAGR of 12.2%.
Furthermore, the growing popularity of esports is a major market driver. Again, as 5G technology spreads, users will have access to faster data speeds, expanding the market for mobile games. Among all these, the F2P segment has been a market leader. Free-to-play games generate approximately 85% of total revenue in the digital game industry.
Figure 1: Mobile games will continue to grow in 2023. Source: P&S Intelligence.
As a mobile game developer, you know this industry has money-making opportunities, but how? This article will cover mobile game monetization strategies in 2023 that will help you earn from your mobile game development.
1. Different markets have different buying powers
According to a Pew Research Center analysis of data from 44 advanced economies, consumer prices have risen significantly since the pre-pandemic period in nearly all of them. In 37 of these 44 countries, the average annual inflation rate in the first quarter of this year was at least twice that of the first quarter of 2020, when COVID-19 was just starting.
Figure 2: Countries affected because of inflation. Source: Pew Research Centre.
Analysts predict that inflation might slump all video games revenue. For example, the launches of Sony's PlayStation 5 and Microsoft's Xbox Series S consoles were both rocky. According to Piers Harding-Rolls, research director at Ampere, the statistics show that the gaming industry is not entirely "crisis resistant ." He believes the video game industry will likely relinquish some of its gains in the coming years.
On the other hand, in 2022, the United States was recorded as the largest gaming market in the world, with a revenue of 54.9 billion US dollars. China's video gaming market ranks second, with annual revenues of approximately 44 billion US dollars.
The critical point for game developers and indie gaming studios is that while some experts predict a decline in the gaming industry due to lower purchasing power and high inflation, total defeat in such a well-established industry is complex. You can navigate the economy's shift by developing smarter strategies, researching your target market, and pivoting as needed.
2. The monetization potential of particular in-game positions
The in-game ad monetization method works when advertisers purchase ad space within a game. You can directly integrate these ads into the game, or they show up as traditional banner ads.
Thanks to the revenue earned from ads in their gaming apps, app developers can provide an accessible user experience while producing the content they love. Furthermore, advertisers have a highly effective method of engaging users in their ads to acquire new players.
Some of these ads are:
These ads capitalize on natural pauses in the user's gaming experience, such as the break between levels. Interstitial ads typically generate deep impressions and conversions because they do not disrupt the user experience.
Native banners, like web banner ads, blend seamlessly into the background in which they are placed for an unobtrusive ad experience. The global spend on native advertising is expected to reach $400 billion by 2025 (source: The Drum). Ad spend for this type has increased due to ongoing technological innovation, such as in-feed native ads that are fully integrated with content.
You can find offerwall ads in high-traffic locations like a game app's menu or store. Or, they pop up at an optimal time for players to use rewards to proceed to another level.
Knowing the ideal ad frequency for your mobile game is essential to success. Your task is to determine the frequency that maximizes revenue without annoying users or raising the churn rate for your mobile games. Learning what works best for your mobile game will take time, but the outcomes are crucial to your ad monetization strategy.
3. The power of playable ads
Playable Ads is an exciting and immersive ad format where users can interact with and "play" your ad for 10-30 seconds. It's an excellent way for your target audience to try your game without downloading anything. However, the most appealing aspect of in-app playable ads are the incredible conversion rates enjoyed by advertisers and the promise of high eCPMs and increased revenue for game publishers.
Data from Mnectar reveals that playable ads have up to 7x higher conversion rates than video ads, which are already relatively high. In contrast to video ads, which typically do a great job illustrating gameplay experience to users, users can tell whether they'd enjoy the game because playable ads are interactive.
Many people believe that playable ads are only helpful for simple casual games. While casual gameplay is easier to convert into a playable ad, more complex games can also be promoted using this ad format.
This top-performing playable ad for War Machines is a prime example of this. War Machines (published by Fun Games For Free) is an action strategy tank battle game.
Figure 3: Screenshot of a playable ad for the War Machines game. Source: YouTube.
4. Users with less purchasing power will interact more with ads that reward them
Inflation negatively affects game downloads and even leads to dormant players (especially hobby gamers). Users love rewarded ads because instead of spending money, they can pay with their time to access items that allow them to continue playing, progress faster, or get paid paraphernalia. Because of this opt-in structure, you can safely integrate rewarded ads without disrupting the user experience.
Rewarded video ads have a favorable reputation for increasing user engagement and boosting retention rates. 90% of gaming apps support rewarded video ad formatting, and video ad network Unity Ads calls it the "hottest revenue generator" on the market. OpenX also discovered that 77% of users are willing to view a 30-second ad in exchange for a retailer discount. Because of the high engagement rates that rewarded video ads can achieve, this advertising format has a high cost-per-thousand impressions (CPM).
5. The subscription model is changing
The gaming industry is not entirely inflation-proof. Subscriptions are the most vulnerable part of mobile game monetization strategies. As the cost of living crisis hits, consumers will carefully consider their discretionary spending. Subscriptions are monthly spending commitments. As consumers look for ways to save money to pay for essentials, subscriptions will come under scrutiny.
Also, more entertainment subscriptions are available than ever (Netflix, Disney+, Paramount+, CNN, and many game services). As the cost-of-living crisis worsens, consumers can (and will) eliminate many of these.
A subscription-based gaming business faces disadvantages like:
- Intense market competition.
- High cancellation rate.
- Uncertain revenue if you are in the startup phase.
- Initial sign-up hesitation.
However, the solution is not to stop offering subscriptions altogether. Instead, you can mix them up with other buy-in options for your players.
For instance, Turbine experimented by adding a free-to-play option to the previously subscription-based Dungeons and Dragons Online. The result was an almost instant success. More players joined the game, revenues grew, and subscriptions increased. Turbine did the same thing with Lord of the Rings Online, adding a free option to an already successful subscription game.
6. Data privacy and strategy changes
The recent changes in data privacy have been especially difficult for marketing teams. According to recent Gartner research, nearly one-fifth of marketers report privacy compliance as their primary concern across all marketing channels. It's easy to see why; a marketer's ability to collect and derive insights rapidly is negatively impacted, and some of their previous marketing technology investments are rendered obsolete.
In 2021, Apple made a significant change by limiting tracking on iPhones. Google then released a new version of Google Analytics to address privacy concerns. As our ability to market to individuals dwindles, we will need to focus more on what brands stand for and then apply modern marketing principles to drive revenue.
Here are some ways to tackle the new changes for your game marketing:
Design a first-party data strategy
Many big businesses have already developed a strategy to ensure compliance with existing regulations. Some may have even proceeded to develop a comprehensive first-party data strategy. Companies should think about rooting their approach to data in a stronger relationship with customers built on trust and a genuine exchange of value to be sustainable and effective.
Organizations that get this right may be more likely to keep access to first-party data. Customer value is central to the data relationship, and a data relationship with a clearly defined and articulated value proposition will help keep customers engaged. According to McKinsey research, roughly two-thirds of customers would be willing to share their data or consider sharing it if they received something of value in exchange.
Implement embedded analytics
Embedded analytics makes data more easily accessible, and it can do so in three places: within your tools and features, on the web, and in your game. The goal of incorporating analytics into these locations may differ, but they all revolve around the use of data.
This brings many potential benefits for the developer in terms of providing a stronger value proposition, a competitive edge, or the possibility of selling the analytical module as a premium service.
Have a multi-pronged monetization strategy to increase ARPU
Consider a flexible, scalable pricing structure that benefits you and your players. When it comes to growing your gaming startup, acquisition isn't everything. Looking for ways to keep existing players active and reduce churn to increase loyalty and ARPU is a highly effective tool.
7. Hybrid monetization models are CRUCIAL
Hybrid monetization combines different approaches for apps, including mobile games, to make money. The hybrid monetization model combines in-app ads and in-app purchases (IAP) to maximize revenue. Consider it a "meeting in the middle" that's strategically placed throughout the app or game to get the best of both worlds. Developers' goal is to maximize lifetime value (LTV) by combining any number of those combinations.
For instance, in the casual shooter game Agent Bone, the game's design includes straight IAPs, subscriptions, battle passes, rewarded ads, interstitial commercials, and pay-to-remove ads. It helps to promote IAP when players come across rewarded playable ads that let them test locked game items like new characters and weapons.
Figure 4: Agent Bone runs on a hybrid monetization strategy. Source: iOS App Store.
New hybrid game monetization models will continue to emerge as developers incorporate innovative concepts to improve their business model while determining which approaches will best appeal to their players. Game makers will have a solid base to grow and prosper in the competitive future thanks to hybrid monetization tactics that could generate and capture value.
8. Multiplayer games get higher spending
Multiplayer games have a high potential for a steady stream of revenue. When developing multiplayer games, developers should think about spending time on developing complex tactical and strategic systems. Long-term, this will increase the likelihood that players will spend money. Long-term participation in the game is greatly influenced by competition. It's an excellent idea to use leaderboards for this. Statistics reveal that before investing money in a multiplayer game, players typically play for 23 sessions. Your game should therefore be endlessly playable. It's also crucial to have a game that users can play endlessly so you can sell consumables for additional mobile game monetization methods.
9. NFT monetization
Traditional games generate revenue by maintaining a value stream in which players commit their time and money to boost the profits kept by the game producers. In contrast, NFTs allow participants to profit from the value they generate inside the ecosystem. Developers use NFTs to produce special elements for their games. Using these tokens, game designers can make every object in their games non-transferable and establish a rarity-based economy.
NFTs are maintained in a digital wallet and can be bought, sold, or traded like other cryptocurrencies. Consider the case of a role-playing game where players can collect things like armor, weapons, and shields by paying for them in cryptocurrencies. Another option is the exchange (marketplace), where the game serves as an agent and receives a commission on each sale. The sale of playable land is the third way, which is fairly new.
Bottom line: The game is a virtual open world in which NFT will benefit from the plot's conception or appropriation. Keep in mind that the future of this type of monetization model is still evolving, given the many laws that still need to come into place for safe and secure transactions.
10. In-app bidding as the primary ad space selling method
Ad spending is increasingly easier to attribute because advertisers now have access to a broader inventory. Additionally, customers still value relevant, better-targeted ads despite new data privacy laws and restrictions.
However, the adoption of app bidding is still in its early stages because so many mobile studios and app developers need to be made aware of its advantages. Let's be honest. Before in-app bidding, the waterfall structure was the industry standard for many years.
Although the ad waterfall approach was a ground-breaking idea at the time, we must admit that it is now mainly outdated. Ad waterfall can still be effective, but there are more suitable alternatives to tailor to the demands of the modern market. In-App bidding, as opposed to the conventional waterfall standard, permits all demand partners to bid concurrently, allowing the highest bidder to win and the publisher to optimize income for every impression.
Every agent involved in the ad exchange process, including the game studio, the advertiser, and the mediator, gains significantly from in-app bidding.
Making mobile game marketing mastery
Mobile games are the biggest and fastest growing gaming segment. So you need marketing expertise if you want to make a mark on this industry. Get the best tips from our game marketing experts in Mobile Game Marketing: Your Complete Guide to Success.
Create winning mobile game monetization strategies with Game Marketing Genie
Publishers will continue to make money from mobile app monetization in the years to come. But over time, revenue methods for mobile apps will develop and grow more intricate. Game developers can outperform the projected revenue growth graph if they focus intensely on transformation and are willing to take on challenges.
Although monetizing your mobile app in 2023 can seem daunting, you can achieve it with suitable methods and strategies. We are a team of specialists at Game Marketing Genie who develop game marketing strategies and content for gaming companies looking to push the envelope.