We recently ran a poll in our YouTube channel's community where we asked our subscribers what their preferred way of paying for games. The results are surprising. One-time payments take the lead but a large proportion of respondents says they're okay with ads on free games.
The answer to how game studios earn money is a lot clearer when it comes to the PC and consoles where traditional sales — physical or digital — reign supreme. Not so on mobile where free games far outnumber premium ones. Be that as it may, mobile game revenues are on the rise. In 2020 alone, it accounted for almost 50 percent of the global games market.
It makes sense when you think about it. Mobile games tend to be simpler than their PC and console counterparts and, theoretically, easier to develop. Plus, who doesn’t have a smartphone these days? With all these free games, how do developers and publishers make money off them? Let’s find out.
Also called Premium Games, these are perhaps the most traditional way of getting games.
When it comes to mobile games, physical copies are practically non-existent since we buy our games from the App Store or the Google Play Store.
One-time payments are the most straightforward of all the methods, and our whatoplay subscribers agree. Even Indie Developer Alva Majo uses this for his latest game, pureya. In our recent interview with him, he called premium games the “least intrusive” method despite its barrier to entry. In addition, there are fewer tricks involved to keep you playing.
Subscriptions in mobile games are relatively new. Apple Arcade and the Google Play Pass went live in 2019. Both offer a set of games that are exclusive to the subscription service and guarantees the absence of ads. These services require monthly renewals but you can unsubscribe to them at any point.
The monthly subscription fees add up over time. For example, the Apple Arcade will cost you $50 every year, while the Play Pass is cheaper at $30. Those are hefty sums to pay for mobile games but it can be convenient for mobile gamers looking for a premium experience and the variety of choices.
The quality of what’s on offer is probably the biggest deciding factor. Apple Arcade may not have that many games but the selections are meticulously curated. On the other hand, Google’s service includes a vast collection of over 300 games.
Subscription services for individual games haven’t caught on yet. It may start soon enough. The subscription movement in gaming has been slowly picking up steam. Its rates may be spare change compared to, say, the Xbox Game Pass. But, if Microsoft can get 3.7 Billion from its 18 million subscribers, who’s to say what mobile games can earn from its more than 3 billion users?
Unlike the tried and true premium games, this “freemium” method lets you into the game for free up to a certain point. Games that employ this method capitalize on your emotional investment to convert you into a paying customer.
With free games being the standard for mobile, it’s harder to distinguish them from the get-go. Demos typically fall into this category. This is also true for story-based games with price points for each chapter. You're immersed into a great fantasy adventure only to find out you need pay to get the satisfaction of finishing the game.
Excessive ads can also be a form of paywall. In hypercasual games, which are one of the biggest earners in the mobile market, ads are usually triggered at inconvenient moments. If you want fewer interruptions, you're usually given the option to buy in. We'll talk more about ads below.
As we’ve seen from our community poll, ads are the mode of choice when it comes to FREE games. This is in direct contrast to a recent market study that says 82% of mobile gamers prefer this to paid games with no advertisements.
There’s no such thing as a free lunch. Advertising is the “selling eyeballs” method of monetization. While there are no upfront payments, developers use some of the space within the game to sell to third parties. There are a number of different ads out there. Banner, interstitial ads, playable ads, expandable ads, etc. But the concept is usually the same. With the pay-per-view model, developers are paid every time a user sees their ad.
We’ve talked about the annoying ads in hyper-casual games. However, there are also less insidious ways to put ads. The biggest trend today is called the Rewarded Ad. These are advertisements that you have the option of watching in exchange for an in-game perk.
Not only does this mean that you get for free what you usually pay with currency, it also gives you the choice to engage with an ad or not. A high player engagement means that developers earn more from the pay-per-view model.
A recent study set in the US has shown that 74% of mobile gamers would watch an in-game ad if they get an in-app perk in return. This shows just how powerful the method can be.
In-app Purchases (IAP)
In-app purchases cover most of the transactions that appear within a game. Cosmetics, power-ups, or items that speed up certain processes in-game fall under this category.
Games can have more than one type of currency. You can get bogged down in the many types, but put simply, they’re there either to keep you playing or to give you an easy way out of a tough spot--a “monetizable scarcity” as one article calls it. The more currencies there are in a game, the easier it is to pull you into an earning cycle and, thus, spend more time with the game. So when the going gets inevitably tougher on a game you like, you’re more likely to give in to their array of items to make things easier.
Getting stuff feels good, and being stuck does not. The more you have fun with a game, the more likely you are to drop a few bucks into personalizing your experience, either with cosmetics or upgraded heroes.
This can be the trap of many mobile games: giving you incentives every time you play and making sure you come back for more. That’s not necessarily a bad thing, developers have to earn their keep somehow. What’s important is that you are aware of how much you’ve invested. Where regulations in-game falters, yours should kick in.
That also goes for dealing with loot boxes, another type of IAP that may just be the most sinister. These transactions, while relatively cheap, rely on chance. These usually appear in gacha games which involve collecting the best heroes for your party, but they also appear in games with cosmetics. For a cost, you only get a small chance of getting the items you want. It’s an almost addictive kind of frustration where you think that the next loot box will finally get you that glowing legendary Mallet, only to get a measly toy hammer instead.
Because of its dangers and prevalence, some regions have already put restrictions on them. If your kids are playing games with loot boxes, a little guidance may save you a call from your credit card company.
To learn more about this, check out our guide to microtransactions.
As effective as these monetization methods are on their own, it’s useful for some games to double up. This way developers get multiple revenue streams from one game. Players have preferences when it comes to paying for games. The mixed monetization method offers you several choices. You can opt-out of annoying ads and still be welcomed to toss in a coin for a cute hat.
Mobile gaming may still be a small slice of the bigger gaming pie but its explosive growth has turned it into an important part of the ecosystem, complete with its own traditions and trends. New games are popping up every day and, with that, new ways of paying for them. As much as we love playing our favorite games, it’s also worth paying attention to how we spend time and money on them. Your health and well-being isn't always their primary concern, but it should be yours.