Future Trends of Monetization in Mobile Gaming Apps
Mobile games have come a long way and are now one of the most profitable and popular gaming platforms. This has led to various shifts in game monetization, giving mobile game developers more ways to monetize than ever before.
Developers who traditionally relied on in-app purchases are turning to ads, while app developers are seeing revenue growth by reducing dependence on waterfall optimization. These are some of the significant innovations happening in game monetization.
Diversifying Revenue Streams Leads to Increased Results
Freemium monetization is the model preferred by most mobile game developers, typically generating revenue through in-app purchases. However, it has a number of challenges, such as relying on a small number of users making purchases. According to a study by an app testing company, they found that only 2.2% of players make purchases, while the remaining 46% of revenue comes from high spenders (whales). As a result, most game developers are incorporating advertising as a revenue source, allowing the freemium model to generate income from a broad player base.
In an interview, a popular game app development company stated that its revenue is primarily driven by advertising. So, they offered players a freemium model: every time players watch a video ad, they receive a coin they can use to access in-game content or hints.
Many game developers and mobile game companies assume that players find ads annoying. They think they must either prioritize user experience or monetize with ads. But in reality, all professional gamers and game enthusiasts know that advertising is an integral part of mobile games.
Ad Placement: A Pilot for Boosting Retention and Value
Game developers and publishers have realized that testing ad creative, delivery, and integration format in the game impacts revenue. Figuring out the nuances of ad placement helps boost engagement, player retention, and minimizes churn without ruining the player experience.
The most productive and effective ad format is rewarded videos, presumably because they offer players the chance to earn a reward for watching an in-game ad. Typically, players enjoy receiving extra rewards or points without paying or waiting, so both advertisers and the game app gain player favor. Therefore, game developers trying to reduce the need for in-app purchases can try rewarded videos. This leads to longer engagement, audience involvement, and higher CPM.
How Ad Flow Types Shape User Experience
It’s important to study players’ mindset when they see an ad on screen during gameplay. This insight greatly helps developers deliver a good user experience.
Players pay attention to ads when they aren’t focused on critical game aspects, so the best time to integrate ads is when players are checking notifications or performing any other simple action that doesn’t distract from gameplay. Placing ads in a user-initiated format like this tends to boost conversions.
Similarly, placing an ad after completing a certain task is more likely to capture user attention. For example, an ad appears after a player finishes a level.
Bidding Boosts ROI for Game Publishers
One outdated way of connecting ad sellers and buyers is waterfall mediation, and many game companies are now practicing in-app bidding and testing its impact on revenue compared to the waterfall system.
What is Waterfall Mediation?
It’s a technology that combines various ad networks into a sequential chain, helping publishers earn more for each impression. Ad networks are ranked by publishers based on historical average price. After a certain period, the ranking can be changed based on historical performance, either automatically or manually. The waterfall can work, but it has many drawbacks, such as inability to know the true value of inventory, costly maintenance, complex setup, and revenue generation gaps.
Creating Opportunities for Advertisers and Publishers
Bidding helps publishers run an open and unbiased auction for ad inventory, giving every ad a chance as demand rises. Hence, most publishers have realized that bidding is the future. Moreover, access to real-time bidding helps publishers eliminate the historical mediation stack and prioritize winning bids based on data.