Making money with your mobile game has been a learning experience for many people. With all the trends changing and evolving, you have to be ready for the next trend, from ad-based monetization to in-app purchase, to video ads, to rewarded video ads. The growth of monetization that was popular in 2014 may not be the same moneymaker being used with today's techniques.

Making sure to evolve with the market and searching for the newest and best techniques is a necessary requirement in the game industry if you want to get into monetization. Cocos knows this and have been working on more ways to help you monetize games, such as mini games found with our Cocos Play partners, working with monetization partners like ironSource to help educate developers in China and the world, and upgrading our game engine to allow for more great APIs that work to improve your monetization for the future.

But in this article, we want to go back in time to look at some of the ways popular games on mobile made their money and if this is still true in today's world. We asked Serena Wei, publisher relations manager, and her team at AdTiming, masters in monetization, to help answer these questions.

The old strategies

Strategy #1 – Creating payment grinds to have players continually working on upgrading their character(s)

Some games would have you upgrading your car to the point that it was so good, you had to buy the next car to improve in the game. This "tiered" progress loop will have players wanting the next best thing every few months. This would give the player hope that they can become the top tier if they keep playing for a few months and that great items were obtainable if they kept going.

This payment grind has continued, but depending on the country you are working with, there are significant positives and negatives to this type of action. A perfect balance is needed when operating more with western markets as gamers are more sensitive to the "Pay to Win" idea that became popularized in Asian countries. Having a keen eye on the operations of the game and finding where people are dropping out is very important to know where you're overdoing it.

Developers are also adding ad-related daily reward systems, which allow players to collect rewards by doing tasks (including watching ads), and they can get more rewards after completing tasks by watching ads, speeding up the grind a bit more.

Strategy #2 – Some items are only available for purchase only. You can't get by hours of gaming.

A very early example of monetization that started in Asia that now has grown into the mobile game industry is having two types of currency - the currency of time and currency of money. Some items can be gained by playing the game for a long time, while some are only by spending real money. Spending money allowed those who enjoy the game very much to spend to improve gameplay, have a beautiful and unique avatar or speed up your progress in the game.

Many game developers today are continuing this process, especially in hardcore and mind-core games. But more and more mid-core and casual developers are abandoning these methods: instead, they estimate which player will make purchases, and which likely will watch ads, and adjust the offers accordingly. But this strategy hasn't really changed a lot and is still seen as a great way to get your hardcore gamers staying in the game.

Strategy #3 – Convert XP or Money to a unique item you use to improve or win better items, upgrades, or events.

Creating tokens or tickets that you can use to win specific items at a cost was a popular way to gain money for games like World of Tanks. This allowed gamers to work their way to buy something that can be modified by the developer with special deals that could get gamers returning to the game as well as having some items only available for a limited time.

This strategy has died off for more improved monetization. Take, for example, hypercasual games. Game developers are taking advantage of rewarded videos to give players better power-ups, XP, money, or other items to improve the length of gameplay. This trend has blown up in the past five years and is now looked to as the biggest moneymakers in the industry.

Strategy #4 – Premium accounts give you more rewards and XP

Having gamers subscribe to a premium account allows them to gain much more gold and XP than they would have for every battle or event. This would allow for faster growth in the game, especially if the price of the subscription is minimal.

Though this is still happening in games like Fortnite, The trend is becoming a meme for some hardcore and mid-core, leading to much exhaustion with the idea and others returning to a one-time purchase of games, a trend that happened with World of Warcraft and Guild Wars in the 2000s where you buy a subscription to WoW and a one time larger fee to Guild Wars.

But with games like DOTA and Brawl Star still making a lot of money, don't expect premiums never to stop being a popular strategy by game producers.

So, what new strategy will we see in the future?

We all know that in-app purchase is the driving force of consumer spending in the gaming industry. But with the hyper-casual game surge, users are getting used to in-app ads, allowing for a larger room for ad monetization to open up.

It is no secret that hyper-casual games have seen massive growth in the past two years. But few know the growth of ad monetization behind them. According to the data from AppAnnie, 2020 is a good year for mobile game advertising, with global mobile advertising spending expected to reach $240 billion by 2020, up 26% from 2019.

In hyper-casual games, users can enjoy playing for free, while the developer earns revenue from mobile ads that display in the game. Advertisers are also glad to show their ads to acquire new users. As a result, additional ad revenue chances popped up in mobile games with the popularity of hyper-casual games.

Hyper-casual games could be fading away, but in-app ads won't.

Most hybrid-casual games combine in-app purchases and in-app ads to broaden the user base, eliminate upfront costs, and create ongoing revenue streams.

As we observe this year, in hardcore and mid-core games, 65%-75% of all revenue still comes from in-app purchases, while in-app ad monetization is a stronghold in hybrid-casual games with a nearly 65-35 split favoring ad monetization versus in-app purchases.

In-app advertising is an important business model for hybrid-casual games

Firstly, mobile game advertising brings about more mobile game ad revenue. As we've noticed from Dancing Line, a game built by our client Cheetah Mobile, great ad placements can generate an instant 15% increase of the average eCPM. In the game. For example, the live-chat style interactive video ad, which specifically designed for casual games, has contributed a lot to their revenue growth.

Additionally, In-game ads, coupled with the proper gameplay design, can boost in-app purchases effectively. Ad displays that play as a part of an in-game economy circle, like rewarded video ads, give users more rewards and XP, as mentioned above. And when the users taste the fruit of rewarded video ads, they will end up paying for IAPs.

So if in-app ads and core gameplay are combined well, ads provide an excellent opportunity to implement a hybrid monetization model with in-app purchases (IAP).

What's more, in-app ads generally increase user retention because users are enticed to spend more time on the app. Players want to get the extra rewards from ads, and continue playing the game.

In the foreseeable future, in-app advertising will be the dominant mechanism for mobile game monetization and the primary driver of publisher revenue.

Under such a circumstance, for publishers to maximize the revenue of in-app ads, we advise publishers to evaluate ad monetization from three dimensions: ad policy compliance, ad design richness, and ad integration with gameplay.

Take different ads. If banners are covering up the gamer's interface, it will not comply with the ad platform policy, making the user experience bad. It's better to separate the game interface and advertising interface for display.

If the interstitial ads pop up frequently, which hurts the player's game experience, players will find it hard to continue playing. It's better to use segments to tailor the ad display frequency to different kinds of users. For example, publishers can serve fewer ads to users who consistently make an in-app purchase or serve ads within the first 5 minutes to users who only play for 10 minutes.

Good ad design improves user engagement, while bad one destroys the whole business model in the game. So in the future, game developers have to think about how to incorporate ads into the game loop. And AdTiming will help developers make better UA and ad monetization essential to game growth.

Thanks to AdTiming for helping us with this story. If you are looking to build your next game and need marketing help in monetization that can maximize your revenue with the help of AI, contact Adtiming for help!