The online gaming industry has transformed into a lucrative business, given that the craze for online gaming has grown over the last decade. With diverse genres like multiplayer, battle royale, and esports, the online gaming industry attracts crores of people daily. Exploring game monetization becomes essential to capitalize on this thriving market.
Microtransactions, downloadable content, and in-game purchases have become major contributors, bringing consistent income for developers.
According to data available on the internet, around 3.09 billion people worldwide actively engage in video gaming. This number has surged by more than 1 billion in the last seven years, indicating a notable 32% increase. Projections suggest that the global gamer community will likely reach 3.32 billion this year.
The estimated value of the video game market is a whopping $385 billion, and esports players are playing an increasingly significant role in boosting this impressive figure.
In India, the online gaming segment holds the fourth-largest position within the media and entertainment sector. Anticipated to achieve INR 231 billion by 2025, it is set to grow at a compound annual growth rate of 20%. In 2023, the online gaming community in India surged to an impressive 442 million, securing its rank as the world’s second-largest gaming user base, surpassed only by China. Among these users, around 90 to 100 million are dedicated and frequent players.
So how do these online gaming apps make money? Let’s find out.
Freemium
Freemium, a mix of “free” and “premium,” is a popular revenue model for game developers. In this model, games are free to download and play, but developers offer additional items or features that players can purchase within the game.
Imagine playing a mobile game where you can download and start playing without spending any money. That’s the “free” part. But as you progress, you might be tempted to buy cool outfits for your character, special powers, or even skip waiting times. These extras fall under the “premium” category, and players can decide if they want to spend real money on them.
One common example is mobile games that let you buy virtual coins or gems. With these, you can unlock new levels faster or get unique items. Candy Crush is a great example – you can play for free, but if you want extra lives or special boosters to tackle tough levels, you can buy them.
It’s a smart strategy because it allows more people to enjoy the game without a big upfront cost. Developers benefit by making money from players who choose to enhance their gaming experience with these optional purchases.
Ads
This is another way of making money while offering gamers to download the app for free. Instead of paying to download a game or making in-game purchases, developers show you ads at certain points during the game.
For example you’re playing a game of Ludo, and run out of coins to start a new game. You will be given an option to either buy coins for a certain amount of money, or watch an ad.
These ads can be about other games, products, or even services. You are not required to buy anything, but the game developer earns money because companies pay to show these ads to players. This way, the popularity of the product or service grows.
Some games also have banner ads – small ads that appear at the top or bottom of the screen while you play. Developers get paid based on how many times players see or interact with these ads.
It is similar to watching commercial advertisements during the break of a TV show or a sports event. The money apps earn per ad varies based on the app’s genre and the type of ad used. It’s important to note that developers typically gauge ad revenue using eCPM, which represents the earnings generated for every one thousand ad impressions, not just for a single ad.
In-app purchases
In-app purchases are similar to Freemium, about which we discussed above. You will be able to download the app or play the games for free, but those games will require you to purchase a few things in order to stand a chance to win cash prizes.
For example, you’re playing a game, and your character needs a shiny new sword or a stylish outfit. That’s where in-app purchases come into play. You can buy these virtual items with real money, enhancing your gaming experience. You can buy special powers or fancy costumes to make your game more exciting.
A classic example is the popular game Fortnite. While you can play the game for free, players often spend money on in-app purchases for unique skins, dances, or battle passes.
Another way in-app purchases work is by offering boosts or extra lives. Imagine you’re stuck on a challenging level, and you want a helping hand. Instead of waiting for lives to regenerate, you can buy more instantly. Games like candy crush use this model, giving players the option to purchase extra moves or lives to keep themselves alive in the game.
For developers, this model does a lot of good – players get to enjoy the game for free, and those who want to increase the fun contribute to the developer’s revenue by making these optional purchases.
Subscriptions
Now coming to subscriptions. Sometimes, apps offer subscriptions. For example, you enjoy playing a game, and instead of paying for each power-up or level, you can subscribe for a fixed monthly fee.
One example of this model is Apple Arcade. By subscribing, players unlock a variety of games without having to watch ads. You can explore a variety of games without worrying about extra costs popping up when you are playing. Subscription covers all costs.
These subscriptions often come with extra benefits like early access to game releases, exclusive in-game items, or discounts on additional purchases. Subscriptions are one of the best ways to gain a consistent revenue for game developers.
Premium paid apps
Premium paid apps serve as a revenue model for developers who sell their apps on app stores for a single upfront payment. While this model may deter players who prefer trying an app before purchasing, maintaining high standards allows premium paid apps to thrive in app stores.
When developers choose the premium paid app approach, they set a fixed price for users to download and access the full game. This upfront payment grants players complete ownership of the game without any additional in-app purchases or advertisements. It is particularly suitable for games that stand out in terms of quality and features. Unless you are offering something different and exceptional, it is unlikely that this model or revenue will fetch significant money.
Services
Developers can also make money by providing services. They can offer services like hosting game servers, creating tools for modifying games and licensing game engines. These services are not just for gamers but also for businesses looking for gaming expertise. For instance, offering tools for modifying games lets users customize their gaming experiences, and licensing game engines earns money by giving other developers access to powerful tools.
Why game development is a lucrative career choice
Monetization models: Various monetization models, such as in-app purchases, ads, and subscriptions, offer multiple avenues for developers to generate income from their games.
Growing industry: The gaming industry is continuously expanding, providing ample opportunities for developers as the demand for new and innovative games rises. Games have a global audience, allowing developers to reach a diverse user base.
Legacy building: Successfully founding and running a game development app can be a fulfilling and lasting achievement, contributing to a legacy in the gaming industry.
