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Monetisation In Video Games

Gaming is one of the most massive industries out there, with it being evaluated at $178 billion in 2021, and it is estimated that it will amount to $268.8 billion in 2025. Games aren’t just for entertainment, they are played for a variety of reasons such as competition, socialising with friends, and more. With games being so universally popular and a lot of popular ones like Candy Crush for mobile or Fortnite for PC/console/mobile being free, the question that arises is, why do companies keep investing in it? How do they make money from it and keep their industry thriving while also creating new content for their audience? The answer to that is game monetisation.

Game Monetisation at a Glance

Video game monetisation is a type of process that a video game publisher or developer can use to generate revenue from a video game product. The methods of monetisation may vary between games, especially when they come from different genres or platforms, but they all serve the same purpose: to return money to the game creators, copyright owners, and other stakeholders.

Initially, game monetisation was pretty simple: you’d pay a fixed fee to get hold of a physical copy of a game, or go drop a quarter in an arcade for one more turn. But with different kinds of games and gaming platforms popping up, there are several kinds of monetisation methods, each with their own set of pros and cons. 

A lot of games still can be bought with a one-time fee, such as the Assassin’s Creed series. These could either be physical discs or digital keys for the game. Some games require a subscription on a recurring basis to play such as World of Warcraft while others while being buy-to-acquire, are available to play for free through subscription services. A great example of the latter case is the Microsoft Game Pass for PC which not only gives you access to titles but also gives you discounts in the Xbox Store. The share of gamers who currently pay for a monthly gaming subscription worldwide is 35%. 

The annual net sum generated by Ubisoft through sales of digital items, seasonal passes, subscriptions, and advertising is €780m. You can also make money through additional content like DLCs and these can be purchased as add-ons to the original game. The annual net revenue generated by Activision Blizzard through microtransactions, DLCs, and subscriptions is $6.49 billion. Finally, a lot of games, especially mobile games, depend on advertisements in-game to generate revenue. These include games like Candy Crush Saga. Mobile games are well on their way to make $39.8 billion in ad revenue alone.

The History of Game Monetisation

Back in the 70s, the most common way to play a video game was to head down to your local game parlor and toss a coin into an arcade machine. Gaming consoles, PCs, and mobile phones weren’t quite in existence yet, and even when they did come into the picture, they were too expensive for most people to buy. Let’s look at the stats for one of the most popular arcade games of all time, Pac-Man.

Cabinets Sold: 400,000 units
Revenue by 1990: $3,500,000,000
Inflation-adjusted: $7,681,491,635

Eventually, in about a decade, computers and consoles became affordable and opened up the retail market. You could buy a game and take it home on a cartridge, floppy disk, and eventually CDs depending on your device. The release of Gameboys and Tamagotchis revolutionised the ability of consumers to game on the go.

The most successful arcade game ever, Pac-Man.

Up next came the shareware method where gamers would be able to play a portion of the game for free, and if they liked it, purchase the rest of it later. id Software used this for their famous releases Doom and Commander Keen. This possibly served as inspiration for games that have both a free and premium version where the latter has additional features/levels/content.

Later came DLCs or downloadable content which serve as an expansion or addition to the base game. One of the first ever DLCs was Grand Theft Auto: London 1969 for Grand Theft Auto and was a resounding success. Games like Total Annihilation in 1997 also offered a new unit every month as free downloadable content for the game on PC. In fact, more money is now spent on DLCs and subscriptions compared to buying video games themselves in the US according to data from 2021.

Grand Theft Auto: London 1969 for Grand Theft Auto was a huge success.

Of course, once mobile gaming came into existence, so did the Apple App store and the Android Playstore. Initially, most apps were paid for with a one-time fee but then the F2P methods and freemium versions also slowly gained popularity. You can read more about this and the history of mobile gaming in our comprehensive article.

As for PCs and consoles, online gaming expanded. Back in the late 90s and 2000s, F2P games came into existence with the revolutionary notion that a game could be completely free for everyone, that purchases didn’t give their players an advantage in the game. Games like Neopets, Runescape, and Maplestory gained popularity for these reasons, and even today in newer games, you can buy cosmetic items which make you look cooler than ‘default skin players’, such in the case of Fortnite, which generated $9 billion in revenue in its first two years.

A lot of skins in Fortnite are famous people or characters and make a lot of money in sales. Like $9 billion.

The concepts of subscription gaming, in-game items, then loot boxes also gained traction over the past two decades. The concept of in-game items was cemented with the release of ‘horse armor’ packs for Bethesda Softworks‘s The Elder Scrolls IV: Oblivion in 2006, and subsequently followed by many similar content packs over the next few years. Microtransactions and in-app purchases (IAPs) also became a considerable source of revenue in the upcoming years.

In-game advertisements also took off around the mid-2000s, particularly on mobile devices. It is estimated that in-game ad revenue might grow up to $56 billion by 2024. In the last several months, cloud streaming is slowly becoming bigger with more subscription services jumping into the space. You can read about the industry in detail here. 

Types of Monetisation

We looked at some types of monetisation which are commonly seen at the onset of this article but different sorts of games and platforms prefer various kinds of monetisation methods. For example, most mobile games use free-to-play  (F2P) models with inbuilt advertisements or in-app purchases (IAPs) for generating revenue. There are also mobile games that work on the freemium model where you get free but restricted access to the game before you need to buy the full premium version of the game to unlock the rest of it. The aforementioned model is pretty similar to the shareware approach we’ve covered.

Finally, there are games that are marketed as buy-to acquire but these have dropped significantly over the past decade. In fact, compared to most of the top 10 mobile games in, say 2008, which are accessible with a one-time fee, the top 10 from this year (so far anyway) is comprised of mostly F2P games with IAPs or adverts.

When it comes to mobile games, here are the key types of monetisation seen:

  • Buy-to-Acquire games: This is the simplest revenue model. You pay a one-time fee to download a game. An alternative way of doing this is releasing a free version with ads and a premium version with no ads and more content which you can buy with a one time payment. This is how Angry Birds did it on Android. You can also release the first chapter or part of the game for free and then charge for the rest of the game.

  • F2P with In-App-Purchases (IAPS) and Adverts: In this type of game monetisation, the game itself is free which lets the users try them out without having to buy it, increasing the game’s user base. Once in-game, players have the option to purchase in-game perks, abilities, upgrades, or items which help them progress further ahead in the game. A key example of this would be extra lives in Candy Crush Saga. They also have the choice to avoid this and continue playing the game normally. On average, only about 4% of players make a purchase within a game. The players who make these purchases often tend to repeat them and hence are the primary sources of income for the game. When it comes to ads, there are several ways for advertisements to appear in games apart from just the full-screen ads or the banners that appear on the screen headers and footers. Increasingly subtle approaches are being taken by brands such as the sports drink brand Gatorade. They gave players a digital boost through energy refills in EA’s Madden NFL Mobile, letting them play longer. Rewarded ads are currently the leading ad format on mobile. Instead of having an ad forced onto them, players choose to watch a video in exchange for a bonus. Most of these games come with both IAPs and advertisements. 

  • Subscription models: Games may also have subscriptions that grant the player more items and even on occasion, an edge over normal players, such as VIP Access in games like March of Empires. Games with this form of monetization usually track live data and are updated based on it. 

When it comes to console games though, it seems as though the majority preference is still buy-to-acquire games, though subscription services like the Xbox Game Pass are still popular. Within consoles, there is an internal war as to which console sells better. This used to be between the Xbox and the Playstation, though in the past two years, it’s the Nintendo Switch which has sold the most. This could be a result of the several Nintendo exclusives like Animal Crossing: New Horizons and Super Mario Odyssey. Between the Xbox and Playstation though, it is still the Playstation coming out on top. A large portion of this success can be attributed yet again to the exclusive games available on the Playstation platform such as The Last of Us or the Uncharted series. When most people would only want to own one console, these exclusives represent another tangible benefit for investing in one particular console. However, exclusives are slowly fading away, and you can read more about that in this blog.

Exclusives like Animal Crossing: New Horizons, have made the Nintendo Switch the best-selling console.

Looking at console subscription services, Microsoft and Nintendo are doing a phenomenal job of making these appealing to their audience. The former offers Game Pass, which is a monthly subscription providing all-inclusive access to Xbox games and new games. Customers get access to more than a hundred Xbox games—including previous generation games that played on Xbox, Xbox 360, Xbox One, and Xbox Series X. Game Pass subscriptions are also available for use on PCs and mobile devices that support cloud play so that you can play compatible games available through the Game Pass on other devices. This last point in particular has hugely popularised the Game Pass and even people without an Xbox often buy it so they can play on other devices, usually the PC.

The Nintendo Switch Online subscription service provides access to more than 100 games from Nintendo and Super Nintendo, including the classics Super Mario Brothers and Donkey Kong Country. The company also offers an expansion pack with more enhanced services, including cloud saving and online multiplayer. Last month, Sony released their answer to Game Pass called Playstation Plus Extra and Premium. They follow the same model as Game Pass and provide a large library of both current generation games and older games from the PS2 and PS3 as well. One major issue in Nintendo games which the Online subscription is partially remedying is how the same game needs to be bought separately on each different generation of Nintendo devices.

When it comes to PC games, buy-to-acquire games and in-game transactions are the forerunners for preferred methods of monetisation, followed by subscription services for either games like Humble Bundles or cloud gaming subscriptions like Nvidia’s GeForce Now and Google’s Stadia. Lots of players still like buying physical or digital copies of a game. When it comes to online games, especially free ones, in-game advertising similar to mobile games plays a role. Finally, a recent kind of monetisation called play-to-earn, where both the players and the game publishers profit, is gaining traction with the rise of the Metaverse and games like Axie Infinity. Axie Infinity has made over $4 billion in NFT sales since its launch. It also shows that there have been 14.45 million transactions and 1.62 million buyers since its inception. 

Axie Infinity has made over $4 billion in NFT sales since its launch and is a shining example of the play-to-earn monetisation model.

Apart from our breakdown across devices, here is a comprehensive list of game monetisation methods employed by game makers before and after a player has acquired the game.

1. Pre-Acquisition:

These are monetisation methods usually employed before you purchase a game or a subscription to it.

  • Pay-per-Play
    Like the name suggests, you pay per game. This originated during the time of arcade machines where one game cost a quarter or two to play, and apart from online games like Poker or Rummy where you have to buy-in per game, it is not that popular these days.

  • Buy-to-Play
    Like premium games, the consumer buys the game once to play, but here, the game generally continues to be supported by the developer or publisher by maintaining online servers or producing new content regularly for the title. Examples of games like this include GaaS titles such as Rainbow Six Siege and Minecraft.

  • Free-to-Play
    Free-to-play games do not require the player to purchase the title to play, though access to some features and content may require purchase of a subscription or via microtransactions. An example of this would be Angry Birds, which after being a paid app on the Apple App Store, shifted to a freemium model where to unlock extra levels and play unhindered by ads, you needed to make a one-time payment. There are subtypes here as well, which you can see below:

    – Truly Free: The game is free and you don’t need to buy anything to complete playing it or to win. Games like Pixel Dungeon which have no ads or strings attached come under this category. These are not made for monetisation purposes, they are created and put out into the world by developers who want to express their artistic vision.
    – Freemium/SharewareGames that have a demo version or come with restricted content come under these categories. For freemium games, the aforementioned Angry Birds is a great example. Shareware is another, rather dated method of game monetisation where the games are free to play to start, but limit how far the player can progress before they must purchase the game. You could play the first part of a game, and if you liked it, you could buy the rest of it. Games like id Software’s Commander Keen or Doom were sold and marketed in this way.
    – Free to play games with IAPs: These are games which are free to download and play, but come with in-app purchases (IAPs) such as in-game skins (Fortnite), extra lives and hints (Candy Crush Saga), and the like. These are popular because such games thrive on a small minority of big spenders. According to App Annie, games now compose 56% of all App Store spending, with 95% of this on IAPs.

  • Subscription model (Pay-to-play):
    These are games that require the player to pay a regular subscription fee to maintain access to all parts of a game. The game is typically free-to-play to allow new users to try the game but full access requires the subscription to be paid. A good example of this is DestinyOther examples of this include games like World of Warcraft, which is free to play up to level 20, after which you need to buy a subscription. 
A great example of a game that uses the subsciption model is World of Warcraft, which is free to play up to level 20, after which you need to buy a subscription.

These can be further split into the following:

  1. Subscription Model
    For these kinds of games, you need to pay a monthly or annual subscription fee usually to be able to access the entire game with all its features. You might also have in-game transactions but a majority of the revenue for these kinds of games comes from the subscription fee. 
  2. Subscription Services
    These are services through which a gamer can gain access to a multitude of games for a fixed monthly price. The player may need to buy access to new content at times, such as through a season pass. This includes both offline stores as well as digital distribution methods. The best example of these is the Xbox Game Pass or Apple Arcade.

Games can be bought either through retail outlets offline or through digital distribution methods. The former are growing less popular with digital distribution being instantaneous, less onerous since you don’t have to find a place that stocks a game before heading there to buy it, and cheaper since digital copies of games are often cheaper, though not always, compared to physical ones.

2. Post-Acquisition:

  • Downloadable Content (DLC)
    These include additional pieces of story, new areas, and weapons added to the game, new characters, and the like. These can be purchased with an ultimate edition of the game or bought separately if released after the main game. Examples of great DLCs include Blood and Wine for Witcher 3: Wild Hunt or the Citadel DLC for Mass Effect 3.
One of the best DLCs released, Mass Effect's Citadel expansion.
  • Season Passes

    A season pass is a form of DLC Compilation in which consumers purchase a package for current and future downloadable content (DLC) packs for a video game (that is generally cheaper than the base price of purchasing DLCs individually). A game may have a single season pass or, for some GaaS games, new season passes over time. Examples include Assassin’s Creed Valhalla’s Season Pass and Super Smash Bros. Ultimate: Fighters Pass Vol. 2.

If you purchase the VIP subscription for Forza Horizon 5, you will receive 3 Exclusive Forza Edition cars, Vanity Items, 2x Credit race rewards, weekly bonus Super Wheelspins, and loads more.
  • Microtransactions or IAPs

    We briefly spoke about how IAPs can be found in F2P games and act as their monetisation method but these can also be present in paid games. In fact, Star Wars Battlefront 2 had to remove game-play affecting microtransactions which made the game pay-to-win. Players no longer had to pay to unlock characters though microtransactions for in-game cosmetics still stayed.. However, microtransactions when they don’t mess up gameplay by giving unfair advantages or offer enough value for money still exist and work for gamers and publishers alike.

  1. In-game items:
    – Cosmetic Only: These include cosmetics like character and gun skins, house decorations, and the like which don’t provide any benefit to the gamer apart from eye candy.
    – Gameplay Affecting: These can be of two kinds, one where by sinking money into the game, one can quickly climb to the top of the leaderboards. The other is by purchasing things like hints or extra lives so that you can solve the game when you’re stuck as opposed to propelling you forward. If gameplay-affecting IAPs are excessive, the game becomes unplayable for free players and the user base of the game will greatly decrease.

  2. Loot boxes:
    A loot box is a consumable virtual item which can be redeemed to receive a randomised selection of further virtual items, or loot, ranging from simple customization options for a player’s avatar or character, to game-changing equipment such as weapons and armor. A loot box is typically a form of monetisation, with players either buying the boxes directly or receiving the boxes during play and later buying “keys” with which to redeem them. These can be seen in games like Rocket League (which removed them two years ago) and Genshin Impact (there till date.)
    Some loot-box systems within free games are criticised as “pay-to-win” systems. In these cases, the contents of the loot box contain items, beyond superficial customization options, which directly affect gameplay, such as booster packs for a digital collectible card game. An example of this is Hearthstone, where players have to keep spending money to get new cards. Full-priced games which already provide downloadable content and then include a loot-box system have been heavily criticised by players. One of the games which drew a lot of flak for this was the aforementioned Star Wars Battlefront 2. The outcry against loot boxes has reached the ears of international lawmakers and they’ve already created legislation which has pushed some countries to roll out bans, like Belgium.

  3. VIP Subscriptions:
    These are a kind of special subscription, usually on top of purchasing a game or subscribing to it which offers exclusive rewards that give your game a boost and make you stand out. For example, if you purchase the VIP subscription for Forza Horizon 5, you will receive 3 Exclusive Forza Edition cars, Vanity Items, 2x Credit race rewards, weekly bonus Super Wheelspins, and loads more.

  4. Battle Passes:
    Again, you can buy these in game, usually F2P games. They encourage players to play the game on a periodic basis to complete it while also providing them with in-game items and cosmetics they can use. Games like Fortnite and Valorant have these.
  • Advertisements:

    When it comes to in-game advertisements, they can be of two major kinds:
    – Interstitial ads
    These are ads which are initiated by the game and cannot be avoided by the player usually. These include popups which players have to watch for a few seconds before closing or ads that appear along the foot or side of the game while playing. These are usually simpler to make while also more annoying to the player, unless they’re interactive or creative. Gameloft worked with Indian online retailer Myntra for a playable ad campaign that received an impressive 82% completion rate and 2.1 million impressions in just under two months.
    – Reward ads
    These are ads which are initiated by players, usually for additional resources like more in-game currency, extra lives, or faster cooldowns. These are usually more accepted by players since they have a choice as to whether they want to watch them while also being rewarded if they do.

  • Play-to-earn Games:

    These are games that typically incorporate blockchain elements such as NFTs. Players are incentivized to use NFTs to improve their existing portfolio or create new NFTs, with their sale managed by the video game publisher or developer. The player then is paid by the company for their work towards the new and/or upgraded NFT. Games like Axie Infinity have even proven to be a source of revenue for some players but these games are also rather susceptible to scams.

There is usually an upfront payment required by the player to get started, typically in the purchase of either cryptocurrency used by the game or in-game currency that they can later trade out, thus making these games “pay-to-earn”, and have been considered the equivalent of Ponzi schemes.

The Impact of Monetisation

At the end of the day, the video game sector is also an industry expected to continue generating the incredible revenue which it does. This means that in order to get gamers to spend more time and money on their games, publishers and developers alike will need to innovate and hold themself to a certain standard. In fact, with developers investing more time in games post their launch to ensure they remain fresh, players often end up getting more value for their money. A great example of this is the original Destiny. Games which were initially pay-to-acquire have also been made free and have switched to an IAP-driven revenue model. The Epic Games store in particular is driving this transition with their acquisition and subsequent free giveaways of games like Rocket League, Among Us, and Fall Guys.

The Epic Games store has been doing free giveaways of games like Rocket League, Among Us, and Fall Guys to build up a user base to compete with Steam.

However, monetisation of games can also come with negative impact for games. Since the method of monetisation must be decided before the game production, it may affect the game’s overall design and will shape how new games are designed. This might mean that games might be made in genres that are easier to monetise. Copies of successful games flooding markets can also lead to a lack of originality. For example, the F2P game Wordle has a plethora of similar games, some good and some bad. The rush to make the most money from one’s game can also lead to an improper consideration of balance between good game design and effective monetisation. This in turn can cause either players feeling extorted by the game and its developers or a failure of the game to produce enough revenue for the game to turn a profit. 

Finally, with games shifting towards a digital world, the question of ownership comes into play. Ubisoft recently said Assassin’s Creed Liberation from Steam would be removed and players who had bought it through that portal couldn’t access it even though they, according to Steam, owned the game. This was eventually rolled back and the game was made available again after global outrage. This is however a reminder that licensing issues can arise anytime and if they strike owners of digital copies, well, odds are that they won’t be able to play the game again. Also, with servers going down for decrepit games, they can become unplayable as well.

To conclude, in our previous blogs about the game industry, we look into the motivations of players and how the decisions they make regarding platform players, investment in the metaverse, and futuristic tech like VR and cloud gaming. All of these usually incorporate monetisation in some form or the other. When it comes to monetisation, it seems like the most successful and thriving model by far is the F2P one. Being able to play a great game for free is more likely to encourage a player to buy a battle pass or invest into cosmetics for the game. A great example of this phenomenon are CS:GO and Valorant skins. 

One of the best kinds of monetisation methods which benefit both consumers and industry players are advertisements, particularly customer-initiated reward ads. Another method would be subscription libraries where customers get a lot of content and games for a fixed price while publishers can resell older content along with the new. Everyone profits. Whether you want to play a game from the good ol’ days or jump into the latest hit, subscriptions like Nvidia GeForce Now and Xbox Game Pass have you covered across several platforms. 

Monetisation has evolved a lot over the years. If you’re looking for custom data about a particular kind of monetisation or the games that fall under the category, we have you covered.

Gameopedia works with clients across the industry on custom requests and can provide in-depth data about metaverse-related games. Reach out to us for data that can empower you to new heights. 

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The History, Evolution, and Future of Mobile Gaming

In our previous articles, we’ve established that the gaming industry is steadily, if not exponentially growing. A key reason for this massive boom is mobile gaming. The global market for mobile gaming is estimated to be $94.8 billion for the year 2022 (all the way up from $52.7 billion in 2018) and is projected to reach a revised size of $139.5 billion by 2026, growing at a CAGR of 12.3%. Even in the past few years, mobile games have made up the most significant chunk of revenue when compared to other segments like PCs or even consoles. However, the question arises as to why mobile games have such a huge market and growth rate. One might simply attribute it to mobile devices being an integral part of everyone’s life as people have mobile devices no matter what but that’s just the tip of the iceberg. In this article, we’re going to take a deeper look into the mobile gaming industry and break down its astounding success.

Analysis of the growth of the mobile gaming market globally over the past 5 years. Courtesy: Global Industry Analysts Inc

The History of Mobile Gaming

The first ever game released for a mobile phone was Tetris for the Hagenuk MT-2000. However, mobile games didn’t really gain traction until Snake released in 1997 for the Nokia 6610. It’s still a game which gets a great deal of love. 

Snake was one of the most profilic games ever released for the mobile.

Technology did evolve, and with it, so did games. The Wireless Application Protocol (WAP) is a technology standard developed to enable mobile devices to connect to the internet. While it didn’t really help people to browse the net or play complex games, relatively simple multiplayer board games like tic-tac-toe or Connect 4 were viable and fun. In the 2000s, Alien Fish Exchange was one of the games that caught fire. It was simple to get into: you have an alien fish you can breed. However, with WAP technology, you could trade and sell fish to other players or worst case, the in-game restaurants (ouch!). In 2001 though, mobile gaming had a seminal moment – the extremely popular Arcade game, Space Invaders, was released for mobile phones. Even though it was monochrome, the fun remained the same. Two years down the line, colour mobile phones started becoming widespread. With the improvements in technology, big-time publishers like EA started investing in mobile games. One of the biggest titles to come out in 2004 was Asphalt GT from Gameloft. More racing games were released that year and became one of the biggest genres for mobile gaming.

One of the biggest titles to come out in 2004 was Asphalt GT from Gameloft, causing the release of more racing games that year.

The next revolution for mobile gaming came in 2007, when Apple released its touchscreen iPhone. With the launch of its AppStore in 2008, there was a platform available for developers to sell their games to their customers without mobile operators or publishers getting a cut. Beyond games, the iPhone and App Store caused most other smartphone manufacturers to abandon their own attempts to build out a more sophisticated smartphone environment, such as BlackBerry and Symbian. BlackBerry had attempted to release its own app store but failed to gain the same success as Apple’s. Only two major competitors remained after the iPhone’s introduction, the Android-based devices (based on the Java language), using the operating system that had been developed by Google, and Windows Phone by Microsoft. Both took up the same approach as Apple, introducing app stores in Google Play and the Windows Phone Store. Ultimately, Microsoft ceased active development of Windows Phone, leaving iOS and Android as the principal players in the mobile operating system and app store market.

In December 2009, Rovio Entertainment released Angry Birds on the App Store, a physics-based game involving launching cartoonish birds at structures occupied by pigs that have stolen their eggs. The game was cheap, addictive, and extremely fun, and when Rovio ported the game over to Android, they released a free version with ads, though users could pay to remove those. Thus, they monetised their game on multiple fronts. 

Angry Birds was a huge hit, especially because of its free version..

The rise of social networks like Facebook saw games like Farmville gaining popularity, with more than 80 million players by February 2010. Up next came King’s release of Candy Crush Saga in October 2012. Both games still integrated with Facebook to ask their friends for extra lives, but the latter also let you purchase extra lives and power-ups in game. By the end of 2013, King had seen over 400 million new players of the game and their revenues had jumped from $62 million in 2011 to $1.88 billion from advertising revenue and in-app purchases.

The next kind of game which gained a huge audience was Clash of Clans. It retained similar in-app purchases as with Candy Crush Saga but also weighed heavily on social engagement similar to MMOs. By September 2014, the app was earning $5.15 million per day, and many users had reported playing the game for thousands of hours since its launch, attributing it to the multiplayer aspect of the game. Hyper-casual games like Flappy Bird and Crossy Road were also popular during this time. 

In 2016 though, a new technology came to mobile phones and changed gaming yet again: AR. Games like Temple Run and Subway Surfers used the rudiments of the technology to add an additional dimension to their game. Niantic then released Ingress, a science-fiction game that uses a mobile device’s GPS to locate and interact with “portals” which are in proximity to the player’s real-world location. The portals often manifest as public art such as statues and monuments, unique architecture, outdoor murals, historic buildings, local community hubs and other displays of human achievement. 

However, Pokémon Go was where AR and its geo-location concept really struck gold as Niantic expanded on what Ingress had taught them. The meteoric success that Pokémon Go found is hard to describe. All of a sudden, everyone around you could be spotted with their phone in hand, furiously swiping to catch a Lapras or Dratini in front of them, though only visible on their device. Odds were, you were too busy trying to catch them all yourself to notice what other people were doing (unless of course they were trying to take over your virtual gym.) Pokémon Go had record-breaking numbers of players, with both its initial iOS and Android releases seeing over 100 million players worldwide within a month of release.

Pokémon Go had record-breaking numbers of players, with both its initial iOS and Android releases seeing over 100 million players worldwide within a month of release.

In the last few years, cross-platform play has become a major watch-word for mobile games. When Fortnite launched, it was initially released for consoles and the PC but soon spread across several platforms including mobile devices. As a result of this, a large number of their players were in fact children playing on phones. Games like Genshin Impact also saw a lot of love. Finally, as the pandemic came in, multiplayer mobile games like Among Us had a huge increase in audience numbers as a locked up population turned to gaming as a way to stay in touch with their friends and socialise.

The timeline for major milestones in the mobile gaming industry.

Why are Mobile Games so Popular?

Smartphones are a device almost everyone has, irrespective of age and station. Whether it’s your granddad or your five year old sibling, they can find and download games and immediately start playing, no matter where they are. According to AppAnnie, players downloaded 82.98 billion mobile games in 2021 and 64 percent of people who play mobile games do so on a daily basis. In 2020, gaming apps were also the app categories reporting the longest session lengths per user

Mobile games are easily accessible to all, extremely convenient to download and play as opposed to setting up a PC or console and their peripherals, and the best part is, you can enjoy them anywhere, anytime. You can download your favourite game from app stores and play it when you are waiting for a taxi or your restaurant order. When it comes to developers and publishers, it is cheaper to make a mobile game and since most mobile games released employ a F2P business model, the barriers to entry are negligible. These days, mobile games are also known for their creativity and console-quality titles. There are already joysticks and controllers specially tailored for mobile phones and in the future, we could very well see titles available for the pc or console playable on mobile.

Of course, once mobile games were proved to be something the public loved, companies had to figure out a way to make money from them without annoying their audience (too much.)

The Evolution of Monetisation in Mobile Games

Before the launch of the App Store in 2008, many mobile phones were able to access limited browser-based games with WAP, and later download new apps that could be purchased from their wireless carrier or a distributor to use on their phone. However, the access to this rudimentary form of internet was extremely limited and game discoverability was hampered by this. Furthermore, there was a wide discrepancies of technologies available in terms of both hardware and software, so games were often limited to certain devices.

With Apple’s AppStore in 2008 though, mobile gaming became widely adopted as a result of games being centralised in one store. Around 80% of games on mobile were paid for in a one-time transaction in 2008, following the same model that consoles did. This however had two major drawbacks – the games were naturally smaller in scope as compared to their console counterparts (as a result of being made for the phone) and the audience for mobile gaming was still rather limited.

The game Tap Tap Revenge, a free game in which players kept up with popular songs by tapping the right spots on the phone screen, was the 2008 most popular free iPhone game of the year. The developers released a premium version of the game for $4.99 and paved the way for freemium games where while the basic version of the game is free, upgrades and addons cost more.  In 2009, Apple enabled in-app purchases for free apps, adding a new monetization route for F2P games. 2011’s Temple Run originated as a premium app, retailing at $0.99, but quickly switched to F2P. Temple Run lasted only one month on the market as a paid app before becoming free. App revenue immediately increased 10x once they switched to a freemium model. Less than 6 months later, by January 2012, Temple Run was the #1 top grossing app. Today, only 4% of apps on the Play Store are paid. Temple Run and Angry Birds started off as paid games, but Candy Crush Saga launched in 2012 as a F2P game with IAPs (in-app purchases) from the start. In just a year, it became the highest grossing mobile app, making about $1 million every day worldwide. The game makes a lot of money simply from offering committed players the option to buy boosters that can help them solve difficult levels. 

Finally, instead of targeting just those willing to spend in game, developers and publishers decided to hit everyone- with ads. In-app advertising was initially a concern – it might lead to a negative gaming experience if overdone and might also impact IAPs. However, creative ad formats, such as those awarding in-game items for watching or playable ads, were actually received positively. Everyone wins in this situation: Gamers who engage with rewarded ads are up to 6x more likely to eventually opt in for an IAP which benefits game publishers. In-app adverts also work great for marketers because players who see rewarded videos are 23% more likely to buy the products advertised. And for the gamers themselves, well 73% of them said that they’re happy with the ad model of monetising mobile games. In fact, hyper-casual users watch 2x more video ads on average than players in other gaming categories.

While game developers know that there is a huge market for the right games, they still have to figure out how exactly they can profit. There are several revenue models available for mobile games and these are:

  • Paid games: This is the simplest revenue model. You pay a one-time fee to download a game. An alternative way of doing this is releasing a free version with ads and a premium version with no ads and more content which you can buy with a one time payment. This is how Angry Birds did it on Android. You can also release the first chapter or part of the game for free and then charge for the rest of the game.

  • F2P with in-game transactions: The games themselves are free which lets the users try them out without having to buy them, increasing the user base. Once in-game, players have the option to purchase in-game perks, abilities, upgrades or items which help you progress further ahead in the game. A key example of this would be extra lives in Candy Crush Saga. They also have the choice to avoid this and continue playing the game normally. On average, only about 4% of players make a purchase within a game. The players who make these purchases often repeat them and hence are the primary sources of income for the game.
Candy Crush creates opportunity for generating income by letting players buy in-game items.
  • F2P with adverts: There are numerous ways for advertisements to appear in games apart from just the full-screen ads or the banners that appear on the screen headers and footers. Increasingly subtle approaches are being taken by brands such as the sports drink brand Gatorade. They gave players a digital boost through energy refills in EA’s Madden NFL Mobile, letting them play longer.

    Rewarded ads are currently the leading ad format on mobile. Instead of having an ad forced onto them, players choose to watch a video in exchange for a bonus. Playable ads are also rather popular. Gameloft worked with Indian online retailer Myntra for a playable ad campaign that received an impressive 82% completion rate and 2.1 million impressions in just under two months.


  • Subscription models: Games may also have subscriptions that grant the player more items and even on occasion, an edge over normal players. Games with this form of monetization usually track live data and are updated based on it. Periodic sales, offers, and in-game items that are otherwise unobtainable are presented. Fortnite and its battle pass where users have to play to unlock premium cosmetics after buying the pass are another way to increase play-time while also maximising revenue. Game pass subscriptions are also well-loved, since they give a lot of games and additional content for a one-time fee.

Popular Categories in Mobile Gaming

Games have always been the most popular category in the Apple and Google app stores, no matter which metric you consider –  the number of active apps, number of downloads, time spent, or revenue generated. Games represent 10% of the time spent on apps. On average, there are 8 games installed per mobile device in the US. Globally, smartphone users play an average of 2 to 5 games per month.

Hyper-casual games are the most played by far, with a staggering 30% of all-app downloads. This could be attributed to the ease of learning the game and the fact that these games are usually free. Next up are puzzle and arcade games, both of which are highly engrossing and possibly addictive. The graph below shows the exact breakdown of different game genres and their global downloads.

The exact breakdown of different game genres and their global downloads. Courtesy: App Annie.

Mobile Gaming - The New Social Network

While mobile games have been popular during the last decade, the 2020 pandemic gave the industry a huge spurt. According to a report, ‘63% of respondents reported an increase in gameplay time, more so in countries hard hit by COVID-19 — with an estimated 75% of the net rise in mobile gaming activity to remain after the “new normal” is established in the next two years.’

In China, which had a national lockdown much earlier than other countries, downloads of mobile games peaked at 284.3 million in February 2020. The same trend could also be seen in other regions as they entered lockdown. Since then, social mobile games have offered users worldwide a way to stay entertained and connected throughout the global pandemic. Games like Among Us in particular saw a huge increase in popularity and this could be because of how team-mates in game have to work together to complete tasks while trying to hunt out the imposters out to get them.

Games like Among Us in particular saw a huge increase in popularity during the pandemic.

Social mobile games are a type of mobile game that includes social features, enabling players to interact with each other during gameplay via messaging and integrated social media. Game developers and marketers benefit from social mobile games’ ability to build a community and keep users engaged for longer, boosting ad revenue, and return on advertising spend (ROAS). Some essential features of these games include:

  • Chat functionality to bring you closer to your fellow players
  • Leaderboards and activity feeds where you get updates as to how your friends are doing.
  • Social media integrations to your other apps 
  • Push notifications to ensure you constantly stay connected
  • Clan and guild mechanics to make you feel like you’re part of a community

The Future of Mobile Gaming

It’s quite clear that mobile gaming isn’t going anywhere except up. The next question that occurs of course is – what comes next? Here are a few trends that are pushing the envelope.

Mergers and Acquisitions: How They’re Allowing The Biggest Game Companies to Find Their Footing in The Mobile Game Industry

In the past few years, mobile gaming has received a lot of attention from companies who’re looking to buff up their portfolios and profits. Since launch, Pokémon Go has generated $2.3 billion in revenue and Fortnite has amassed some 250 million players. Perhaps in an attempt to replicate such success, the first substantial investments in mobile gaming came from those who already had a stake in the industry. Tencent invested $90 million in Pocket Gems, gaming powerhouse Supercell invested $5 million in mobile game studio Redemption Games, Boom Fantasy raised $2 million from ESPN and the MLB, and Gamelynx raised $1.2 million from several investors. 

The first investment from an arguably old-school enterprise came from Goldman Sachs, who invested $200 million in hyper-casual mobile gaming studio Voodoo. In July 2018, private equity firm KKR bought a $400 million minority stake in AppLovin and a year later, Blackstone announced their plan to acquire mobile ad-network Vungle for a reported $750 million. Take Two and Microsoft are also foraying into the mobile platform with their acquisitions. The former’s acquisition of Zynga lets them get their hands on cash generators like Farmville while also letting them learn how to make successful F2P mobile titles from a proven expert. 

Cross-platform play is one of the hardest to achieve features a game can have. The differences in software architecture which different platforms such as Xbox, PlayStation, and PC have make creating ports for all of them simultaneously an onerous undertaking. It might also lead to one particular platform being favoured over others, such as in the case of Fortnite, where although there is a large player base for both console and mobile devices, the mechanics are easier on PC. For competitive play, Epic Games decided to create separate tournaments and lobbies to overcome these issues, but if you’re a console player looking to play with your PC friends, odds are your game will suddenly jump in difficulty. However, games like Genshin Impact have proven that cross-platform games when done right can increase your net revenue while also increasing your player base significantly. Perks like this can make cross-platform the new standard games aspire to, and increase mobile gamings’ already massive audience.

Technology like Cloud Gaming, AR, and 5G Make Mobile Gaming’s Future Bright

5G is shaping up to be a game changer for connectivity thanks to its faster speeds and higher data bandwidth. As a direct result of this, applications like cloud gaming, AR, and the like are looking increasingly viable for mobile devices.

Cloud gaming is expected to grow from 3 million active users in 2019 to 177 million active users by 2024. One of the biggest obstacles to playing immersive games with detailed graphics and worlds are the lack of processing power on mobile devices as compared to a PC or even a console. However, cloud gaming can help mitigate this. Many leading online gaming providers are planning live events – such as Travis Scott’s five-day concert event on Fortnite – and those kinds of experiences can be provided through the cloud as a result of the benefits developments in 5G have fostered. These include low latency and an increase in the bandwidth of networks.

Another kind of technology which has already demonstrated its rather amazing suitability for mobile devices is AR. Mobile phones are perfect for the kind of interactions AR requires. This is a result of significant improvements in hardware over the last decade, higher camera quality, and improved internet access. Verizon, Deutsche Telekom, EE, Globe Telecom, Orange, SK Telecom, SoftBank Corp. and TELUS have joined Niantic’s Planet-Scale AR Alliance, which has a mission to create “amazing real-world AR experiences that demonstrate the possibilities of 5G.” Several years down the line, Pokémon Go is still going strong and has seen tie-ups with major companies like Starbucks. It seems to merely herald a future where AR can layer a whole new dimension atop our existing reality.


How AR and Pokemon GO layer a whole new dimension atop our existing reality.

Finally, the mobile esports industry has boomed in recent years alongside traditional esports. Mobile esports viewers worldwide amounted to over 400 million in 2019. Of the most watched esports tournaments worldwide, the 2021 Free Fire World Series in Singapore drew in over five million peak viewers, while the PUBG Mobile Global Championship reported nearly four million peak viewers. The highest grossing mobile game worldwide as of 2021 was PUBG Mobile, the mobile version of the well-known battle royale game PUBG. In 2021, the global mobile gaming content market was worth $131.2 billion and is projected to reach $173.4 billion by 2026.

The Biggest Mobile Gaming Market: APAC

Mobile gaming is likely to skyrocket, especially in regions like Asia Pacific (APAC) where mobile phones are the most accessible devices for people to game on. By the end of 2021, the region had 1.62 billion gamers, or 55% of players worldwide, up from 1.2 billion gamers in 2019. Improved internet infrastructure and accessibility as well as technological literacy is on the rise in this region. A lot of the successful games in the region such as PUBG Mobile and Free Fire have set the global standard for in-game social features like game chat, friendlists, leaderboards, and PvP modes. APAC players were estimated to have spent $57.9 billion on mobile games in 2021. This is definitely a market for players in the mobile gaming industry to constantly keep an eye on.

We’ve come a long way from the likes of Snake and it seems unlikely that the growth of the mobile gaming industry will slow down any time soon. Gameopedia works with clients across the gaming industry on custom requests and can provide in-depth game data and insights for mobile games. Reach out to us for data that can power your business to new heights.

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