Do you know how much mobile or AAA games make? The figure may shock you. Game monetization refers to the process of generating revenue through various channels. Proper video game monetization models can differentiate between a successful and a flop game.
Before we can dive into the various in-game monetization strategies, it is important to understand how monetization works and how to leverage it properly. For developers, this includes generating revenue and sustaining a profitable business model. On the other hand, monetization for players is mostly a nightmare, if not implemented properly.
Fret not, in this blog, we will dive into the various game monetization strategies and learn how to properly implement these business models to make a successful game.
Let’s get started.
Gone are the days when game publishers used to rely on hard copies of video games to generate revenue. In 2025, there are multiple ways to monetize a game and ensure profitability.
Gaming is one of the most flourishing industries, surpassing both the music and entertainment industries combined. It is a multi-billion dollar industry with a value of over $455 billion. (Source)
However, there is no one-size-fits-all monetization strategy. There are various business models to generate profits and it is usually best to combine two or more monetization strategies to create more income channels and also give players an option to choose where they want to spend their money.
In recent years, live service games or Games as a service (GaaS) have also been popularized. These types of games receive a constant stream of monetized content with each update to encourage users to continue playing and spending. Multiplayer online games like World of Warcraft and League of Legends were some of the first games to leverage this model. However, games like Fortnite, PUBG, and Apex Legends soon followed with their loyalty programs (Battle Pass/Royal Pass). Moreover, this trend also made its way to top-grossing mobile titles like Genshin Impact and Clash of Clans.
The gaming industry is driven by various game monetization strategies and there is no one right answer. Instead, various publishers and game developers utilize different strategies depending on their game genre and objectives. Let’s explore monetization in gaming and understand how to leverage the various business models.
The pay-to-download model is arguably one of the most common ways to monetize games. It is also called the ‘premium model’ or ‘pay-to-play’ as it requires players to pay a specified amount to download and play the game. However, once players have made a purchase, they are not bombarded with in-app purchases or advertisements.
While this is a fairly straightforward approach, it requires strategically assigning a value to the game to make it seem justified. Before, games were only sold as physical copies in offline stores. However, now digital stores like Steam and Epic Games Store allow publishers to sell games online.
However, one drawback of this approach is that players who are willing to indulge in microtransactions or loyalty programs cannot do so. There is only a one-time fee that players can pay. This significantly cuts the video game revenue. Game publishers solve this by offering a ‘Deluxe Edition’ or ‘Collector’s Edition’ which is more expensive than the base game.
One of the problems of paid games is that the revenue stream is closed once the user pays the one-time fee. However, some publishers introduce additional downloadable content or DLCs that players can purchase after the game.
This video game monetization model is quite popular with AAA games that are successful. These games take advantage of the hype and willingness of the player to get more gaming content from a game they already like.
Some DLC like The Witcher 3’s Blood and Wine and Elden Ring’s Shadow of the Erdtree become so successful that they have a fanbase of their own. Shadow of the Erdtree was even nominated for the Game of The Year which is a first for any DLC to do. Just imagine the hype among players.
The free-to-play model also known as F2P in gaming circles is especially popular in mobile gaming. While this model offers the game for free to players, it is one of the most profitable video game monetization models for developers. This is because developers can combine models like in-app purchases, loyalty programs, advertisements, and other models to maximize revenue generation.
For instance, Genshin Impact is a AAA mobile game that is free to download but utilizes gacha mechanics for revenue. It made over $400 million in revenue in just 4 months of its release. In 2022, it generated over $1.5 billion and $1.2 billion from its Android and iOS apps respectively. These figures highlight the immense potential of the F2P model in modern mobile gaming. (Source)
It utilized various types of microtransactions like Welkin Moon, Primogems, and banner openings to consistently generate revenue.
In-game purchases also known as microtransactions are also a popular mobile game monetization model where players pay a small amount for a specific virtual good (items or collectibles). One of the best features of this in-game monetization model is that it can be used by every type of game, regardless of the genre.
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Microtransactions are so effective as they give players the choice to spend money on the item they want to buy. However, it is also crucial to implement microtransactions properly and avoid a pay-to-win scenario in the video game. They can be either purely aesthetic or impact the gameplay in a way. While cosmetic in-app purchases are mostly character skins or emotes, non-cosmetic IAPs involve power-ups, special items, or more.
Here are some types of in-game transactions you can offer players:
In-game advertisements are a popular video game monetization model for free-to-play mobile games. This includes showing third-party advertisements within the game. For advertisers, this is an effective way to reach a niche gaming audience and promote their products. While PC and Console games do not utilize this model, it is prevalent in mobile gaming.
However, for developers, it is important to place the ads strategically so they do not hamper the gameplay experience. Here are some types of ads that are common for in-game monetization:
These are simple static ads that promote a brand or its products. Banner ads are best used in combination with subscription-based game monetization models where developers can provide a discount to players who view the banner ad. However, the placement of the ad should be strategic and should not affect the gameplay.
These ads cover the whole screen and are shown at regular intervals like in-between levels. If implemented properly, they are very effective for revenue generation. They can either be static or videos that users can skip.
It is one of the best in-game advertisement monetization models. Here, players get an in-game reward in exchange for watching an ad. This is quite effective as players have control and are also incentivized to watch an ad. One of the best implementations of Rewarded Ads was in Shadow Fight 3 where players can watch an ad and get a second chance if they lose a battle.
These types of ads are quite common in mobile games. Playable ads include a short playable demo of a game that players can play. These are also quite effective as players are most likely to engage with an ad and download the game after the short demo.
These are not ads in the conventional sense but strategic brand placements. For example, have you ever seen cars of a specific brand in a racing game? That is the advertiser becoming part of the gameplay itself and promoting their products. I personally bought a Chevrolet Cruze after playing Need for Speed: Most Wanted (2005).
The subscription model is similar to microtransactions with a slight difference. In this video game monetization model, players pay a small recurring fee (monthly/weekly/quarterly) to access the game or unlock exclusive game content.
This monetization strategy is beneficial for both developers and players. Developers get a steady stream of income that can be invested in the game’s growth. On the other hand, players get exclusive access to additional gaming content like skins, characters, and virtual currencies. Moreover, since players have invested money, players are less likely to drop off, resulting in more user retention.
Games like PUBG: Mobile, Valorant, Apex Legends, Shadow Fight, and many more utilize the subscription model in the form of loyalty programs.
The sponsorship video game monetization model refers to a brand partnering with a game developer to display their brand in the game itself. This could be as simple as showing the brand’s logo or actively featuring the brand in the gaming content.
Brands pay hefty sums to games to feature their brand in video games. For instance, Monster Energy places its branding in Death Stranding, allowing players to drink their energy drink for a stamina boost. Similarly, companies like HP and Red Bull have also sponsored esports leagues like the Overwatch League and the League of Legends World Cup.
We have discussed various in-game monetization strategies but the best way to boost your revenue is to combine monetization models appropriately. Most modern games utilize the hybrid model as it allows them to cater to players with different spending habits.
Most mobile games follow the free-to-play approach with microtransactions, advertisements, and a combination of other strategies. Similarly, free-to-play games on consoles and PC combine microtransactions and subscription plans like battle passes.
On the other hand, AAA games leverage a premium (Paid) monetization model with DLCs and regularly updated fresh content. Paying players get access to new content while non-playing players can still enjoy the base game without spending a penny.
Since every game’s ultimate objective is to generate revenue, it is essential to follow best practices for mobile game monetization. A successful monetization strategy strikes the perfect balance between profitability and ensuring an engaging gaming experience. Here are some ways to maximize your revenue generation while also maintaining player satisfaction:
Before you can decide how to monetize games, you need to understand your target audience. Analyze their preferences, behavior, and spending habits to create a tailored strategy that generates maximum revenue.
When implementing micro-transactions, it is essential to do it strategically. Make sure you provide value with IAPs like providing exclusive content, consumables, and cosmetic items. Avoid implementing microtransactions that impact the gameplay as it makes the game pay-to-win, which negatively impacts the gaming experience.
Follow a free-to-play business model combined with other game monetization strategies. An F2P model allows video game developers to leverage various other revenue generation models like microtransactions, advertisements, subscription plans, and brand sponsorships. This maximizes revenue while also ensuring that players only pay for something they are interested in.
Advertisements are some of the best ways to generate additional revenue from your mobile game. Moreover, this strategy can also be combined with other monetization models to supercharge your revenue. However, make sure to strategically place ads so they do not hamper the gameplay experience. Balance the frequency of ads and also offer a one-time purchase to remove ads permanently.
One of the best ways to create a consistent stream of revenue is by offering subscription services like Battle Passes. These subscriptions feature exclusive rewards and also commit the player to the game, increasing brand loyalty.
While generating profits should be your primary goal, you can never neglect player satisfaction. Tailor your mobile game monetization strategies to your audience’s preferences and prioritize the gaming experience. Avoid pay-to-win mechanics, frustrating ads, recurring microtransactions, and any other practice that may result in negative feedback.
Unethical game monetization means prioritizing revenue generation at the cost of player satisfaction. Some monetization strategies if not implemented properly can result in a negative player experience. Here are some factors of bad in-game monetization strategies:
Game monetization requires understanding player behavior, ethical practices, type of game, and a tailored approach. The most effective in-game monetization models will depend on your target audience. Video game monetization strategies like in-app purchases or advertisements are like double-edged swords. If not implemented correctly, it can be more harmful than beneficial.
In general, if a game is already paid, players don’t expect it to have advertisements or microtransactions. On the other hand, you can follow a more flexible approach and combine different models in free-to-play games since users can access them for free. Moreover, it is best to stay updated with current trends and evolve with the industry. Who knows whether the monetization approaches that work well now will work in a few years?
Ans. The best way to monetize a video game involves combining multiple strategies like in-app purchases, advertisements, and subscription models. This hybrid approach allows developers to cater to different types of players while maximizing revenue potential.
Ans. Free-to-play (F2P) games generate revenue through microtransactions, in-game ads, premium currency systems, and loyalty programs in battle passes. Despite being free to download, these games often outperform paid games in terms of earnings.
Ans. Microtransactions also known as in-app purchases allow players to buy virtual goods like cosmetics, power-ups, in-game currency, and other in-game collectibles. They are a commonly used monetization model in mobile and online games. However, it is recommended to keep the in-game purchases purely cosmetic to avoid any unfair advantage in the gameplay.
Ans. Yes, in-game ads, especially rewarded and playable ads, are an effective monetization method for mobile games. When strategically placed, they generate revenue without significantly disrupting the user experience.
Ans. Pay-to-win models are generally criticized because they give paying players an unfair advantage. This can negatively affect player satisfaction and lead to a loss in long-term user retention, making it an unsustainable monetization strategy.
