Monetization of video games is a process of generating revenue (or making money) from video game products.
Game developers can monetize their games through multiple proven ways:
- Direct sales
- Microtransactions (In-App Purchases)
- Subscription model
To monetize a video game, developers can either make it free-to-play and have microtransactions, complemented by ads, or sell the full game for a set price. The key is to make the game not too expensive, but also not too cheap.
1. Direct Sales
Direct sale is the process of selling the game directly to the players.
Direct selling is a classic monetization method that has been around for the longest and is the easiest to implement.
There are multiple ways to sell the game:
1.1. Publish the game on a popular distribution platform (e.g. Steam, Google Play, App Store, etc.).
- Pros: Easy to set up, with direct access to millions of users
- Cons: Most platforms take a cut from revenue (Can be up to 30%, depending on the store)
1.2. Publish the game on a proprietary website with its own payment processor.
- Pros: No revenue split, meaning 100% of revenue goes to the site owner (excluding any payment processor and Hosting fees).
- Cons: Developers will need to do their own marketing and promotion: Learn more about SEO vs. Paid promotion.
2. Microtransactions (In-App Purchases)
Microtransaction in games is a strategy that involves selling in-game items, currency, abilities, skins, or upgrades for a set price, allowing the game free-to-play, but with some limitations.
Examples of microtransactions:
- Selling in-game currency that can be later used to purchase in-game items
- Advanced weapons that are otherwise inaccessible
- Cosmetic items, such as weapons and player skins
- Upgrades that give the players a slight advantage in the game
Displaying ads is a great way to add supplemental income to your game by allocating a small area on a screen that will show various types of advertisement, with the ad types being: pay-per-click (PPC), pay-per-action (PPA), and pay-per-thousand (PPM).
Platforms that support ads are Web and Mobile (ads on Desktop are currently not widely adopted, due to being deemed inefficient)
To start using ads you'll need to sign-up to a popular Ad network and wait for your application to be approved, after that, you'll be able to implement ads in your game.
Popular gaming-friendly Ad networks:
- Google AdSense
- Google AdMob
Each Ad network usually offers just one type of ad, either PPC (pay-per-click), PPA (pay-per-action), or PPM (pay-per-thousand) (sometimes a combination of PPC and PPM).
Pay-per-click (PPC) ads are the type of ads that pay on a per-click basis, meaning the publishers are getting paid every time someone clicks the ad, which is controlled by the cost-per-click.
Cost-per-click (CPC) is the value that the advertiser will pay for each ad click, which is then split between the Ad Network and the publisher.
Pay-per-action (PPA) ads are the type of ads that pay on a per-action basis, meaning the publishers are getting paid every time someone registers or buys something on the advertised website.
Pay-per-thousand impressions (PPM) ads are the type of ads that pay for every thousand impressions, meaning publishers are rewarded for having a higher impression rate.
4. Subscription Model
The subscription business model is a type of monetization strategy that involves setting up a monthly payment, in exchange for extra abilities and/or enhanced functionality.
Examples of in-game subscription-based features:
- Giving players the ability to host their own game rooms
- Special cosmetics and graphics in the game
- Access to otherwise locked parts of the game
Direct sales, Microtransactions, Ads, and Subscriptions are the primary methods for making money from video games and implementing at least 2 of them will yield the best results.