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In-app purchases really are most effective for mobile game monetization
In-app purchases really are most effective for mobile game monetization
April 15, 2014 | By Christian Nutt

April 15, 2014 | By Christian Nutt
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    15 comments
More: Smartphone/Tablet, Business/Marketing



Mobile developers consider in-app purchases of digital goods to be the most effective form of monetization for games, and they're also most likely to use them to monetize their games.

That's according to a new report released by VentureBeat Intel, which collates data taken from 176 developers and over 1,000 games.

In-app purchases of digital goods scored the highest across the axes of "more cost-effective for the effort" and "popularity on survey" when VentureBeat ran the data. Interstitials, banner ads, and video ads also scored highly for both popularity and effectiveness.

When that data is presented another way, though, it reveals that certain monetization methods are less popular but also effective: text walls, "app walls," or in-app promotion of other apps, and offer walls, which give players the option to accept an advertising offer which generates revenue for the developer.




Premium paid downloads -- as a method to make money out of mobile games -- is now squarely in the "less popular, less effective" quadrant. This comes as no surprise, as free-to-play now accounts for 81 percent of U.S. revenue on Apple's App Store, and more internationally.

The data isn't always clear-cut, however. Banner ads appeared on both the most and least effective lists, at 4th and 1st places, respectively. The report puts that down to the fact that that they work for some games but not others, depending on how much screen-space the game requires.


Also interesting is the fact that Google was selected by developers who responded as the top monetization platform -- but it's also probably the default option used by smaller developers who don't have time and effort to use other, potentially better options, the report argues: "small developers are cheating themselves by not using multiple monetization strategies from the top companies who are winning larger shares of ad revenue per user," it warns.

The full report, which stacks multiple monetization platforms and methods against each other to see which is the most effective, is available now from VentureBeat Intel -- for $499.


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Comments


Ian D'Aprix
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VB Intel should make it free-to-read but make all the vowels and punctuation available as in-app purchases.

Ian D'Aprix
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By the way, thanks to Christian for writing this neat little summary. I'm sure the full report is far more comprehensive, but this is a far more palatable platform!

jin choung
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cocaine, heroin and prostitution are also extremely profitable money making ventures.

Jeff Alexander
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False analogy. Those are profitable because of what they are, not how they're sold.

Michael Joseph
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@Jeff Alexander.

What they are and how they're sold are one in the same for exploitative game designs.

Jed Hubic
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Everything that isn't charity is a money making venture. Is this some sort of under handed shame on games for making money comment?

Michael Joseph
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@Jed Hubic

All money making ventures are equally legitimate? Jin Choung's point is that they are not. Like yours, his too is a completely subjective perspective.

Greed isn't so much about "how much do I get" as it is about "how far am I willing to go to get it."

Not everyone lacks the moral self-governance to make money by exploiting the weaknesses of their fellow man.

Tony Chen
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Nice article, really helpful@

Tuomas Pirinen
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It is fascinating to follow the comments on these articles. There is a tremendous disconnect between the behavior of the real-world gamers and how they consume games, and how the commenters on forums like gamasutra perceive the games using IAPs.

I really feel that comparing IAPs to drugs and prostitution is simply hyperbole. Perhaps this is driven by jealousy of seeing other developers being successful? I find it curious that after all these decades of selling product to people there is this sudden alarm and distress.

Michael Joseph
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And you would follow hyperbole by questioning the character of the commenter?

This really isn't that complicated. There are game design purists out there who believe games that have integrated monetization into their gameplay are inherently exploitative. Full stop.

Why should jealousy have anything to do with it? Purists believe those they regard as exploitative game developers may be passionate about making money, but they're not passionate about making games. Everyone knows this.

A world class chef who quits his restaurant for a more lucrative position designing dollar menu products for McDonalds will have unwittingly revealed to the world (if not yet to himself!) that he has lost his passionate for the culinary arts.

Tuomas Pirinen
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I would like to understand the motivation for such extreme comparisons. Out of curiosity, would episodic content or DLC also classify for this condemnation, seeing as they are also integrated monetization? Or is it simply IAPs?

And my comment was a bit extreme, I apologize, I am just surprised by the intensity of the comments I read.

I do have to say that practically all games studios I have seen care a very great deal about making money, regardless of the business model -it is what allows them to exist, after all.

Latest Forza game for example had IAPs as well, and I find it very hard to believe that there was no passion for making games in that Studio.

Michael Joseph
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Forza is a great example. I'm sure you're right that there are passionate gamers and racing fans working on that. I suspect there are fewer now than during the earlier games in the series.

I also suspect there are some developers who lament the inclusion of IAPs into the game. But maybe if they claim they've been turned into digital pimps forced to release product copies who's jobs are to solicit their respective John Gamer 24/7 and turn tricks is going too far.

Fact is, many players believe the series has gone down in quality. Indeed I think you can point to many changes in the series and make the argument that those changes are indicative of a decreased level of passion for the game by the developers over time.

If we continue to water down what it means to have "passion" the word will soon have no meaning.

Tuomas Pirinen
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It will be interesting few years I am sure, as we will see what way the market goes. At the end of the day, it will be the purchasing decisions of the gamers that determine which business model will be used: people will vote with their feet and wallets. I am fascinated to see which way the cookie crumbles.

Marc-Andre Caron
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In other news: Cars are found to perform best on roads.

Andrew Jackson
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Are they considering "unlock the full game with no ads" in app purchases as "digital goods" or "premium-paid download"? I've seen a lot of games on android doing this recently and I really like it, reminds me of the old shareware days.
Wonder how successful that shareware approach actually is on mobile though, it's technically an IAP but its not really a micro transaction so I never know where it sits on these graphs.


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