Generating money from video games is as important as creating the video game itself. Because at the end of the day, you need to be rewarded for the energy, money, and time you put into making a game. At the minimum, you need to compensate for the video game development cost.

So how can video games make money? Are there any strategies?

Indeed. There are a few monetization strategies that can be implemented in video games to generate high revenue. Those include

1. In-game ads
2. Freemium Model
3. Paid Games
4. Data Monetization
5. Subscription Model
6. Branding and Sponsorships

Let us see the above mentioned strategies and monetization models in detail.

Top Game Monetization Strategies and Revenue Models

1. In-Game Ads

In-game ads are one of the popular methods of revenue generation in video games. The main purpose of in-game advertising is to promote revenue, bring more traffic, and increase customer engagement with the product.

In-game advertising (IGA) uses banner ads, video ads, audio ads, and mini games to advertise a brand in video games. There are three popular types of in-game ads which include static ads, dynamic ads, and gamevertising. 

There are specific formats of in-game ads you can see in video games that are mostly used for advertising including

Rewarded Video Ads — Rewarded video ads are 15 to 30 second ads that offer rewards to the players that they can use in the game.

Interstitial Ads — Interstitial ads come with a clickable call to action button, as soon as you clear a level or achieve a certain target in the game.

Display Banners — Display banners display ads in the top or bottom of the video game screen. These ads may be static ads or dynamic ads.

Playable Ads — A demo play of a game is available in playable ads and it also comes with a call to action button to install the game, once you complete the demo gameplay.

Offerwall — Offerwalls allow users to fill out surveys, watch ads, play mini games, etc., in exchange for rewards that can be used in the game.

Coupon Ads — Coupon ads offer coupons that can be used for offline purchasing.

2. Freemium Model

Freemium is the combination of free and premium. The Freemium model allows players to download games for free and then charge them through in-app purchases to unlock premium content. For example, in multiplayer online games, it is free to download the game, but to unlock many characters and their accessories, you need to purchase them. Or you can play the game for a long time, collect adequate coins, and then unlock them. 

This model is largely used in video games to generate revenue and it is proved as one of the successful monetization models. Making revenue through in-app purchases exceeds more than the revenue generated from paid video games.

3. Paid Games

Paid games are the most common monetization model that has been followed for a long time, where video games make revenue by selling their games for a fixed rate. Once you pay for the game, you get lifetime access to the game. 

Previously, the games were only sold in offline stores. But now the games are even sold digitally. The digital sales opened up new possibilities of revenue generation for game developers — where even though you purchased the entire game, you can spend extra money to unlock additional features in the game.

4. Data Monetization

Data monetization is one of the least followed monetization strategies exercised in video games. In this method, the player activity and other specific player data are collected by video games. They use this data to earn revenue by sharing them with partners, advertisers, research, and third-party analysis companies. 

The data shared should be non-inclusive of any personal data of the players. The collected data is usually to understand the player’s behavior and their interaction with the game. 

In order to use this model, you need a high number of daily active users (DAUs) playing the game.

5. Subscription Model

Subscription model is a very popular monetization model which mostly comes with a trial period of 15 days to 1 month — where the player downloads the game for free, plays the game and if they like it they can pay for the subscription.

The players can subscribe to continue playing the game, avoid ads, or unlock premium features in the game.

This model is very much successful in non-gaming apps like Netflix, Spotify, and Amazon. 

Though the subscription model is not very popular in-game applications, big gaming companies are betting that the subscription model will play a big part in the mobile game development industry.

6. Branding and Sponsorships

Iconic brands use branding and sponsorships to reach targeted audiences and promote their new products to the audience. From in-game advertising to sponsoring sports events, virtual events, and tournaments, they use video games as platforms to sell their products. 

Luxury brands like Porsche, Audi, Ferrari, Gucci, Armani, Louis Vuitton, and many other brands partnered with popular game development services and featured their products in video games. Hire game developers to create unique video games to make huge profits through branding and sponsorships.

Summary

Video games use many monetization strategies to generate revenue including in-app ads, in-app purchasing, paid games, data monetization, subscription models, branding, and sponsorships. Two or three monetization strategies are combined and implemented in video games to make a sizable profit.