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Most Popular Gaming Monetization Models 2024

The global gaming industry is a modern media juggernaut some 2 to 3 times the size of the film industry. Latest estimates suggest that it enjoys annual revenues in excess of $300 billion and sustained growth that shows no sign of stopping any time soon.

The games industry was always going to gain ground on other forms of media as it came of age, but few could have predicted it would reach the scale it has today – though this was due to a cunning combination of new formats and novel monetization models.

It can be easy to assume that headline grabbing titles like Elden Ring or Cyberpunk 2077 are the main drivers of sales – so-called ‘triple A’ games that are the industry’s equivalent of summer blockbusters. And while the Call of Duty series alone is indeed worth more than the entire Marvel Cinematic Universe combined at the time of writing – it is actually a minority component of the modern sector’s revenues.

To get the bottom of what’s really going on, one needs to consider the role of the smartphone in all of this. Global estimates for game console penetration suggest that although in some markets like the USA, 50% of households own consoles, the global average is closer to 20%. That drops to 10% when one factors in high performance gaming computers. Now compare this with the 86% of the global population that own a smartphone, and things begin to make sense.

Smartphones introduced more people to the joys of video games than at any other time in history, and now the smartphone games sector makes up around 50% of all gaming revenues.

This has been driven by some truly innovative methods that have moved beyond the classical ‘pay to play’ model that apes DVDs and other physical media.

F2P

Free to Play games, otherwise known as F2P, are a relatively recent phenomenon – but have since taken the wider games industry by storm. Unlike freemium games that lock content behind pay-walls, F2P games are, as the name suggests, truly free. All core game mechanics and features are immediately accessible to players. The distinction here, and the means by which these games make any money – is that they offer microtransactions. These are small items of DLC that comprise customization options like new outfits, weapon skins or emotes. In effect, players can pay for the opportunity to express themselves.

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This invitational method is incredibly effective, and has generated vast sums of money for these titles. Fortnite, for example, earned over $9 billion in its first 2 years just from micro transaction sales alone.

Hybrid Marketing

It can be easy to assume that the fortunes of the modern game industry are purely as a result of disruptive new monetization approaches, and while these certainly have a key role to play, more conventional targeted marketing methods and promotional styles have also strongly contributed to the industry’s healthy bottom line.

Nowhere is this more apparent than when it comes to the iGaming sector that encompasses everything from online casinos to daily fantasy sports – the majority of which are, again, predominantly now accessed on-demand through mobile platforms and devices. This sector has long been at the forefront of offering bespoke offers and welcome deals to new and returning patrons, so much so that it has become part and parcel of how this sector has managed to outcompete its brick-and-mortar counterparts. Gamers keen to access real money slots titles know that they can easily source compelling deals from reputable platforms on free spins on digital one-arm bandits, and this hyper-specific marketing approach has increasingly been gaining ground across the wider industry.

Freemium

Of course the monetization model most closely associated with mobile is the freemium model. Simply put, freemium games are titles that lock the majority of their content behind pay-wall, effectively offering up a pared back free experience to gamers to encourage them to ‘try before they buy’.

This is an oversimplification however, as the majority of gamers never buy the full game. Instead, freemium games have devised ingenious ways to extract revenues from gamers by making them watch adverts, participate in marketing surveys, or pay in microtransactions in order to incrementally progress.

In essence, by avoiding paying full price for the game in question, players end up generating more revenues in advertising than they ever would have by buying games outright.

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