How do Mobile Games make Money

What you'll learn

In App Purchases

Pay to Download

Subscription Access

Add Supported

Whenever I share that I design and program mobile games, this question ends up being the one that I get asked the most.  How do those mobile games make their money?  For the sake of time I generally provide a very short explanation.  However the real answer is actually rather involved.  Let’s look at how mobile games today make their money.

Basic answer to how mobile games make money

The basic answer is to compare mobile games today to older console games.  Imagine playing Super Mario Bros on Nintendo.  Once you run out of lives, the game is over.  Now let’s assume that when you run out of lives, instead of the game being over, you have the option of buying another in game life for $0.25 - would you do it?

The real answer to this question is a little more involved.  Most mobiles games take one of four different routes to make their money.

1. In App Purchases
2. Pay to Download
3. Subscription Access
4. Ad Supported

Let’s take a minute to explore these different routes.  The exact method you take often depends on what type of app or game you are creating.

In App Purchases

Offering In App Purchases is by far the most popular and the most lucrative.  If you are designing a mobile game, this route can offer you the most profit as a game designer.

Here is how the concept works.  Within your app you create an in-game currency. This could be anything like gold, coins, energy, etc.  Actions within your game then cost a certain amount of this in-game currency to perform.

For example, in a slots game, you spend in game coins to spin the reels of the slot machine.  Now when your user runs out of this in-game currency, you can present them with an offer to pay real money for the in-game currency.  In our slots game example, we may offer our users the chance to buy 1,000 in game coins for $0.99.

Pay to Download

The pay to download route is not as lucrative as the pay for premium content route.  However it is a good way for apps that do not have consumable content to monetize their application.

Reference and utility style applications often take this route.  Let’s assume for a minute that you just created a really good calculator app tailored to the construction industry.  There is no in game currency in this app, so you offer it for download with a price tag of $3.99.  Users pay the one time fee and then get to download the app.

Subscription Access

Subscription models are similar to Pay to Download, but are slightly different.  Instead of charging users to download the app, you provide the app for free and then charge for use based on time.

The subscription method is very useful for apps or games that provide new content over time, yet do not have any sort of in-game currency.  Common examples of this could be teaching or news style applications.  Support and service models also fall into this category.

Ad Supported

The last monetization route is known as the ad supported route.  Let’s assume that you have a joke or news style app.  This type of app has no in game currency mechanism and really might not offer enough unique value to be a pay to download app.  You still have ways to make money on this app.  You can add both text, image and video style ads into your app to help you monetize your app.

Quick Recap

So just to recap really quickly:

In App Purchase:  The most lucrative, most useful in games that have consumable content.

Pay to Download:  Most appropriate for apps that provide a specialized service or utility that can justify access price points.

Subscription Access:  Best for games or apps that offer constant content updates, but not content that is consumable.

Ad Supported:  Used in apps when the other methods do not apply.