Keeping up with the latest monetization trends in mobile gaming can be challenging. The landscape is constantly evolving, with new monetization methods, challenges, and innovations constantly popping up.
If you want to know what the biggest monetization trends are right now, look no further than episode 62 of Liftoff’s Mobile Games Playbook. In the episode, host Jon Jordan speaks to experts Andrew Seow, formerly Director of Monetization at Tripledot Studios, and Ravid Sela, Ad Monetization Lead at Playstudios.
In this blog post, we summarize some of their insights, including thoughts about the move towards header bidding and its impact on the industry, the rise of hybrid monetization models, and potential future innovation in mobile app monetization.
The rise of header bidding in mobile app monetization
In 2024, the rise of Header Bidding was a standout monetization trend in mobile gaming, headlined by Google Ads, with other networks like Moloco following suit and making that transition as well.
Header bidding is a process where mobile app publishers offer their ad inventory to multiple advertising networks simultaneously, allowing them to bid on it simultaneously. This creates more competition for each ad impression, increasing revenue for the app publisher by ensuring they receive the best possible price.
Seow describes header bidding as similar to a single-slot auction house, where bidders offer their bids side-by-side instead of offering competing bids, one after the other.
Header bidding differs from the alternative ‘waterfall model’, a programmatic approach in which ad requests are sent sequentially to ad networks in order of their historical performance until one fills the ad slot.
Pros and cons of header bidding
The shift towards header bidding has changed the pricing dynamic from publisher-led to more partner or network-led. This change has pros and cons when compared to the waterfall model.
Header bidding cuts out much of the work involved in methods like the waterfall model, giving the mediator more power. Due to the process’s concealed algorithm, more agency is given to the bidders, and publishers may lose access to the information they would gain from seeing which rates are not succeeding in the bidding process and the eCPMs of losing bids.
While workflow is improving, valuable intel can be lost in the process. Another disadvantage is that not everyone can benefit from such a streamlined, large-scale system.
Seow says: “We need to remember that on the other side of the chain are individual advertisers who want to buy inventory on our apps, and they can only do that if they have the technical ability to read the signals they are sending, interpret them, and price them. Changing bidding has streamlined a lot of infrastructure, but it isn’t necessarily accessible to all advertisers.”
Monetization trends and challenges in 2024
It is widely accepted that 2024 was not a strong year across the monetization industry. Two key reasons for weaker performance were greater control for networks and mediation partners, and the increased user acquisition costs. Strategies have had to evolve, so publishers have found new tactics to adapt to a shifting ecosystem.
Hybrid monetization models
In 2024, hybrid monetization models became increasingly popular among mobile game publishers. These models combine in-app advertising and in-app purchases to maximize overall revenue streams and user engagement. Games can cater to a broader audience, engaging players who prefer not to spend upfront through rewarded video ads while also offering opportunities for paying users to enhance their experience.
Hybrid monetization is effective because it can attract a wider user base through accessible ad-supported options while simultaneously benefiting from higher eCPMs driven by paying users within the app, creating a self-reinforcing cycle for revenue generation.
The most challenging part of the transition to a hybrid monetization model is that tailoring a game for in-app purchases can be very different from building one that’s primarily ad-supported. This means that apps will have to adapt their engagement mechanics to ensure that both monetization methods work seamlessly.
“Games that tend to use a hybrid build don’t rely on friction to get users to pay but on higher value for users,” Sela explains. “So seasonal passes, for instance, are a very trendy item right now. This is something that can help convert a user into a paying user, and in return, they get more enjoyment from the game without friction. It helps users progress in a way that isn’t exactly a pay-to-win format, but it enhances the fun.”
User spending habits in mobile games
While in-app purchases are an essential part of game monetization, only a small percentage of users make them. A 2024 report from Unity found that only 1.83% of mobile gamers spend money on in-app purchases, and of these, only 28.81% are likely to spend again after the initial payment.
Seow states that, with the exception of games like Genshin Impact or Honkai: Star Rail, where an entire meta is built around in-app purchases and their value, for most games, it’s a small minority of users that are making consistent in-app purchases.
For the majority of mobile gamers, their relationship with the industry is very casual, used as a way to entertain themselves and relieve boredom. This means that most players don’t feel inclined to spend money.
This is widely accepted by publishers who rely on in-app purchases as their main revenue model. Their focus is, therefore, more on increasing the amount of money this super minority pays, with converting users into paying users as a secondary goal.
The future of direct-to-consumer monetization
While the number of people willing to spend money on mobile games is very low now, the percentage of people willing to make in-app purchases may increase in the future. Younger generations are currently willing to spend money on games like Fortnite and Roblox, where cosmetic items and battle passes are commonplace.
This could be aided by the rise of monetization methods such as direct-to-consumer stores, which sell in-app purchases to consumers from outside of the app—such as through the developer or publisher’s website. Such stores are already well established in some parts of the world, particularly in non-gaming apps, and are also becoming increasingly common in the mobile games industry.
These external stores are a win-win scenario. Consumers are usually offered much better deals when making purchases for their favorite apps this way, as the developer avoids the hefty commission fees levied on sales made directly through the Apple App Store or Google Play Store.
However, that does pose an infrastructural question—if apps can generate revenue outside the confines of app stores, where does that leave Apple and Google? That issue has led to a number of fights over payments, stores, and commission fees throughout the last few years.
The most notable was the widely documented legal battle between Apple and Fortnite developer Epic Games. In 2021, Epic Games had its game removed from the App Store after it gave users a direct payment option. The disagreement was only settled in May this year, with the court ruling that Epic Games is permitted to include links to alternative payment methods.
The role of AI in monetization strategies
The AI boom will certainly impact monetization strategies in the future. However, generative AI has yet to make a real impact on them for now.
Sela says, “It still needs to be proven that we can rely on it. Right now, we’re using it more for ideation and areas of creativity rather than leaning on it technically or analytically.”
Seow agrees, adding that while it is used commonly for user acquisition work, with data science or analytical work, publishers don’t want to share their data at this stage. Therefore, until there is a data-safe, privacy-safe, and confidential way to share data with gen AI platforms, it remains unlikely that its use will drive monetization strategies in the near future.
Ultimately, despite near-term negative impacts, the shift towards header bidding could benefit monetization teams, as they would have more time to think creatively about new ways to monetize games.
2025 is likely to be a year of innovation for mobile game monetization, with publishers embracing new concepts and innovations to adapt to changes in the market. We anticipate that new products and technologies will continue to emerge, shaping and disrupting existing revenue models.
