Two serious problems surround mobile game monetization. Less than 1% of players become paying players and mobile advertisements can’t prove they’re effective.

Less than 1% Pay to Play

A Playnomics, Q1 2013 Engagement Report examined 1.7 million domestic and international game players on PC, tablet and smart phones. In reading this report, a few statistics really jump out. At the end of the study, a mere .77% were converted into paying players. The study concluded that 20% of those who monetized also contributed 90% of the total amount spent. The issue is further exacerbated by the fact that one player spent $7400. The top 1% of those monetized made up nearly 33% of the total spend. This reinforces the trend that a very small group of players were/are in control of the revenue and hence the success and failure of a game/company.

Playnomics Player Engagement Q1 2013

With statistics this haunting, it should keep industry execs up at night staring at the ceiling. While it has panned out tremendously for publishers King and Supercell, their success stories are the rare exception. This begs the question, how long will free-to-play and in-app purchases continue in their current form? If history has taught us anything, keep one ear to the ground because the music will stop.

Mobile Advertising Effectiveness Can’t Be Measured

The second problem concerns the other key revenue source, mobile advertising. Problematic to the advertiser is that mobile ad effectiveness can’t be measured with any degree of accuracy. In a MIT Technology Review, eMarketer states that only 2% of the total advertising spend goes to mobile websites and apps.  There are no cookies in apps (games) and therefore the standard method of tagging, tracking and targeting ads can’t be used. And so currently mobile advertising relies solely on performance-based models.

To compound an already difficult problem is how consumers switch between mobile devices and PC. For instance, they may see an ad on mobile yet make a purchase on their PC. Therefore its difficult to connect the dots between impressions and actions or sales.

The Interactive Advertising Bureau (IAB) in 2011 reported “all media depend critically upon reliable metrics for audience reach,” and mobile ads were “challenged by serious methodological and technological limitations.”

But have no fear. Like digital desktop advertising, a solution will be found and then we’ll see the real flood of targeted mobile ads. Google has filed patents on ways to connect mobile ads to real-world purchases. And Drawbridge, a new company claims to have the technology for marketers to follow consumers from one device to another. So imagine how that will work on your game synced across all your Internet connected devices. Yippee. Oh, and when the ads become so pervasive, we’ll pay for ad blockers to remove them.

What do you think about current methods of monetization? What free-to-play games do you pay-to-play though micro-payments?


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