What will be the Winning Monetization Mix for 2022
I’ve been reflecting on the great insights shared among games industry peers at the recent PocketGamer.biz roundtable.
Joining me on the panel was:
Tianyi Gu: Newzoo Market Lead Telecom & Mobile Services
Alex Olthoff: Yodo1 Head of MAS Customer Product
Michal Hablovič: Pixel Federation Ad Monetisation Lead
Anton Volynk: SayGames Head of Developer Partnerships
Brian Baglow (Moderator): PocketGamer.biz Managing Editor
One aspect that I particularly love about gaming is that unlike every other form of digital entertainment, personalization is built into the experience. Whether changing the look of your avatar or customizing your weapons in a shooter game, this level of customization and personalization of, and participation in, the experience is not available to content creators or consumers in any other form of entertainment media, whether movies, TV shows, or books.
In the discussion on Winning Monetization Strategies for 2022, everyone agreed that there is no single “best” solution for game monetization, but Newzoo analyst Tianyi Gu observed that publishers are realizing that ad monetization is a crucial part of an overall monetization strategy that is increasingly inclusive of IAP, IAA, in-game brand experiences, subscriptions, battle passes, and more.
Pixel Federation for example shifted from a pure IAP-driven business to one led by in-game advertising, while conversely SayGames transitioned from generating 100% of their revenues from video and banner advertising, to adopting other forms of monetization including non-interruptive InGamePlay ads and IAPs.
During the wide-ranging conversation, three trends really stood out for me:
Hybrid monetization creates new revenue streams that allow flexibility and control.
Developers and players alike are reaping the benefits of new monetization models. These models grant more control to players and developers over the game experience, allowing personalized monetization at the individual player level and increasing flexibility and freedoms in the game design process.
Rewarded video was “v 1.0” of this shift away from traditional banners and interstitials, where gamers are empowered to choose whether to be interrupted in return for in-game benefits. Rewarded videos also enabled developers to segment their audiences in to payers and non-payers, while maintaining retention. While this model is undoubtedly better than interstitials and does allow some player agency in the monetization path, it still breaks game immersion.
Michal talked about how their trials with different ad formats allowed Pixel Federation to experiment with varying monetization approaches depending on specific game audience, genre, and geographical segments.
Bringing a non-interruptive brand advertising experience into the game itself reduces player friction, and eases the tension that has traditionally existed between product teams and monetization teams, where ad monetization could only occur at the expense of the game experience.
Michal noted that “It’s good to have the product and monetization teams working together from as early a stage as possible, so that game designers can create those sweet spots where the ad format really works best in their game experience.”
Anton agreed, commenting that SayGames development teams have moved from testing of non-intrusive ads to implementating them into game design and development workflows: “Now we’re starting to introduce in-game advertising as an additional way to monetize existing audiences without interrupting the gameplay, and our development teams think about their games from this perspective.“
Although AdInMo’s InGamePlay ad placements can be integrated at any phase of a game’s lifecycle, in our experience integrations are most seamless when done at the GDD phase.
Brands leaning into gaming.
Brand advertisers and their media buyers have recognized the reach and engagement of gaming, especially for connecting with hard-to-reach cord-cutter and cord-never audiences.
Tianyi observed that even within the games sector, advertisers are shifting their brand spend from lean-back passive experiences to lean-forward gaming experiences. “Most mainstream brands were looking at esports but now that interest is really shifting to games and mobile games in particular, because mobile gaming has a very wide audience reach with diverse demographics.”
Publishers and developers are seeing the opportunities of brand advertising, and are building their game experiences to take advantage of this shift. Anton mentioned that “Unlike IAPs, you can monetize your entire audience with ads. A new approach we’re seeing with in-game (advertising) is a completely non-intrusive ad experience, where you’re seeing a brand within the game world.”
Democratization of advertising.
Integrating brands into games opens up possibilities that were previously unavailable to brands and games. AdInMo is creating a platform where any brand can have interactions with game players, and any game from an indie game to a AAA title has access to monetization through brand advertising.
As Alex from Yodo1 said, “There will be interesting opportunities for us to pick indie brands, smaller brands that have a rabid fan base and inject those into other indie brands, seeing a whole new way for brands and games to interact, and not limited to only those large brand names that we all know globally”.
Alex also described this from a developer experience, reflecting that many successful game development teams are small and they don’t always have the luxury of dedicated monetization managers. He noted that these smaller developers, especially in emerging markets, are where they see the fastest market growth over the next couple of years, so providing simple and effective monetization solutions to them is critical, so they can thrive and grow into the next AAA publisher.
Anton agreed, and noted that for hyper-casual game development in particular “there’s lots of these smaller teams who thrive just because ad monetization exists. And because hyper-casual games cater for wide audiences with no gender, age or geographical separations, this has created an opportunity for lots of smaller teams to become very successful.”
It’s certainly an exciting time for in-game monetization as models and platforms have matured and advertisers are keen to bring their media buying wallets to the space. While game developers and brand advertisers are co-existing in the same ecosystem, the real winners are the players, who are able to enjoy better, more personalized game experiences without interruption.
By Kristan Rivers, CEO of AdInMo
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