3 Ways to Think Differently About Mobile Game Monetization

While the current dominant business model for free-to-play mobile games is to combine in-app purchases with advertising, 26-year-old WINR Games' founder Jeremy Zuckerman is taking a different tack: rewarding players with cold, hard cash.His free-to-play game Big Time works like a lottery, incentivizing users with virtual raffle tickets (rather than, say, coins). Every week, one ticket is chosen ? and a player wins the week's "pot," usually around $1,000. Gutsy? Definitely. A foolhardy experiment? Maybe.But it's also indicative that mobile game developers are starting to think (way) outside the monetization box. And the one thing that's certain about this business is that things can change on a dime.Here are three next-generation models starting to attract attention in the mobile game community ? and our predictions about their ultimate viability.

Pay-Per-Episode

The Idea: With an episodic monetization model, a developer breaks down his or her game into bite-size episodes, which are then sold at a discount compared to what the whole game would be sold for at once. For instance, a $15 title could be split into five $3 installments.The episodic model can encourage more innovative game design ? a benefit for both players and developers ? and it also helps developers spread out the costs and risks of building a game from scratch. Episodic games, which use multiple app icons, also enjoy greater presence on app stores, which are flooded with hundreds of look-alike apps, making it hard to search for and find new games.The Pitfalls: This monetization model works best when there?s a linear story arc underpinning your game. The Walking Dead, for instance, is probably the most successful mobile game that implements episodic releases. For more casual, open-ended games, it won?t work.[caption id="attachment_8712" align="alignnone" width="900"]

Image via @Telltalegames[/caption]Our take: Episodic games lower some creative risks, but the main challenge for developers is to keep their audience engaged between episodes ? which can be an especially hard task for casual games.

"Netflixification"

The Idea: Netflix and other streaming services have turned the TV-viewing and movie-renting experience on its head. What if users could play mobile games via subscription, too?Bundling apps and offering them as a subscription could potentially benefit both developers and players. First, it would give users a better sense of value compared with in-app purchases ? that is, a $5 subscription for 20 mobile games is a better deal than buying coins for $1 here and there. Second, subscriptions could offer a steady source of income for developers. Also, making your game available as part of a package deal could attract new users who may not have otherwise encountered it.A promotional image of Amazon's Unlocked program[caption id="attachment_8713" align="alignnone" width="738"]

Image via TechCrunch[/caption]Pitfalls: One of the biggest challenges to getting a mobile games subscription program off the ground is convincing an app store to make it available. Apple in particular has historically avoided offering game-specific subscriptions in its App Store.Another hurdle is that mobile gamers may not want to commit to a subscription, says Joost van Dreunen, CEO of digital research firm SuperData."Considering that free-to-play is the number one form of monetization on mobile, it will be challenging to sell mobile gamers on committing to a monthly fee," van Dreunen tells Re/code.Our Take: It?s yet to be tested in the mobile games market (though Amazon's rumored "Unlocked" program would come closest), so it's hard to say if the concept will really take hold. That said, it's an encouraging sign that video game subscriptions are seeing success on other gaming platforms, like PlayStation and Xbox.

Cash Rewards

The Idea:Paying users real money has been tried in app categories like fitness and shopping, but as WINR's Zuckerman is betting, the idea has potential for mobile games, too.And he's not the only one: Skillz, a cash competition platform, allows developers to up the stakes for players by allowing them to make bets on the outcome of a round of mobile gaming. For instance, players can make bets starting at $0.25 about how well they'll perform in, say, a bowling game.WINR's flagship app: Big Time.[caption id="attachment_8714" align="alignnone" width="900"]

Image via Apple App Store[/caption]Skillz Founder and CEO Andrew Paradise tells Forbes that the service is a way for developers to augment their advertising revenue in a time when most mobile games are offered as free-to-play.Cashplay, based in Prague, is another service that lets developers hold cash tournaments with real money.?With some games achieving a 14 percent conversion on overall in-game DAU into real cash players and 52 cents ARPDAU on those conversions, we are achieving a much higher monetization rate than traditional means of mobile revenue generation can ever deliver,? writes Cashplay CEO Jarrod Epps in Pocketgamer.Pitfalls: It requires out-of-pocket costs for developers until they have enough revenue coming in through IAPs or ads. And as developers know all too well, monetizing players isn't always a walk in the park.Our Take: Cash rewards can potentially boost your game's profile and build a loyal audience by offering a tangible reward, but this is a pretty risky move if you're a small mobile game studio looking to make money quickly.