Introduction 

Did you know the most popular mobile games in the world are free-to-play (F2P)? But how do these seemingly free games generate massive revenue? Do you want to know the secret behind how free-to-play (F2P) games make money? If yes, then read this blog from the start till end. 

Free-to-play games are the trendiest segment in the gaming industry. Millions of games are available for free and paid in different app stores. But the free-to-play games have captivated billions of people's attention. 

You may not know that around 20,000 thousand apps and games get published daily on the app stores, but only a few of them come to users' attention. Of course, these app stores have their own algorithms that decide how an app should be visible on top. 

These app stores recommend what users generally search for the most. And guess what! People search for free games. Free-to-play games generate huge revenues for gaming companies with a massive success rate. 

But if publishers make their games free-to-play, how do game developers make money? If you are a gaming entrepreneur looking to publish free-to-play games and want to know how F2P games make money, this post is for you. 

In this article, we will look at how F2P (free-to-play) games make money and list down the gaming industry's proven strategies to do so. 

What is the Free To Play (F2P) Concept in Gaming? 

The F2P (Free-to-play) concept in gaming allows players to download and play a significant portion of the game for free without needing an upfront purchase or subscription. This differs from traditional paid games, where players must pay the total price before accessing the entire experience. 

F2P games typically use a "freemium" model, which offers the core gameplay for free but generates revenue through optional in-game purchases. These purchases can include cosmetic items like character skins, additional content like new levels or characters, or in-game currency that can be used to buy these items. Some F2P games may also include advertising to generate income. 

The key difference between F2P and traditional games lies in the initial barrier to entry. F2P games are accessible to everyone, regardless of budget, which can lead to a larger player base and community. 

However, F2P games are carefully designed to avoid feeling pay-to-win, where players who spend money have a significant advantage over those who don't. 

Ideally, F2P games offer a balanced experience where paying is optional for enhancing the experience, not essential for basic enjoyment. 

Paid Vs Free To Play Games

Before we understand how do F2P game developers make money, let’s have a look at some of the notable benefits and drawbacks of paid and free games. 

How Do Free To Play Games Make Money? (Top Proven Monetization Strategies)

Here are top proven strategies about how f2p (free to play) games make money:

In-App Purchases (IAPs)

One of the most influential and primary sources of income for game developers is in-app purchases. Players can unlock exclusive content through virtual stores. 

These purchases are available in-game, which allows users to buy certain game content. In this model, the game offers various premium services from power-ups to cosmetics skins, special weapons, extra lives, etc., that user can buy at their will. 

In-app purchases bring a next-level gaming experience for users and offer them different types of in-app purchases (IAPs), allowing them to enjoy the complete game features and functionalities seamlessly. 

Take Clash of Clans as an example, where players can purchase extra piles of gems that allow them to build villages and compete against clans. 

Moreover, there are other great examples that have used this microtransactions model as their primary source of business revenue. 

Subscription

The subscription-based monetization model provides users with VIP benefits that normal users don’t get. Users buy a game subscription plan in which they get various benefits like extra lives, extra experience, boosts, etc. 

By availing the subscription plan, users don’t need to buy extra game assets again and again. 

Mainly, game developers add monthly, quarterly, and yearly subscription plans for a certain amount. Also, these models offer unique benefits like special weapons, extra power-ups, etc., that are not accessible to non-subscription users. 

Game development companies significantly earn huge revenue for their business through this monetization model. 

Subscription services have become a prominent monetization strategy for F2P games, offering a recurring revenue stream for developers while providing players with a predictable and potentially cost-effective way to enhance their experience. 

These subscriptions often come in tiered structures, with a free tier granting basic access to the game and paid tiers unlocking additional benefits, such as: 

— Exclusive content 

This can include access to additional characters, maps, game modes, or story content, offering deeper gameplay experiences for dedicated players. 

— Faster progression 

Subscriptions may offer increased experience gain rates, reduced cooldowns for specific actions, or additional resources, allowing players to progress through the game faster. 

— Cosmetic rewards 

Premium subscribers might receive exclusive character skins, weapon modifications, or other cosmetic items, allowing them to stand out visually and express themselves further. 

— Ad removal 

This is a common perk, eliminating intrusive advertisements that can disrupt gameplay and providing subscribers with a smoother and more enjoyable experience. 

In-Game Banner Advertisement 

F2P advertising is one of the great marketing strategies for businesses looking to enhance their visibility in the market. Also, this is the prime source of earning for free-to-play (F2P) games. 

There are various types of Ads that the free mobile games use: 

— Display ads 

Free mobile games typically use a variety of non-intrusive ads to generate revenue. These ads, which include static images, dynamic displays, banners, videos, and pop-ups, take up minimal space on the screen, often appearing as small banners. 

— Interstitial ads 

Many mobile games employ interlevel ads, like those that appear after completing a round in Candy Crush Saga, offering player’s bonus lives or power-ups in exchange for watching a short advertisement. 

— Incentivized ads 

Mobile games often leverage incentivized ads, offering in-game rewards like boosts, currency, or diamonds in exchange for ad viewing. While these ads encourage engagement, the rewards must be valuable, not readily obtainable through typical gameplay, to incentivize interaction. 

— Contextual ads 

Mobile games often utilize integrated advertising, also known as contextual ads, where brand elements seamlessly blend into the gameplay environment. Imagine encountering brand logos and posters on PokéStops in Pokémon Go, navigating city streets plastered with advertisements in Grand Theft Auto, or seeing banners displayed around the stadium in a virtual football game. These ads become part of the game world, offering a more immersive but potentially less disruptive advertising experience. 

Removing Ads 

To improve player experience and generate sustainable revenue for free-to-play games, developers are increasingly implementing the "Remove Ads" option as a monetization strategy. 

This feature allows players to eliminate disruptive in-game advertisements, such as video ads and pop-ups, fostering a smoother and more enjoyable gameplay experience. 

By offering this optional purchase, developers can tap into a specific segment of players who value an ad-free environment and are willing to pay a one-time fee or subscription. 

This approach maintains the core free-to-play model, ensuring accessibility for a wider audience while generating revenue from players who desire a premium experience. 

Furthermore, the "Remove Ads" strategy fosters user loyalty by acknowledging players' agency and allowing them to customize their gaming experience. 

This demonstrates developer respect for player preferences, potentially increasing satisfaction and brand loyalty. 

This approach strikes a delicate balance between catering to a diverse player base by offering both a free-to-play option and a premium ad-free alternative, ultimately promoting player satisfaction and the long-term sustainability of free-to-play games. 

Data Monetization 

This is another earning source for free-to-play (F2P) game developers. However, this monetization model is used by most of the gaming companies. 

When players play the games, they leave their insights about the mobile gaming experience, like their behavior, likes, and dislikes. 

Through this type of user data, companies can collect crucial insights about which users play their games and which do not. 

This helps them understand the user preferences. 

This way, developers can enhance and optimize their games according to user preference. 

Recent studies show that 20 per cent of users who have installed the game on their mobile phones played once or twice and then never played. 

In simpler words, the new users acquired by the platform may not engage on any level other than the initial downloads. 

By collecting this sort of data, companies can quickly identify their prominent users for their business. 

Battle Pass System

The Battle Pass has become a popular way for F2P games to generate revenue. It works like a tiered progression system, offering both free and premium rewards to players as they complete challenges and progress through the game. 

Imagine a ladder with free rewards like in-game currency and basic cosmetic items scattered along the way. 

These give players a taste of what's available and keep them engaged. 

However, the most exciting rewards, like exclusive character skins, weapon modifications, and even experience boosts, are locked behind the premium "Battle Pass" purchase. 

This system cleverly taps into player psychology. Free players get a glimpse of the desirable rewards, motivating them to become paying customers. 

For those who buy the Battle Pass, the tiered structure provides a clear goal and encourages continued play to unlock the most coveted items before the season ends. 

Real Money Games

Nowadays, gamers are more into real money games that allow them to earn a significant amount of money while playing games. This has become the trendiest source of earning for free-to-play game developers. 

Apps like fantasy cricket are the best examples of real money games wherein players play games using real money. 

This is the most high revenue generating model for business where there is no loss, only profit. For example, MPL is this free-to-play (F2P) game segment's top contender. 

In this model, players pay money for the same wherever they play a game. 

The game charges a certain percentage of the total money as an entry fee or commission. 

The real money segment has been truly a golden jackpot, as the risk is only for users. In such games, either users win or lose, but the game will earn money for each bet that is placed in the matches. 

The more user base the game has, the more rewarding tournaments they can organize, and each tournament will bring a significant amount of revenue for the game owner. 

Selling Exclusive Merchandise 

This model is effective when you have a large number of users and a great reputation in the industry. Games with an extensive fan following and reputation sell exclusive merchandise like clothes and personalized products from the game. 

This model works as a great revenue source for the free mobile game. 

Selling exclusive merchandise is a great way to generate revenue for free-to-play (F2P) games. 

Fortnite is an excellent example of it. Fortnite, the popular online battle royale game, is a masterclass in monetization through exclusive merchandise. The brand offers a wide range of products/merchandises, including:

• Apparel: T-shirts, hoodies, hats, and more featuring popular characters and skins from the game. 
• Collectables: Action figures, Funko Pops!, and other physical representations of in-game items and characters. 
• Cosplay accessories: Items like replica weapons, backpacks, and building materials for players in real-life cosplay. 

Fortnite's merchandise is visually appealing and high-quality, making them desirable collector's items for fans. 

It's important to understand that the game, its character, or the brand itself should be famous among users. 

An exclusive game product strategy is only beneficial when you have a good number of users as your fanbase who take your games as a competitive element. 

Many gaming companies sell other brand products in the game for a decent commission. 

These merchandise or products can be effectively showcased in the game section in various ways like a pop-up that can take the users to the buying link. Similarly, there are more ways to monetize your free-to-play (F2P) games. 

Crowdfunding 

Do you know! On average, 20,000 apps were launched in app stores each month. But here is the thing: many apps go unnoticed by gamers and also these stores. Nowadays, getting discovered by users and app stores has become quite a hurdle for the new game. 

But what if your users already knew about your game? It will become easier for you to gain a heavy user base without putting so much effort into various marketing campaigns, right? 

Therefore, this is where the crowdfunding strategy works like a charm for you. You may have seen many gaming or other companies using this strategy. 

This is called crowdfunding, which is a type of marketing practice. In this model, companies launch/run various ads, trailer videos, etc., to let users know about the product they are launching in the market. 

This effective marketing strategy helps you earn a target user base for your business even before making your product live in the market. Also, launching a beta launch of your game is an excellent tactic many game developers have used. 

The best example of this tactic is PUBG, when it was launched as a beta and players liked the game, the team earned a massive user base. 

This helped them earn the recognition of the gamers and the app stores. 

This is what crowdfunding looks like: it allows you to earn great recognition among gamers and app distribution platforms. 

Crowdfunding is a powerful tool to build excitement for your game. A well-run campaign can generate a passionate community of early supporters, priming your launch for potential success. 

Strong launch momentum can then translate into significant revenue opportunities. 

Tips for Choosing the Best Free To Play Mobile Game Monetization Strategy 

Of course, you can choose any monetization strategy for your free-to-play (F2P) game, but it is also crucial to understand which type of model you can opt for which type of game. 

This is crucial; not every model is suited for every type of F2P mobile game. 

Here are some key tips for choosing the best F2P mobile game monetization strategy: 

Understand Your Game Type 

The first thing to understand is that your F2P game type decides what monetization model is suited. Not all monetization models are equally beneficial. 

For example, a casual puzzle game will benefit from in-app ads, while a basic card game like Teen Patti, then in such a case, you can go for the real money monetization model. 

Moreover, you can also opt for in-app purchases (IAPs) that will allow your players to buy extra coins or power-ups to enhance their gaming experience. 

Therefore, analyze your game’s core loop and what monetization strategy it would naturally fit in. 

Competitor Analysis 

Another way to find out which free-to-play (F2P) monetization plan can be beneficial is to research your potential competitors. 

By putting a little bit of effort into researching, you can identify what your competitors have implemented into their F2P games. 

In more simple words, research how similar F2P mobile games in your genre are making money. Analyze what monetization methods they use and how effectively they are implemented in the game. 

This will give you crucial and valuable aspects of what works for your target audience. 

Analyze Your Target Audience 

Your revenue is what your audience spends on your game for various activities. Therefore, the revenue stream you choose for your F2P game should be aligned with them. 

While implementing the revenue stream model, ask yourself these questions; 

- Who are you making this game for?

- What are their spending habits and expectations for F2P games?

- How much are they willing to pay?

- Are they more likely to tolerate in-app ads for a free game?

- Would they be receptive to spending on optional in-game items?

- And how will you attract that audience? 

Answer these questions and understand your target audience. All of this is crucial for creating a monetization strategy your audience finds fair and enjoyable. This way, you’ll develop a perfectly aligned strategy that will surely give you success. 

Conclusion 

F2P games have truly revolutionized the whole mobile gaming industry by providing free access to the games. Moreover, this field opened various significant monetization opportunities for game developers. Thousands of F2P games are launched on the app stores monthly by game development companies leveraging billion-dollar revenue streams. 

Now that you have learned about all the F2P game monetization strategies and which model is more beneficial, you are ready to dive into the billion-dollar industry. 

If you're intrigued by the concept of "how do free-to-play games make money", you're probably thinking about creating a F2P game for your business. Get your game developed by a professional F2P game development company and implement the right monetization strategy to make a big fortune out of your Free-To-Play game app.

Frequently Asked Questions (FAQs)

Are Free-to-Play games really free? 

Yes, Free-to-Play (F2P) games are free to download and play, however, these F2P games often have optional in-game purchases or subscription services for users who want to enhance their gaming experience. 

Are in-game advertisements annoying? 

The frequency and placement of in-game advertisements generally vary from game to game. However, developers take crucial note downs of which ads are balancing monetization with maintaining a positive user experience. 

How do F2P games protect user privacy when collecting data? 

Game developers typically adhere to strict privacy policies and regulations when collecting and using users' data. They ensure that users' privacy is fully protected and respected. 

Are free-to-play games profitable? 

Yes, free-to-play games can be very profitable. They make money through in-app purchases, where players spend money on virtual goods or cosmetic upgrades. Another way they make money is through advertising. Free-to-play games are especially popular on mobile devices. 

Can players enjoy F2P games without spending money? 

Absolutely! Many F2P games offer a rewarding experience for players who choose not to spend money, with optional purchases serving as enhancements rather than necessities. 

What is the future of Free-to-Play game monetization? 

The future of the F2P game monetization model continues to thrive, with game developers constantly exploring innovative ways to monetize their games with the focus on delivering value to players.