Subscriptions are a great way for app developers to create a consistent revenue stream. Sarah Impey, Marketing Manager at player analysis platform Game Analytics, shares her expertise on the topic with us below.
These days, subscriptions are everywhere. Music, films, TV, food delivery – you can even learn a language with a subscription. Publishers have been predicting that Netflix-style subscription gaming will take off for years.
But mobile gaming is pretty far behind, as most developers are still making most of their money from ads or in-app purchases. Announcements from Apple and Google of subscription-based gaming services (Apple Arcade and Google Stadia) could be about to change that. Vodafone also announced a partnership with game streaming platform Hatch to bring cloud-based mobile gaming to their 5G service. In this post, we’re looking at the benefits of subscription-based gaming.
Ads are the safe bet
At the moment, only 14% of mobile publishers see subscriptions as an effective way to make money from their content. This is because ads pretty much guarantee income for developers – banner ads usually bring in around US$2 to 3 CPM (i.e., per 1,000 visitors), while full-size ads between levels can net around $10 CPM.
You can also offer incentives for users to download other developers’ games or give people the option to remove ads entirely for a small fee. But could a subscription service get you more bang for your buck?
So why subscriptions?
As long as the price is right, and the quality is high, subscription-based apps can be incredibly profitable. Revenue for subscription apps is steady and predictable. And you’ll quickly build a loyal customer base.
Players get a good deal as well, benefiting from premium gameplay without having to buy expensive consoles — and many users are willing to part with their cash to reduce ads.
However, most users are willing to put up with a few ads to get a game for free. Ads are an accepted part of the mobile gaming experience. So for a subscription service to work, you must keep the quality high for the product’s lifetime, which obviously costs money in development and maintenance.
You’ll miss out on ad revenue
You’ll also miss out on revenue from in-app ads, as well as seasonal spikes of in-app purchases (people tend to spend more on apps during holidays). That means you’ll need to check you can make enough from subscriptions to cover any shortfall.
Could a subscription strategy work for you?
There’s no one-size-fits-all answer to this – it depends on your product. But there are a couple of deal-breakers. For subscriptions to work, you need to keep adding content. This could be new items or levels, or even new games from your portfolio. But whatever it is, it’s got to be worth the weekly or monthly fee. So if you don’t think you can keep that up, then subscription probably isn’t for you.
You’ll also need to check your games’ retention and average session length metrics. If you only produce hyper-casual games (pick-up-and-play lightweight games that don’t take long to make), a subscription-only service isn’t likely to appeal to your audience. So you’ll be better off sticking to in-app ads or purchases. However, if you’re regularly producing new hyper-casual games, then that stream of new games could work as a subscription, as long as you have enough of them to make people want to come back.
Your final consideration should be whether you still want to offer a free version of your product, which is usually the norm. However, you’ll need to find a nice balance here – showing too many ads and limiting gameplay too much may mean losing a lot of loyal customers.
Lastly, you can still have in-app purchases in subscription games to appeal to your whale audience. Finding a balance may be tricky and can take some time, so if you do go down this route, it’s essential to listen to your players.
The last word
As long as you can regularly create good quality new content, a subscription model could work for you. But this doesn’t come cheap, which is one reason why mobile gaming seems reluctant to jump on the subscription bandwagon.
GameAnalytics is a player analysis platform. It helps game developers to analyze, understand, and monetize their players by making the right decisions based on data. Adjust and GameAnalytics have worked together to bring advertising insights to GameAnalytics’ Benchmarks+. You can check out the GameDev Toolbox here. And learn more about our partnership here.