Freemium Has Edged Out Premium in Mobile Gaming

Since the start of 2014, paid games have continued to lose market share to free games. By Q4 2020, only five percent of newly released games were paid games. The share of paid games on the App Store had fallen to 12 percent (from 43 percent in Q1 2014).

Besides, Freemium games have held an edge in monetizing since 2014. This explained the transition away from the premium model. Paid games only accounted for eight percent of mobile game revenue on the App Store at the start of 2014. By Q4 2020 this share had fallen to one percent.

Paid game shares relative to free games on the App Store – Source: Sensor Tower

Subscription Model is On the Rise

By 2020, 29 percent of the top games by U.S. revenue on the App Store had a subscription. This number has climbed steadily, up from just 9 percent in 2017.

More games began to adopt the subscription model, including some top titles like Roblox, Clash of Clans, and PUBG Mobile. While the subscription is not the top in-app purchase for most of these games, it boosts the freemium model when implemented correctly.

Share of the top 100 games by U.S. App Store revenue in 2020 that have a subscription –
Source: Sensor Tower

Most Mobile Games Don’t Rely on Subscriptions

Games that have successfully implemented the subscription model tend to get the bulk of their revenue from one-time purchases. Roblox is an exception, with monthly recurring subscriptions as its top three IAPs. Roblox also gives subscribers a discount on additional Robux as an extra incentive to subscribe.

Other top games have their subscription among the top 10 IAPs. They still outsides the top three spots. The subscriptions contribute to these games’ success but are not the only monetization strategy they use.

Top in-app purchases (IAPs) for games with subscriptions –
Source: Sensor Tower

More Than 50 Hyper casual Titles Crossed 50M Installs in 2020

The rise of Hyper Casual games illustrates how more developers are monetizing primarily through ads. 56 different Hyper Casual games surpassed 50 million downloads in 2020, up from just 14 that threshold in 2018. It is yet to be seen what the impact of IDFA will be on the Hyper Casual games space, and mobile games advertising more broadly.

Number of Hyper casual games reaching 50 million worldwide downloads by year –
Source: Sensor Tower

Key Takeaways:

Monetization Trends

1. The vast majority of mobile games utilize the freemium model over the premium model. By Q4 2020, freemium games earned 99 percent of the revenue on the App Store compared to just one percent from premium games.

2. Some top games have found success using the subscription model, with examples including Roblox, PUBG Mobile, Clash of Clans, and Mario Kart Tour. While a subscription can help boost the revenue for games when it fits into the overall monetization strategy, most still rely on one-time in-app purchases.

3. More and more games are monetizing through ads, with 56 different Hyper Casual games adding at least 50 million users in 2020. The impact of IDFA on this strategy is yet to be seen.