A few years ago, hybrid monetization was just a buzzword to describe a new trend in mobile game monetization.
Today, it’s a standard practice in mobile game development.
Not only that, but its popularity grows by the day.
For this reason, every game developer should be familiar with the ins and outs of this monetization strategy. Let’s go over everything you need to know about hybrid monetization – from how it works, to its pros and cons, and best practices.
What is Hybrid Monetization?
Hybrid monetization is a strategy in which developers use multiple monetization models in a single game.
Rather than focusing on a single monetization strategy, they combine two or even three different revenue streams. These are the most common combinations:
- Ads + in-app purchases
- Ads + in-app purchases + subscriptions
- Ads + subscriptions
Going Hybrid – Monetizing More Players
The #1 reason developers use hybrid monetization is to monetize a larger pool of players.
Allow us to illustrate.
Imagine you own a fast food stand that only sells hot dogs. With this business model, you’re limiting your money-making potential to people who like hot dogs. But if you decide to spice things up by adding burgers to your menu – voilà, you’ve instantly expanded your potential customer base.
The same logic applies to mobile games.
If you’re only using ads to monetize a game, you’re limiting its monetization potential to a user base that, well, tolerates ads. Then again, if you only rely on in-app purchases, your revenues depend on a slim percentage of users who spend money on mobile games.
With hybrid monetization, you can get the best of both worlds. By leveraging at least two monetization models, you’re casting a wide net and expanding the audience you can potentially monetize.
Other Benefits of Hybrid Monetization
The potential of monetizing a large pool of players is the primary and most obvious strength of hybrid monetization. But, there are more advantages beyond that:
- Boosts player engagement by offering various ways to interact with the game
- Helps with user retention by providing extra incentives for players to come back to the game
- Delivers a superior ROI compared to other monetization models, reported by 1 in 4 developers (Walnut Unlimited)
- Maximizes player lifetime value (LTV), allowing developers to generate higher value from each player over their entire in-game journey
- Ensures a steady revenue stream by decreasing dependency on a single source of revenue, resulting in higher financial stability
Getting Started with Hybrid Monetization
Before you go ahead and add a new revenue stream to your game, note this.
Hybrid monetization comes in many different shapes and forms, and it’s important that the combination you use makes sense for your game.
Here are some things to consider.
1. Balance Monetization Models
Many developers fear that including an additional monetization model will cannibalize the existing one.
For example, many fear that including ads will negatively affect IAP spending.
A research by Facebook Audience Network has shown that 86% of developers who included both ads and IAPs in their games reported that purchasing levels remained the same or even increased.
What does this mean for you?
As long as you carefully balance these monetization models, there’s no need to worry about them negatively affecting each other.
To achieve this balance, it’s important to take on hybrid monetization from a game design perspective.
Would you remove or replace features that clutter the UI and annoy your users? Well, you should adopt the same mindset when designing your monetization strategy.
2. Carefully Choose Ad Formats
If you’re about to include ads in your monetization strategy, it’s important to be tactical about the ad formats you’ll be using.
In a hybrid monetization model, some formats perform better than others. Being aware of this can help you make better decisions and unlock higher revenues.
The best-performing ad formats in a hybrid model are offerwalls and rewarded video ads.
According to ironSource, players who watch rewarded video ads are 6x more likely to make IAPs. Offerwalls, on the other hand, account for an average of 33% of ad revenue in games that use a hybrid model (Unity).
Why do these ad formats work so well in hybrid monetization?
They give players a sweet taste of in-game rewards.
Thanks to this, players get a glimpse of a premium in-game experience, resulting in increased loyalty and a higher probability of making in-app purchases.
3. Segment Users
Avoid developing a one-size-fits-all hybrid monetization strategy.
Instead, adopt an approach that recognizes different types of players who play your game and group them by common characteristics. For example:
- Spenders vs. non-spenders
- Long-term vs. new users
- Occasional vs. regular players
- Players who engage with ads vs. players who don’t engage with ads
Once you identify different groups of players who play your game, use this to your advantage.
For example, if you notice a group of players unlikely to ever make IAPs, you can hit them with more ads.
On the other hand, if players make IAPs and play regularly – these are your most valuable users. Therefore, make sure they enjoy a premium gameplay experience. For example, by reducing the number of ads they see in a day and by creating personalized IAP offers.
4. A/B Test
Which ad placements deliver the best results? What is the maximum number of ads you can show before users are annoyed? Which IAP price points work best for your game?
Numerous questions, only one way to answer them.
Rigorous A/B testing.
By A/B testing changes to your monetization strategy, you can make data-driven decisions, improve performance and reduce risk.
If you’re unsure how this process should look like, here are some tips for effective A/B testing in a hybrid monetization strategy:
- Conduct tests on a group of users for a limited amount of time (e.g. 10% of users over two weeks)
- Regularly monitor your ARPU (average revenue per daily active user)
- Analyze and refine different ad variables (e.g. ad frequency, ad creatives, user engagement)
- Monitor churn rates for different ad types
5. Get Inspired
If you’re not sure how to get started with hybrid monetization, analyze how it’s done in chart-topping games.
How can you do it?
The traditional route would involve visiting the app store, downloading a game, playing it for a while, and writing down the important things.
Fortunately, there is a better and more effective method – reading game analyses written by mobile gaming experts.
At MAF, we regularly play and analyze hit games, many of which monetize via hybrid monetization. In these articles, we introduce the most interesting monetization features, reveal the best-selling IAPs, and provide first-hand screenshots.
Some of our most recent analyses of games with hybrid monetization include:
All these games can be a great source of inspiration for your hybrid monetization strategy. However, studying games that are similar to yours will be the most valuable.
Why is Hybrid Monetization on the Rise?
The rise of hybrid monetization is directly related to trends and developments in the mobile games market.
Here are the top trends that have been shaping hybrid monetization in 2023.
The Trend of Hybrid-Casual Games
If we had to proclaim the mobile gaming buzzword of 2023, it would undoubtedly be hybrid-casual games.
Over the last year, many big hypercasual studios have changed their focus from simple hyper-casual titles to more complex, hybrid-casual games.
This also marked a shift in the monetization strategies they use.
While hyper-casual games mainly monetize with ads, hybrid-casual games almost always rely on hybrid monetization.
A great example of this is Mob Control by Voodoo. This game monetizes with a balanced mix of interstitial ads, banners, rewarded video ads, in-app purchases, and subscriptions – you can read all about it in our detailed analysis.
Changes and Restrictions
The mobile gaming landscape is constantly changing.
Just as you get used to doing things in a certain way, new rules and restrictions emerge.
For example, Apple introduced important privacy changes, while Google, on the other hand, limited intrusive ads. On top of this, countries and different regulatory bodies introduce restrictions of their own.
Relying on a single revenue source has become increasingly risky.
Therefore, developers are turning to hybrid monetization which makes it easier to navigate potential restrictions and helps ensure a steady revenue stream.
Wide Range of Monetization Methods
Over the years, developers have come up with numerous ways to monetize with ads, IAPs, and subscriptions.
Rewarded video ads have evolved into a diverse array of formats. Offerwalls, on the other hand, are no longer unattractive and intrusive like they used to be. Likewise, battle pass subscriptions are no longer reserved for mid-core games, but appear in all kinds of games.
On top of these classic monetization features, we’re also seeing new ad formats appearing on the market. For example, audio ads.
All in all, today, developers who use hybrid monetization have a wide range of methods at their disposal. This makes it easier to create a balanced monetization strategy and create a positive user experience.
Wrapping up on Hybrid Monetization
There is no doubt – hybrid monetization is here to stay for a long, long time.
We expect that, in the upcoming years, hybrid monetization will continue to evolve, fueled by trending ad formats like offerwalls.
If you’d like to explore this monetization strategy, MAF can help you out. Reach out to us and let’s discuss how we can help you boost your game’s revenue!