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CTV Game Monetization: How Does it Work

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As the CTV app ecosystem continues to mature, streaming apps aren’t the only ones which are presenting attractive monetization opportunities. Gaming on CTV offers an open and potentially very lucrative field for developers who want to invest in creating a quality playing experience. On Roku, the most popular CTV platform, gaming apps represent 2% of the apps available, but rank second as a category in terms of actual usage. On Amazon Fire and Apple TV, games make up an even larger portion of available apps, at 17% and 22% respectively. 

Though gaming is still a relatively nascent phenomenon on CTV, there is already a good variety of games out there across genres, including:

  • casual games – Crazino (Playcent Games)
  • strategy games – Space Conqueror (Alpha 212)
  • racing games – Asphalt 8 (Gameloft)
  • role-playing games – Harvest Tale (Alpha 212)

Let’s look at how game developers can earn money from this more uncharted part of the CTV universe.

How gaming apps make money

Like most apps, games on CTV are usually free to download, but that doesn’t mean that they don’t make money! The two methods by which game developers usually monetize their apps are in-app advertising (IAA) and in-app purchases (IAP). Each of these models offers its own advantages and disadvantages.

In-App Advertising

In-app advertising involves ads from third parties being published in the game app (controlled by the publisher) by means of ad networks, which connect the two sides by working as a channel between supply and demand. Ads can appear in many forms, such as banners, videos played between levels or pauses in play, or as offerwall ads (where a user completes a survey or watches an ad in exchange for in-game benefits). 

One might expect that gamers would see in-app advertisements as disruptive to their experience, but a study conducted by Accenture/CV2 found that 73% of gamers are actually fine with seeing a certain amount of in-app ads while gaming. It’s likely that they accept ads as part of the bargain of playing the game for free. This means that you can have in-app advertising (within reason) without turning off your user base.

In-App Purchases

IAP is a staple of the so-called “freemium” gaming experience, and is likely familiar to anyone who has ever played games on their mobile phone. Gamers are offered the chance to improve their gaming experience (with things like extra levels, special tools or weapons, additional lives, and other in-game benefits) by paying money. Alternatively, some apps offer users the ability to purchase a premium version of the game which includes more of these extras by default. The  payment is usually made via digital wallet supported by the device’s operating system. The model functions just as well in CTV gaming. 

Games are obviously more fun when you’re able to win them, and including in-app purchases allows players to pay for that additional fun. This model is highly lucrative for developers because it allows them to earn money at large scales without actually adding new inputs for each purchase. The game mechanics and play experience available are the same whether or not a player makes the purchase. Once you’ve created in-app purchase options, you don’t have to produce anything new for the customer with each purchase. You can just watch the money roll in.

Which model is better?

It’s hard to answer this question definitively. The answer depends on the game itself and the audience it targets. As always, ad-based monetization will be preferable for audiences that aren’t keen on spending lots of money. Gamers in general are willing to accept advertisements in exchange for free entertainment. Moreover, the ad-targeting data you can get from your users’ devices will allow you to place relevant ads for good prices. On the other hand, advertising requires intermediaries to connect supply and demand for ad spots, which cuts into revenue.

Well-developed, addicting games can earn lots of money from in-app purchases. The model is great for user engagement, since players that already enjoy the game will get even more entertainment and excitement out of the bonuses you offer. This results in better engagement and longer play sessions. Users who have paid money to advance their gameplay will probably keep coming back for more. However, players can simply choose to play a game in the traditional way without buying extra benefits, which means that an IAP-dominant strategy leaves a developer with many hours of gameplay that aren’t monetized. In-app advertising, on the other hand, allows you to monetize each session played, whether or not the player chooses to buy anything.

As more and more people discover CTV, gaming on the platform will attract more quality options. For right now, the domain is wide open, and both monetization models offer attractive paths for game developers to make money from their creations.