Jessica Clement
Senior research expert covering video games
Gaming monetization - Statistics & Facts
No longer a niche interest, video gaming is a billion-dollar juggernaut with an annual industry value of 455 billion U.S. dollars. Long gone are the times where the only way of making money in the game industry was customers simply buying a game – as of 2024, there are many other ways gaming companies seemingly endlessly monetize their gaming content.
The gaming industry depends on several monetization models to make such mammoth profits: consumers may simply buy games, revenues can be generated via in-game advertising, or gamers spend money on microtransactions (individual purchases, loot boxes, gacha), downloadable content (DLC), or tiered extras, such as season or battle passes within the game. Each of these models can be exploited individually, however, in many cases, gaming companies choose to combine at least two of the three models to boost income prospects.
The combined models function mostly in free-to-play (F2P) games, where gamers are encouraged to pay for enhancements, such as additional lives, currency, personalized avatars, an ad-free experience, or unrestricted playing time. Those playing for free may face in-game advertisements, timers, fewer customization options, or gated content. Some companies have been criticized for diminishing the free experience of their F2P titles in favor of more aggressive, pay-to-win (P2W) monetization strategies where players cannot complete certain endgame content without paying for certain in-game items.
A 2023 industry survey revealed live service games as a trend that is likely to stick around and more than six in ten game developers stated that live services are necessary for long-term success.
How do video games make money?
For game developers, the most common gaming business model is pay to download but there are many approaches to making money from games and there is no one-size-fits-all approach.The gaming industry depends on several monetization models to make such mammoth profits: consumers may simply buy games, revenues can be generated via in-game advertising, or gamers spend money on microtransactions (individual purchases, loot boxes, gacha), downloadable content (DLC), or tiered extras, such as season or battle passes within the game. Each of these models can be exploited individually, however, in many cases, gaming companies choose to combine at least two of the three models to boost income prospects.
The combined models function mostly in free-to-play (F2P) games, where gamers are encouraged to pay for enhancements, such as additional lives, currency, personalized avatars, an ad-free experience, or unrestricted playing time. Those playing for free may face in-game advertisements, timers, fewer customization options, or gated content. Some companies have been criticized for diminishing the free experience of their F2P titles in favor of more aggressive, pay-to-win (P2W) monetization strategies where players cannot complete certain endgame content without paying for certain in-game items.
Gaming monetization leaders
Many of the top gaming companies worldwide implement several monetization strategies in their gaming releases, with newly released titles being increasingly likely to include some sort of additional in-game spending options. Electronic Arts (EA), already no slouch in terms of monetizing their titles via live services, made approximately 4.46 billion U.S. dollars in revenues from extra content sales in the most recent fiscal year.Industry trend: live service games
Live service games or games as a service (GaaS) represent a growing segment of video games where gaming titles receive a long or indefinite stream of monetized new content post-release to entice players to continue playing and paying. This approach was initially popularized with multiplayer online games such as World of Warcraft, Destiny, League of Legends, and Fortnite. In recent years, it also found its way into major single-player releases such as Assassin’s Creed: Valhalla. This trend is not limited to PC or console games but is also popular with the top-grossing mobile titles such as Genshin Impact or Clash of Clans.A 2023 industry survey revealed live service games as a trend that is likely to stick around and more than six in ten game developers stated that live services are necessary for long-term success.
Jessica Clement
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Jun 5, 2024
Jessica Clement
Senior research expert covering video games
