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February 13, 2023

How Mobile Free-to-Play Games Make Money

Originally Published 11/27/2020

When you look at lists of the top-downloaded and top-grossing mobile games in 2018-2019, you’ll notice that every game on that list is a free-to-play (F2P) game. Anyone can enjoy free-to-play games without any upfront cost.

The F2P model is popular for all game platforms, primarily mobile gaming. It originated from massively multiplayer online (MMO) games in the early 2000s.

Even augmented reality (AR) games have succeeded with the free-to-play model. One such game, Pokémon GO, has grossed around $2.65 billion worldwide across the App Store and Google Play since its launch in July 2016.

F2P games have dominated the mobile market for over a decade. How do F2P games make money, and why has F2P become the most popular monetization model?

A bar graph comparing player spending between apps. Apps include: Clash of Clans, Pokemon GO, Clash Royale, and Candy Crush Saga.

Much of F2P’s success is attributable to the large number of players F2P games can acquire.

The traditional premium model requires players to purchase a game before they can play it. Having to pay before playing creates a barrier to entry, limiting the player base.

F2P games are often thought of as a funnel. Anyone who discovers the game can play it, and once they have played it, they are funneled toward purchasing content.

A funnel model that shows a monetization strategy with funnel stages from top to bottom being: Discover Game, Play for Free, and Purchase Content.

A Washington Post report on F2P games shows that half of the revenue often comes from only ten percent of the players. However, these ten percent of players often spend more money than they would have if they only had to pay once.

This F2P funnel strategy is often referred to as a freemium model.

Want to get started on your own “Free to Play” title? Click here, and we would be happy to get you started.


Freemium games let players experience most of a game for free, but they require payment to access some content. Transactions to access this content are called in-app purchases (IAP).

Players will only purchase additional content if they play the game regularly and see value in the purchase. This makes player retention vital for a freemium model.

While premium games make the same amount of money regardless of how a player plays, F2P games must keep their users engaged and playing often. High player retention on a freemium game typically results in higher player spending.

A study on player retention states that “[For the first day of play,] overall playtime and consistent playtime are the main determinants of retention. Total Rounds, Total Sessions, and Average Duration are the strongest positive predictors. " Current Absence Time, Average Stars, and Average Time Between Sessions are the strongest negative factors.”

This means that if someone plays the game a lot during the first day, they are much more likely to keep playing in the future.

Some of the most successful freemium games use machine learning to analyze player behavior and create systems that notify players of special deals at opportune times. By analyzing player behavior, game developers of F2P games can create tailored experiences that increase engagement and provide better opportunities for gaining revenue.

For example, by analyzing their behavior, developers can predict a player’s expected lifetime value (LTV), the total amount of money a player is expected to spend. If the player’s behavior matches the behavior of someone close to purchasing, they can be shown specific ads or offered discounts and promotions. It’s better not to advertise to players with high or low expected LTVs; you will likely not change these players’ minds with ads, which may negatively affect their experience.

Simply offering IAPs in a game does not mean players will buy them. The top-earning mobile games have monetization integrated seamlessly into the core gameplay loop.

Players only make purchases if they see value in them. As a result, some of the most popular IAPs are items that give instant fulfillment. For example, players may pay for extra lives to keep playing right away or to skip timers to unlock new content.

Another popular type of IAP is cosmetics. These are especially popular in multiplayer games such as Fortnite, where players can pay money to unlock special skins and items that make their character unique.

Supercell’s Clash of Clans season pass, introduced in early 2019, has been very successful. A few months after its launch, Oliver Yeh wrote that “the game just marked its highest-earning month since 2017, generating approximately $76 million in global player spending on the App Store and Google Play.”

Freemium games are constantly adapting their IAPs to take advantage of changes in the market. It is crucial to monitor purchases and player behavior to optimize IAPs. Adjusting IAP pricing and monetizing key features can be vital to maximizing revenue. Even small changes can have significant effects when dealing with millions of players.

While freemium is a very popular approach to monetizing a free-to-play game, it isn’t the only successful F2P model.

A hand holding a smart phone with App: Pokemon GO displayed on the screen.

Free with Advertisements

Rather than monetizing through IAPs, some F2P games make their money from advertisements. Unlike freemium games, which rely on a small percentage of players to make money, games that monetize with ads earn a small amount of revenue from every player.

The Free with Advertisements model is popular with hyper-casual games. Since hyper-casual games have the highest number of players and game sessions on the app stores, they can make a ton of ad revenue.

Hyper-casual games typically use interstitial ads as the primary way to get ad impressions. Interstitial ads are ads shown between gameplay loops. This works well because a typical hyper-casual gameplay loop lasts between 10 to 60 seconds.

Another popular way to use advertisements is by showing rewarded ads. Rewarded ads give players an in-game benefit for watching a 15- to 30-second ad.

According to a survey by Unity, “71% of players surveyed cite watching in-game video ads as their preferred way to ‘pay’ for a mobile game. [...] 86% of developers saw [IAPs] remain unaffected, or even climb, after integrating rewarded ads into a game.”

Rewarded ads encourage players to engage with the game and can be implemented alongside IAPs. Players are more likely to watch an advertisement when a reward is tied to it. Also, rewarded ads allow players to opt out of seeing the advertising, making players feel like they have more control over their game experience. Many of the most successful F2P games combine both IAPs and rewarded ads.

New: Subscription Model

A newer model that might become a popular option for game monetization is the subscription model.

Popularized by services such as Netflix and Hulu, subscription services are making their way into traditional and mobile video games. Battle Royale games like Apex Legends, Fortnite, and Call of Duty: Warzone have subscriptions available. These subscriptions give players access to exclusive in-game items and bonuses for a monthly payment.

Apple Arcade and Google Play Pass are two game platform subscription services. These services offer subscribers a library of games to play for free. On Apple Arcade, developers earn a royalty based on how much time players spend in their app. Similarly, we know that Google Play Pass pays devs based on how much their game is played.

Although this model isn’t technically F2P, it may be an alternative for games that tried F2P and weren’t successful.


A F2P strategy takes advantage of the fact that nearly everybody has a mobile phone. With the top F2P games raking in billions of dollars in their first three years, it’s safe to say that F2P isn’t going anywhere.

As mobile games optimize their monetization strategies, we can expect the F2P market to grow.

Want a chance at your own successful Free to Play game? Click here, and we would be happy to get you started!

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