How Do Game Developers Make Money?

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How Do Game Developers Make Money?
20 Mar 2024
5 min read

Blog Post

In the vast and dynamic world of gaming, where virtual landscapes unfold and digital adventures await, there exists a fascinating ecosystem of game developers who work tirelessly to create immersive experiences for players worldwide.

Yet, beyond the captivating realms and thrilling quests lies a crucial aspect of game development: monetization. Have you ever paused to ponder how game developers make money from their creations?

The answer is far more intricate than meets the eye. From traditional premium purchases to innovative subscription services and microtransactions, game developers employ a myriad of strategies to generate revenue and sustain their ventures in this ever-evolving industry.

Let's delve deeper into the diverse ways game developers monetize their creations, shedding light on the mechanisms that fuel the gaming economy and shape the landscape of digital entertainment.

How Do Game Developers Make Money?

We’re all gamers here. Whether those games be vast MMOS, competitive multiplayer titles or fun apps we play on the commute, games are more diverse and widespread than ever. But have you ever considered how games actually generate income for the developers who create them?

The answer goes way beyond the simple sale of the games themselves, especially considering the astronomical budgets games often have these days—seriously, Starfield cost over $200 million.

So, let’s take a peek behind the fun; looking at the many different ways game developers monetise their experiences.

1. The Premium Purchase Model

This is the oldest model in the book. While it has been around since the beginning of gaming, this is still perhaps the most popular model for monetisation across the range of games—from indie to AAA.

This model is simple. Developers make the game. You buy the game. They take their wages from that money.

This model is still so widespread thanks to its simplicity, and the fact that it’s easy for consumers and developers to both know what they’re getting into.

Given, most developers will pass their game onto a publisher to actually release the game—dealing with everything from printing disks and boxes to publishing the game on Steam and other online platforms.

That said, this model can struggle to attract players like some of the others, as it requires large up-front purchases, often without the player having experienced the game enough to know whether it’s worth the price. But it’s simplicity keeps this the most popular model, by far.

2. Free-to-Play (F2P)

Over the past 15 years, free to play has gone from being a niche model to one of the most popular models utilised by AAA developers—particularly for mobile and multiplayer games.

This model is a little more complex. Developers make the game and publish it online for anyone to download, for free. But they lock certain content, bonuses or other aspects of the game behind some kind of paywall. That can be a one time purchase, a subscription, a battle pass or in-game advertising.

Free to play experiences can be great for generating traction, as players can jump in without having to spend any cash. Then if they think the game is worth it, they can begin paying. But this model relies on the game being very good. If it’s buggy or poorly designed, gamers will be able to tell, then they’ll simply be playing your game and dropping it before handing over any money.

Also Read: Introduction to YouTube Monetization: How Many Subscribers Do You Need to Start Making Money on YouTube?

3. The Subscription Service

Subscription services are complex. Thus, they are best left to large game developers or studios. From Xbox Game Pass, PlayStation Now and Nintendo to World of Warcraft, true subscription models are quite few and far between, and there’s a good reason why.

Subscription services require players to fork out a set amount of cash every month—usually around US$10. Thus, the game or service needs to be providing a LOT of value for that subscription to go on for months or even years.

But if the game is good enough, it can be a great boon for developers, as it provides them with a consistent stream of income, allowing them to reinvest this into making the game—or the service—much more rewarding for the user base.

4. Games-as-a-Service

This is a relatively new model championed by games like Fortnite, Roblox and more. Games as a Service (or GaaS) is an extension of the free to play model, where base games are free to download but additional content—from expansions to cosmetics—are periodically added and require some kind of payment to access. This approach blends the idea of a subscription service and a F2P model, using the strengths of both without their weaknesses.

Fortnite is a great example of this, with its battle passes unlocking additional content for players, with the base game simultaneously being available for any player to play for free.

5. The Microtransaction Model

So far, we have been talking about how players actually get to play the game. But there’s another level of monetisation—the microtransaction. These microtransactions are small purchases which happen within the game itself—for things like cosmetics, bonuses and other in-game benefits. This model has proven incredibly effective for developers; from Candy Crush to Fortnite. For example buying Fortnite vbucks to access new skins is a classic form of microtransaction.

The Future of Game Monetization

There are a variety of ways any game can be monetized, and the ideal model really depends on the style of game and its intended audience. That said, developers have been combining multiple models to create hybrid income, which often proves to be far more effective than simply choosing one model.

EDITOR’S CHOICE

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