Beyond the App Store: The future of IAP monetization
The future of in-app monetization is, well, out-of-app.
With Apple’s deprecation of the IDFA and longstanding refusal to adjust their 30% tax on developers, in addition to an overall drop in game revenue across the board, the mobile gaming landscape has been feeling the strain.
But the industry received a lifeline thanks to Tim Sweeney and Epic Games. As a result of their much publicized legal battle with Apple, it was ruled that app developers can, through communication with users outside of the app only, direct them to their own external web stores to purchase in-game items, bypassing Apple’s 30% commission.
While industry giants have been quietly building out their web stores with in-house resources, the vast majority of studios don’t have the war chest to do the same. And so we launched AppCharge. Our mission? To revolutionize IAP monetization with a direct-to-player monetization platform that gives developers a headstart from the get-go, rather than a handicap.
Keep reading to learn more about the rise of mobile game web stores and how you can use AppCharge to skyrocket your game’s monetization – without doing much at all.
The growing importance of out-of-app (OOA) monetization
Looked at solely through the lens of bypassing Apple’s 30% tax, web stores are a no brainer for games. But the need for web stores is made increasingly urgent when you consider three trends that are making monetization of game items all the more crucial in our industry.
The emergence of games-as-a-service model
Gamers have increasingly high expectations of what a game should be; games are expected to constantly evolve, add new features and experiences. On one side of the coin, this puts a strain on the budgets of studios, who need to hire liveops teams.
On the other side of the coin, a natural product of a liveops strategy is greater room for IAP monetization. New battle passes, in-game items, and special offers are hallmarks of liveops strategies – it’s just when you cut 30% off from all transactions, there isn’t much room for error in order for the investment on those liveops salaries to pay dividends.
Webstores represent a major boost to liveops-focused games. Not only do they provide studios with more breathing space and better return on their liveops investment by bypassing Apple’s 30% cut, but they actually facilitate more robust and engaging offers for users. From highly personalized offers to new loyalty programs, webstores serve as the backbone of a profitable and sustainable liveops strategy.
From hypercasual to hybrid casual
The second trend that highlights the growing importance of IAP monetization is hypercasual’s shift to hybrid casual in recent years. Apple’s deprecation of the IDFA essentially killed the hypercasual industry, which relied on hyper-efficient, targeted user acquisition, and quick ad monetization from users with low LTVs.
This model has been jeopardized as a result of Apple’s changes: revenue generated by hypercasual games dropped 10% in 2022 compared to 2021, down to $12.3bn from $13.7bn.
As a result, hypercasual developers are being forced to find ways to add deeper layers to their games, in order to increase user retention and LTV, and add IAP monetization to the previously ad-focused model.
Overall reduction in ad monetization
It’s not just the hypercasual category that’s feeling the heat. Following the IDFA apocalypse, games across the board are spending less aggressively on UA.
Consequently, 2022 saw a reduction in eCPMs compared to the previous year, causing games to earn less money from ads. And it’s unclear if the industry will recover to its pre-IDFA levels of ad monetization in the near future.
In order to survive, games must build out their IAP monetization strategies.
Direct to player: A new era in gaming
A perfect storm
All of these forces, and the Apple-Epic legal case, combined to create a perfect storm for the rise of D2C web stores in mobile gaming.
Industry leaders like Supercell, Moon Active, Playtika and Scopely, all of whom monetize heavily from IAPs, already launched web stores for their hit games. Numerous others have followed suit.
The benefits to game developers of D2P web stores are obvious: a significant uplift to their profit from sales of game items. Instead of losing 30% of all revenue to Apple, developers who build their own online stores pocket all of the fee.
Challenges of web stores
However, there are challenges posed by web stores. Firstly, Apple forbids games from advertising their external stores inside their apps – meaning developers need to find alternative ways to inform users. For large, legacy publishers with strong followings on social media, this isn’t such a big issue. For smaller outfits who are still building their brand, it requires some thinking – like partnering with influencers and building a strong community.
It’s also much more convenient for a user to make an IAP within the game, rather than going to an external web store. Because of this, developers will need to find a way to incentivize this change in user behavior. However, given the large boost to their margins afforded by web store transactions, discounts and incentives like loyalty programs can be offered to get the ball rolling and begin changing user habits.
Lastly, building and maintaining a web store using in-house tech requires time and investment. AppCharge’s co-founder actually led the development of Moon Active’s web store and knows first-hand how time consuming – and expensive – it can be. Giant companies like Moon Active can afford to do this, but most others need a third-party tool that makes it easy to launch a web store.
AppCharge: Powering the D2C mobile gaming economy
AppCharge offers a white-label web store platform for mobile game developers. Taking just a 5% cut from purchases, our platform allows for total customization, with developers able to design every aspect of their store, use gamification elements to boost engagement and encourage repeat purchases, set up segmentation to provide the most relevant offers for all users, and seamlessly handle payments and billing.
The best part?
After the initial integration to update the balance in customer accounts, the entire D2P monetization strategy can be managed by live ops and monetization managers – no technical development needed.
Compared to building your own webstore, this saves significant resources and allows teams to focus on building out a winning D2P strategy that improves user engagement, strengthens retention, and increases repeat purchases.
The future of IAP monetization is here, and we’re proud to be leading the way.
Unlock Your Game’s True Revenue Potential with AppCharge
Ready to transform your game’s monetization strategy and reap the rewards of out-of-app web stores? Get started with AppCharge today and watch your revenue skyrocket while creating a more engaging and personalized experience for your players.