How To Implement an IAP Revenue Stream

The growth of Freemium gaming models has pushed developers to implement new monetization strategies, subsequently giving rise to the IAP (In App Purchase) model. Many success stories have stemmed from game studios converting to IAP, or more commonly adopting the model to supplement traditional in game ad revenue. Prior to their $250 million acquisition by Zynga, Gram Games began testing IAP on single title Merge Dragons. The new revenue model was such a success that IAPs quickly became 90% of all revenue generated across their games (traditional ad revenue continued to grow over this time frame).

 

IAP models have successfully been implemented by small teams, they require fewer app installs to generate substantial revenue and they allow game studios to take control of their revenue streams instead of trusting it in the hands of third party ad companies. 

 

When building out an IAP based game, you must keep a few things in mind.

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Focus on your core audience

Rather than looking at averages across the board, focus on your most committed users. These are the users that are going to drive the most engagement in your game, thus being more likely to convert when offered IAPs. With proper analytics, users can be segmented into appropriate groups. Once you’ve established a core group, resources can be allocated to retaining these users, engaging them with custom offerings and targeting outside look-alike users with marketing campaigns to grow this segment.

Track relevant metrics

  • DAU (daily active users)
  • ARPPU (average revenue per paying user)
  • IAP conversion rate
  • Customer LTV (lifetime value)

Use IAPs to enhance player experience rather than limit it

Instead of creating paywalls that limit what players can or cannot do, think of ways that you can casually enhance gameplay for users with IAPs. Can you reduce sticking points in gameplay where individual players are stuck by offering them a booster or in game unlock? Doing so can convert an issue that would normally reduce player retention into a revenue producing opportunity.

Create a mini economy within the game

Think about an ecosystem where players are engaged to buy into, contribute and earn throughout the game play. Within this economy, too much scarcity of “diamonds” could frustrate players, while too many would create the perception of inflation.