Mobile gaming has exploded in past years. Strong cell phones in almost every pocket usually guarantee premium games with flawless visuals and excellent gameplay. The mobile gaming sector has, therefore, experienced explosive income. As of 2023, mobile games represented around $89 billion in global revenue, more than 40 percent of all gaming revenue.

And yet, with these high revenues come questions about the ethics of some of the most popular monetization models, specifically around the ubiquity of mobile ads. Ads can be really distracting for players, and they often feel nickel and dimed because there’s always a request to pay small amounts to get further in a ‘free to play’ game. This leads to the question – is it possible for a mobile game today to be financially successful without relying on advertising?

Key Mobile Game Monetization Models

Before analyzing whether it’s possible to refuse ads for monetization and make ad free games, it’s important to understand the most popular options game developers have to earn revenue:

1. In-app purchases

IAPs are in-app purchases, where players can buy virtual goods using real money available within the app, such as extra lives, power-ups, virtual currencies, cosmetics, items or anything else. They are a way for developers to earn incremental revenue.

2. Advertising

Mobile games have a number of advertising formats. Interstitial and banner adverts show on the screen throughout gameplay. Rewarded video ads give out in-game rewards when you watch short videos. Because of mobile, advertising spends are huge, and you can monetize games with large user bases through ads.

3. Paid Downloads

Games can charge an upfront cost to download the app, usually $0.99?$9.99. However, this can deter many players from downloading, so paid games now make up a small portion of overall revenue.

4. Subscriptions

Premium access to games allows developers to charge a regular membership fee—often monthly or annual. This gives better players digital content and an ad-free experience.

The Challenge of Refusing- InGame Ads

In 2023, an estimated 90% of mobile game revenue came from free-to-play games. The vast majority is monetized through a combination of IAPs and abundant in-game advertising. Most developers see ads as an essential way to monetize games that do not charge for downloads.

However, ads come with downsides:

• Player Experience: Ads can really disrupt gameplay and enjoyment. Interstitial ads, in particular, are intrusive and annoying.
• Development Focus: Games designed around ads might kill creativity and gameplay in order to make more ad views.
• Brand Value: Because the game’s brand suffers from too many ads, players feel like they are constantly led and dimmed.

Some data shows the degree to which oppose players’ excessive ads:

• In a 2024 survey, over 43% of players stated that too many ads make them less likely to play a mobile game.
• 57% of players prefer to play games with optional or rewarding ads over games with forced ad views.

However, refusing ads also comes with financial challenges.

Lower Total Revenue

Mobile ads can generate massive revenue. Refusing ads means entirely preceding this revenue stream. For games with the potential for millions of downloads, this lost ad revenue is very significant.

Higher Cost Per Install (CPI)

Games must spend money to acquire new players who download, try, and play a game. The mobile game industry’s average cost per install (CPI) is $3.5 in North America. This means spending $3.5 in marketing to acquire one new player.

Ads help keep CPI costs down in two ways. First, they directly promote the game to new players within other apps. Second, they provide revenue to reinvest into acquiring more paid installs. Refusing ads means acquiring players purely through paid channels, which raises CPI costs.

Lower Conversion of Downloads to Paying Players

Mobile ads directly convert players into payers. Watching a rewarded video ad and then making an IAP is a proven conversion flow. Without ads, there are fewer opportunities to directly pitch real-money purchases to players. This lowers the percentage of downloads that convert to paying, engaged customers.

To sum up, refusing ads causes financial problems for developers and problems for games. But there is a brand risk to focusing only on monetization and neglecting the player experience. Is there a middle way? Can mobile games make money without forcing players down their throats with constant ads? Let’s analyze some alternative monetization strategies.

Alternative Monetization Strategies

Game developers do have options to minimize ads other than removing them outright. Here are some alternative monetization models that refuse disruptive ads:

1. Subscription Revenue

One option is to rely more heavily on subscription monetization. An auto-renewing subscription, such as $499 per month, can provide predictable revenue. iOS and Android subscriptions also come with the benefit of a reduced 15% platform fee (vs. 30% for IAPs).

Subscriptions monetize the most engaged, loyal players. According to GlobeNewswire, mobile game subscriptions could grow from $6.6 billion in 2022 to $17.46 billion by 2027. Game companies like Xbox see subscriptions as the future.

The secret is to offer enough value – exclusive content, virtual currencies, and an ad-free experience – to entice subscribers. For instance, you can also offer a free trial that will convert players into recurring subscribers.

2. Hybrid Model

A hybrid monetization model for games can be followed, which includes subscriptions and scaled-back ads. Ads are shown in the free experience, from which an incremental stream of revenue is generated. However, players can also subscribe and get an ad-free experience.

This gives the games a strong revenue from non paying players while still offering the premium version for players who don’t want ads.

3. Contextual Advertising

If refusing all ads outright is not possible, developers can shift towards contextual advertising. This means that ads will only be relevant to the game content itself. Less intrusive ads that serve ads that are closely aligned with gameplay and the target audience keep them that way.

Say, a racing game might show real ads for car brands and racing items. A puzzle game – ads for other puzzle or word games. Its contextual relevance makes both players and advertisers happier.

4. Rewarded Ads

Rewarded video ads that exchange ad views for virtual currency or lives can also strike a balance. Top games make over 20% of ad revenue from rewarded ads. The value exchange makes players more receptive to ads.

At high volumes, rewarded ads still carry negative brand implications. However, limiting ads to this format provides revenue while avoiding constant disruption.

5. RealWorld Rewards

There are some games that are experimenting with exchanges of ad views for real-world rewards. For instance, watching some ads will give you vouchers for Uber Eats or Amazon. It is a way to help justify ads by giving them tangible value for players.

The variety of alternative monetization models shows that developers can avoid disruptive, excessive ads without removing them outright. Let’s look at some real-world examples of mobile games that have found financial success with minimized ads.

Case Studies: Successful Games with Limited Ads

The most profitable mobile games today follow free-to-play models with aggressive advertising. However, there are still examples of games finding strong financial success while refusing excessive ads:

1. Coin Master

Coin Master is a casino-style slot machine game from the studio Moon Active with over 100 million downloads. With a 4.7 average and lifetime revenue of over $6 billion, it is a great app.

It’s a very popular game that avoids disruptive ads. It earns almost entirely from slot machine IAPs and has strong enough content to justify purchases. This shows that down possible doubling onAPs refuse ads.

But, its IAP monetization, the nature of it, has also drawn some brand criticism and accusations that it encourages gambling addiction. It demonstrates the dangers of relying on one too much.

2. Pokémon GO

Eight years after its launch, Pokémon GO is still hugely popular, with $7.9 billion in lifetime revenue. It is no burden of conventional advertising. Instead, it monetizes through contextual sponsorships with real brands that fit within gameplay.

For example, real-world PokéStops and Gyms usually work with a retail brand sponsor that can be tied to the location. Events’ brand partnerships include companies like Verizon. The game can also be subscribed to by hardcore players. It’s a careful balance: no ads, but strong revenue from contextually relevant brands.

3. Clash of Clans

Despite being 10 years old, Clash of  Clans still has over 150 million monthly active players. It earns over $5 million daily in revenue.

The game features no banner ads and has an average rating of 4.5 stars on over 55 million Google Play reviews. It does so by limiting ads to optional rewarded videos for virtual currencies and gems. There are no disruptive ads that players don’t like, but they can still watch ads to get resources more quickly if they want.

This demonstrates that you can have fewer ads if you have engaged players, as well as IAP monetization and alternative ad formats that provide value instead of disruption. But it’s still practically impossible to say no to ads at scale. Most top games will continue showing ads one way or another to maximize revenue.

The Future of Ads in Mobile Games

The increasing expenditure on in-game advertising indicates that big companies still give this top importance.

However, industry experts see possible changes on the horizon:

More Hybrid Models: As was already discussed, more developers might choose hybrid models that include both free versions with advertisements and ad-free subscriptions. Subscription margins are substantially greater.

Regulations Around Data and Kids: Government rules on data privacy and laws about children’s games may restrict some models. DPA laws in the US already affect data collection and ads in kids’ games. Tighter regulations are not just for other regions.

Backlash Against Excessive Ads: If enough players complain publicly about excessive, intrusive ads, large developers may need to pull back to avoid the brand damage Industry. Analysts see rewards-based ads as a method of offering value instead of annoyance.

Mobile ads will continue to rise, but in the next few years, we may see some small changes in how consumers are paid for ads, ad-free subscriptions, and regulatory compliance.

Conclusion

The scale of in-game mobile ads is so high that refusing them outright would bring major financial challenges to developers. But too many ads ruin the gameplay and create player hatred of once beloved game franchises.

The right way to go is to balance limited ads with alternative monetization models that put value over disruption. Subscriptions, sponsored events that make sense, hybrid models, and incentivized commercials help to guarantee that income keeps flowing without badgering athletes.

A small number of games have achieved this balance and found success with minimizing ads. However, for smaller studios lacking the brand recognition of a Pokémon or Clash of Clans, refusing any ads is likely financial suicide. The safest bet remains to use limited ads as an incremental revenue stream within an overall monetization strategy optimized for the player experience.

The mobile gaming industry will continue evolving. Today’s reality may necessitate ads, but consumer attitudes, regulations and technology may change best practices in the years ahead. Savvy developers should start experimenting now with rewards-based experiences and subscriptions to future-proof revenue for when the mobile ad landscape inevitability shifts once again.