The game monetization market is undergoing significant shifts, largely due to the post-pandemic recalibration. After a period of exponential growth, the gaming industry is now seeing a return to pre-2020 levels, with game downloads and revenues declining across the board. Reports indicate a 6% drop in App Store downloads and a 10% decline on Google Play, signaling a challenging environment for game publishers.

Navigating the slump: Challenges and opportunities

The decline in revenues is particularly evident in the mobile gaming sector, where even the most profitable genres are experiencing downturns.

Role-playing games (RPGs), once the industry's cash cow, saw a 3.8% revenue decrease between 2022 and 2023, while strategy games faced an even steeper drop of 11.7%.

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This trend has led to widespread downsizing, with over 10,000 jobs lost in the gaming industry in 2023 alone.

One of the key challenges contributing to this downturn is the shift in user tracking consent, especially after Apple's implementation of App Tracking Transparency (ATT).

This change alone cost Meta a staggering $10 billion in revenue. For game developers, these privacy changes have complicated the ad monetization landscape, making it crucial to adapt to new strategies.

Rethink the monetization toolset with direct inventory sales

In the face of these challenges, game publishers need to revisit their monetization strategies. One of the biggest pitfalls in the current market is an over-reliance on open marketplace (OMP) monetization.

While OMP dominated the 2010s, the pendulum is swinging back towards direct inventory sales. One of the reasons for the shift is that the sell-side can lose up to 98% of ad revenue to intermediary fees in the OMP ecosystem.

Direct selling, on the other hand, offers a way to retain more revenue and gain better control over ad placements.

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This strategy is already being adopted by big players like Roblox and Nintendo (https://www.nintendo.com/en-gb/), who are creating custom, high-impact ad experiences that resonate with their audiences.

By leveraging first-party data and offering targeted, premium inventory, publishers can maximize revenue while ensuring privacy compliance.

Retaining users and boost engagement with cross-promotion

Another critical strategy in the evolving market is cross-promotion. With the limitations imposed by ATT and the SKAd Network, traditional user acquisition methods have become less effective.

Cross-promotion allows publishers to drive engagement for new titles by harnessing the popularity of older releases within their portfolio.

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However, to make cross-promotion effective, game studios need to adopt machine learning and other advanced tools that can match users with relevant apps without cannibalizing inventory monetization.

Leverage first-party data to thrive in the post-ATT market

In today's privacy-conscious environment, first-party data has become a valuable asset for game publishers. By building robust data processing, analytics, and governance systems, publishers can unlock significant ad revenue and gain insights that inform business decisions.

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Zynga is an excellent example of a studio that demonstrated the power of first-party data in improving user acquisition and cross-promotion efforts. Committing to user data collection and processing helped the company to be relatively unscathed by ATT adoption.

Expand partnerships with custom ad mediation platforms

Ad mediation platforms are another powerful tool that many game studios have yet to fully embrace. These platforms connect publishers with multiple ad networks, expanding monetization opportunities.

However, relying too heavily on third-party mediation can come at a cost, such as high partnership fees and limited control over ad placements.

Forward-thinking publishers are opting for custom mediation solutions that give them greater control over their revenue and inventory.

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Maximize revenue per impression with dynamic pricing

Dynamic pricing is an essential strategy for game publishers looking to maximize the value of their inventory.

By adjusting impression costs in real-time based on user data and market trends, gaming studios can maintain a steady fill rate while achieving higher CPMs.

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The adoption of AI-powered tools for dynamic pricing is becoming standard practice, enabling publishers to accurately predict bid prices and optimize their monetization strategies.

Ready to take your game monetization to the next level?

The gaming industry is at a critical juncture, and staying ahead requires innovative monetization strategies that drive revenue, ensure control over inventory, and promote long-term user retention.

Understanding these common pitfalls—and knowing how to avoid them—can position your studio for success in an increasingly competitive market.

To explore how Xenoss can help you unlock the full potential of your game monetization strategy, book a chat with our engineering team.

Whether you're looking to implement direct inventory sales, leverage first-party data, or adopt dynamic pricing, we have the tools and expertise to help your gaming project thrive in 2024 and beyond.

Don't miss out on the opportunity to revolutionize your game monetization—connect with Xenoss today and start optimizing your strategies for maximum growth!