Playing free-to-play mobile games is trending nowadays. Free-to-play (F2P) games are bringing huge revenues for the companies, and frankly, these games are bringing in Millions or even Billions of Dollars.
But, have you ever wondered how these games make money? What is the preferred method of earning money by game companies? Even though the games are free, how are these companies generating revenue?
In this article, we will have a look at how F2P (free-to-play) games make money, and we will list down x proven strategies to do so.
Paid vs Free Games
Before jumping to how the free games make money, let’s have a look at what benefits or drawbacks the free games have when compared to the paid games.
| Free Games | Paid Games |
|---|---|
| More downloads. | Fewer downloads. |
| More Reviews. | Less Reviews. |
| Lower customer expectation. | Higher customer expectation. |
| Lower customer retention. | Higher customer retention. |
| Higher Visibility. | Lower Visibility. |
| Can opt for in-game advertisement. | Mostly in-game advertisements are not used. |
| The user will uninstall the app whenever they feel like it. | You get loyal customers and so they will refrain from uninstalling the game. |
| Less expensive to develop. | More expensive to develop. |
| Multiple monetization options. | Limited monetization options. |
| Helps in building a brand image. | Due to less number of downloads, building the brand image is a hefty task. |
How do F2P (free-to-play) games make money in 2025? [8 Proven Strategies]
1. Advertisement
The biggest source of earning for free-to-play (F2P) games is indeed Advertisement.
According to InMobi, mobile users are a lot more likely to click on ads in a mobile app than on a mobile website. In-app ads served worldwide, which grabbed 80% of impressions, garnered an average click-through rate (CTR) about 2.8x higher than those placed on the mobile web.
Also, according to the latest report and study by Statista, here are the details on mobile advertising spending in the year 2022 and expected in 2024.
- The year 2022: $336 Billion
- Expected in 2024: $412 Billion
There are various types of Ads that the free mobile games use:
— Display Ads
These ads are the most standard ads used in free mobile games. These include static ads, dynamic display ads, banner ads, video ads, and pop-up ads. These ads do not occupy the full screen. Usually, small banners are used to display ads.
— Interstitial Ads
These ads should be named interval ads as these ads are shown in the interval period. Suppose you have finished a level and you have to go to the next level, these types of ads will come exactly at that time.
For example, Rayman Adventure requires the players to watch a 30-second video between each level.
— Incentivized Ads
Incentivized Ads are mostly used for mobile games. These types of ads will provide you with an incentive if you watch the ad. You can get a boost or in-game currency or diamonds, etc.
These types of ads simply give the users a reason to watch as many ads as they possibly can. But, the reward should be special and not something that the user can easily get, or else no one will watch the ad.
— Contextual Ads
Contextual Ads are another commonly used type of free mobile game ads. These ads are a part of the gameplay. They are integrated into the game. You can see brand logos and posters in Pokemon Go Pokestops, in the streets of Grand Theft Auto, or at the stadium/ground in football games.
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2. In-game Purchases
In this model, the game will offer various skins, weapons, power-ups, lives, etc that the users can buy at their will.
The gameplay will be free and the users can play the full game without buying anything. However, everything will be limited, for example, there can be a game that uses energy to play each level. One energy takes 30 minutes to replenish, now the users can either wait for 30 minutes to play another level, or they can buy the energy via in-game purchase.
The game can also offer various premium skins. These skins are a sure way to attract the hardcore gamers to buy them.
These games also offer in-game coins or diamonds as an in-game purchase.
According to Statista, in 2021, global gaming audiences spent approximately 61 billion U.S. dollars on additional in-game content. In 2025, the market value of in-game purchases is projected to surpass 74.4 billion U.S. dollars.
3. Subscription
In the subscription model, the users will get extra benefits which will also be known as VIP benefits.
The players will be able to get more lives, more money out of each level, special power-ups, exclusive skins, and so on.
The players will have to buy the subscription every month, quarterly or yearly. The extra benefits that the players get are the key attraction of the subscription-based model.
Another application of this strategy is to provide a free version of the game that is limited to certain levels or for a certain time. After the players have played your game, they can decide if they want to subscribe to your game to continue playing the other levels or not.
However, in this model, the first one is more prevalent.
4. Data Monetization
Data is the new gold.
When the users interact with the free game, they leave various insights about their behaviour, their likes, and dislikes. With data insights, the company can know which users are using the important for game, and which users are not using the game.
A recent study showed that 20 percent of users never used a game again after using it only once. In other words, a considerable chunk of those new users acquired may not engage on any level other than the initial download.
So when the company knows which users are the best users for them, they can focus more on them. Moreover, this data will also help in determining which type of users the game needs, so they can target the users.
Also, the data collected has great value outside the business.
5. Real Money Games
Apps like Fantasy Sports etc, use real money to enter and play each game.
This way, whenever the user will play a game, they will pay money for the same. A percentage of the total money that is collected for the game is kept by the company.
The real money category is a golden jackpot, as the risk is only for the users, as they will either win or they will lose. But for the game, it will earn money for each bet that is placed.
The more players the game has, the more tournaments they can hold, and each tournament will bring a hefty amount of money for the game.
6. Removing Ads
Ads are very annoying to the users, and this is something that every developer knows, but how can they earn money from their free mobile game if there are no ads?
A simple yet innovative idea is to remove ads. However, the users have to pay to get the ads removed. If they want to have an uninterrupted experience while playing or using the free game, then they can do so by paying the developer to remove the ads.
This way, the users who have complaints about the ads can simply remove them, and the other users can simply use the game with the ads.
7. Selling exclusive brand products
Sell exclusive merchandise like clothes, figures, and personalized products from the game. They can work as a great source of income for the free mobile game. However, before you start earning from this source, you have to make a great following of your game.
For people to buy exclusive products of the game, it is very important that the game, its character, or the brand is famous among the users, or else they won’t be interested in the exclusive products. Therefore, this monetization strategy can be adopted only after you have a good number of users as your fanbase.
Products of other brands can also be used to be sold in the game. These products can be effectively showcased in the game, and a pop-up can take the users to the buying link.
8. Crowdfunding
With more than 20,000 games launched on app stores every month, many games go unnoticed by gamers and also by these stores. Getting discovered is a very hard task for the new game.
But what if the players already knew about the game, and are anticipating the game’s launch?
The game will perform splendidly in the opening week, and so will earn the recognition of the gamers as well as of the app stores.
This is what crowdfunding helps your game achieve. With crowdfunding, you can create anticipation for your game, and so when it is launched, it is sure to be a hit.
After the successful launch, you will be sure to earn great revenue.
Tips for Choosing the Best F2P Mobile Game Monetization Strategy
1. Understand your game type
The first thing that you have to do before you decide on your monetization strategy is to understand the type of your game.
For example, if it is a basic card game like Teen Patti, then you can go for the real money monetization strategy. If not, you can also opt for in-game purchases where the users can buy skins for the cards and the tables. Also, you can sell in-game currency and diamonds. You can also use the advertisement strategy.
2. Competitor Analysis
There will be hundreds and thousands of apps out there which are either totally, or in some way similar to your game. Find such games, and analyze which strategy they are using.
With a proper study of your competitors, you will get a better idea of which monetization strategy you should use.
3. Analyze the Target Audience
You will earn from the audience, so you should keep them at the centre while deciding your monetization strategy.
How much is your audience willing to pay, and how will you attract that audience?
Will your strategy hinder the audience or annoy them in any way? Is what you are offering valuable to the customer that they will pay?
Answer these questions and you will be able to move aside all the options that you have, and you will come up with the perfect strategy.
Conclusion
Now that you have learned about all the ways that f2p games can be monetized using, and you know how to choose the right strategy, you are good to go. Get your game developed by professionals, and use the right monetization strategy to make a fortune out of your game.
This concludes our list of the free-to-play game monetization strategies and how to find the right one for your free game. Do let us know in the comment section, which is the most appealing and profitable strategy according to you.
Also, if you think we have missed a strategy or so, do let us know.
Key takeaways
Free games make money from in-app purchases (currency, boosters, cosmetics, battle passes), ads (rewarded video, interstitials, banners) and subscriptions or paid ad removal; many combine two or three. Capermint builds them into F2P games for US, Canadian and global studios and brands; a casual MVP typically costs $10K–$40K and takes about 60–90 days, confirmed after a scoping call.
How free games make money: 6 revenue models compared
| Revenue model | How it earns | Typical genres | Watch out for |
|---|---|---|---|
| In-app purchases | Soft and hard currency, boosters, extra lives, bundles and time-limited offers | Puzzle, match-3, card, strategy, RPG | Pay-to-win balance; store commission on each sale |
| Rewarded and interstitial ads | Advertisers pay per impression via ad mediation; rewarded video trades a bonus for a view | Hyper-casual, casual, word, trivia | Too many interstitials hurt retention |
| Battle pass and seasons | Free and paid reward tracks refreshed every few weeks | Multiplayer, midcore, live service | Needs a steady content pipeline |
| Subscriptions and ad removal | VIP perks or daily currency, or a one-time ad-free purchase | Casual and puzzle games played daily | Perks must feel worth renewing |
| Sponsorship and brand content | Brands pay for in-game placements, events or a branded game | Sports, racing, large audiences | Needs audience scale or a brand partner |
| Real-money contests (licensed only) | Operator keeps a fee from paid-entry contests or wagers | Skill, fantasy, casino | Licensing by jurisdiction; prohibited in India |
Many commercial free games combine two or three models; choose them before design starts. Go deeper: hybrid-casual games handbook, ad SDKs for mobile games, how to improve in-app purchases and real-money games in the USA.
How much a free game earns: the numbers to track
Downloads alone do not predict revenue. A free game earns from its daily active users and what each one brings in: daily revenue = DAU × ARPDAU, where ARPDAU blends ad income and in-app purchases. Paid user acquisition pays back only when player lifetime value (LTV) beats the cost per install (CPI).
| Metric | What it tells you |
|---|---|
| D1, D7, D30 retention | Share of new players still playing after 1, 7 and 30 days; the first number to fix in soft launch |
| DAU | Daily active users, the base that every ad and store number multiplies |
| ARPDAU | Average revenue per daily active user, from ads and purchases combined |
| Payer conversion and ARPPU | Share of players who ever buy, and average revenue per paying user |
| eCPM | Ad revenue per 1,000 impressions, which varies by ad format and country |
| LTV vs CPI | Lifetime value per player against cost per install; LTV must exceed CPI for paid growth |
What it costs to build a monetized free-to-play game
| Build | What is included | Typical cost (USD) | Typical timeline |
|---|---|---|---|
| Ad-supported casual MVP | One core loop, 2D or light 3D art, rewarded and interstitial ads through mediation, remove-ads purchase, analytics events, App Store and/or Google Play release | $10K–$40K | Typically about 60–90 days |
| Hybrid F2P game with in-app economy | Soft and hard currency, store and time-limited offers, boosters, season or battle pass, player accounts, LiveOps events, ads for non-payers, optional multiplayer, iOS and Android | $40K–$120K | Typically about 12–20 weeks |
| Large custom live-service game | 3D or multi-mode game, custom backend and economy service, LiveOps tooling, segmentation and A/B testing, web shop integration where store rules allow | $120K+ | 4–6 months or more, fixed at scoping |
| Monetization upgrade on an existing game | Dedicated team or co-development after a code and build review: add ad mediation, a store, a battle pass, events or analytics to a live title | Monthly rate, quoted after the review | Ongoing, billed monthly |
Typical ranges; final quotes follow a scoping call. See the mobile game development cost guide for other game types, our mobile game development services and hyper-casual game development, or add monetization to a live title with game developers for hire.
| Engagement models | Fixed-scope project, dedicated team billed monthly, or co-development and staff augmentation on your existing game |
|---|---|
| Tech stack | Unity (2D and 3D) or Unreal Engine; App Store and Google Play billing, ad mediation, analytics and attribution SDKs as scoped (for example AppLovin MAX, Google AdMob, Firebase); a custom backend (for example Node.js) for economies, events and multiplayer |
| Store and privacy readiness | App Store privacy labels, App Tracking Transparency prompt, Google Play Data safety form, child-directed ad settings where needed, and odds disclosure for any randomized paid items |
| Markets | Buyers in the US, Canada and worldwide, with calls scheduled in US and Canadian business hours; Capermint-reported 650+ customers worldwide and over 200 specialists, delivering from our studio in Ahmedabad, India. For players in India: free-to-play, social and e-sports formats only |
How we build monetization into a free game
Brief and NDA
You share the concept, genre, audience, target markets and the revenue model you have in mind. An NDA is available before detailed discovery.
Scoping call and estimate
We agree features, art direction, engine, backend and the monetization stack (ads, store, passes), then send a USD estimate with milestones. Final quotes follow this call.
Game and economy design
A game design document plus an economy sheet (currencies, sinks and sources, prices, ad placements, reward pacing), tested in a playable core-loop prototype.
Production with monetization built in
Core loop, content, UI, store and offers, ad mediation, store billing, analytics events and the LiveOps tools the model needs, delivered in milestone builds.
QA and soft launch
Device QA, sandbox purchase and ad placement tests, then a soft launch in test markets to tune retention, prices and ad frequency before scaling.
Global launch and LiveOps
Store submission, then seasons, events, new offers and A/B tests under a dedicated team or support plan.
Real money, loot boxes and player privacy
Adding cash or redeemable prizes, especially with paid entry, turns a free game into a regulated product. In the US, online casino is legal in only a handful of states (for example New Jersey, Pennsylvania and Michigan), daily fantasy follows state rules and a growing list of states restrict sweepstakes models; in Canada, Ontario runs a regulated iGaming market through AGCO and iGaming Ontario, while most other provinces offer online gambling through provincial lottery corporations; in India, the Promotion and Regulation of Online Gaming Act 2025 prohibits online money games, so we build free-to-play, social and e-sports formats there. Randomized paid items need odds disclosure on the App Store and Google Play, and games directed at children must follow child-privacy rules such as COPPA. Operators are responsible for licensing; we build to the technical requirements of the target jurisdiction. This is general information, not legal advice.
Free-to-play monetization FAQs
How do free mobile games make money from ads?
They sell ad impressions to advertisers through ad networks, usually via a mediation layer that runs an auction for each ad slot. Rewarded videos, where players opt in for coins or an extra life, typically earn the highest rates; interstitials between levels and banners add volume. Income depends on daily players, ads watched per player and advertiser demand by country.
What percentage of players pay in a free-to-play game?
Usually only a small minority, often low single-digit percentages, ever make a purchase. A small group of high spenders often generates a large share of in-app revenue, so most free games also show ads to earn from non-payers. Good first-purchase offers and fair pricing lift conversion more than blocking progress.
How much money does a free game with 1 million downloads make?
There is no fixed figure, because downloads alone do not predict revenue. What matters is how many players stay (D1, D7 and D30 retention), daily active users (DAU) and average revenue per daily active user (ARPDAU), which varies with genre, ad load, prices and country mix. A simple model is daily revenue = DAU × ARPDAU; soft-launch data gives the real inputs.
How do free games make money without microtransactions?
Mainly through advertising, a one-time paid upgrade such as removing ads or unlocking the full game, and subscriptions. Sponsorships, branded events and advergames commissioned by brands are other routes, as are licensing and merchandise for well-known games. Many puzzle, word and casual titles run on ads plus a single ad-free purchase.
How do live service games make money?
They sell a steady calendar of content: seasonal battle passes, limited-time cosmetics, event bundles and premium currency. The base game stays free, and new seasons every few weeks give players reasons to return and spend. The model needs LiveOps tooling, a content pipeline and analytics from launch, so it costs more to build and run.
What is hybrid monetization in mobile games?
Hybrid monetization combines ads and in-app purchases in one game, often with a subscription or season pass on top. A hybrid-casual puzzle game might show rewarded and interstitial ads to everyone while selling boosters, ad removal and a pass to engaged players. It is widely used in casual games because it earns from payers and non-payers.
How much of a free game's revenue does the developer keep?
Less than gross sales. Apple and Google take a commission on in-app purchases made through their billing, long set at 30% with 15% rates for smaller developers and many subscriptions; rates now vary by country, program and payment method. Ad income is paid net of the ad network's share and carries no store commission. In the US, 2025 court rulings in Epic's cases against Apple and Google opened the way to link players to outside web shops, subject to current store terms.
Are loot boxes and gacha mechanics allowed in free games?
In most markets, yes, with conditions. The App Store and Google Play require odds to be shown before a player buys a randomized item, South Korea requires published odds by law, and Belgium treats paid loot boxes as gambling. Because the rules keep changing, many studios now prefer direct-purchase cosmetics and battle passes.
How much does it cost to build a free-to-play game with ads and in-app purchases?
Typical ranges are $10K–$40K for a casual MVP with ads and a basic store (about 60–90 days), $40K–$120K for a mid-scope game with a full in-app economy, LiveOps events or multiplayer (about 12–20 weeks), and $120K+ for a large custom live-service game. Ad mediation, store billing and analytics are scoped into the build. Final quotes follow a scoping call.
Can a free game offer real-money prizes or sweepstakes?
Only where the law allows it. Cash or redeemable prizes, especially with paid entry, bring a game under gambling, contest or sweepstakes rules. In the US, cash-prize skill games and daily fantasy follow state rules and a growing list of states restrict sweepstakes models; in Canada, Ontario runs a regulated iGaming market through AGCO and iGaming Ontario, and most other provinces offer online gambling through provincial lottery corporations. India's Promotion and Regulation of Online Gaming Act 2025 prohibits online money games, so there we build free-to-play, social and e-sports formats. Operators are responsible for licensing; we build to the technical requirements of the target jurisdiction.
Planning a free-to-play game?
Share your genre, target platforms and markets, revenue model and budget range. We schedule calls in US and Canadian business hours and reply with a scoped USD estimate and milestones.
Frequently asked questions
Can I earn money by playing games for free?
Yes, you can earn money by playing free games through methods like watching ads, participating in tournaments, testing games, or using cash-reward apps. Some games also offer opportunities to earn money via in-game purchases, referrals, or even by selling in-game items.
How do free games make money without ads?
Free games can make money without ads through in-app purchases, subscriptions, and premium content. Players can buy virtual goods, special features, or additional levels. Some games also use the freemium model, offering a free base game with optional paid upgrades for enhanced experiences. Additionally, game merchandise or sponsorships can also generate revenue without relying on ads.
What is the "Freemium" model in game development?
The "Freemium" model refers to offering a free version of the game with optional paid upgrades. Players can enjoy the game for free, but can purchase premium features or virtual goods for an enhanced experience.
Is the revenue model for free games changing?
Yes, the revenue model for free games is evolving. With advancements in technology and user preferences, developers are exploring new monetization methods like blockchain, NFTs, and cloud gaming.
What is a free-to-play (F2P) game?
A free-to-play (F2P) game is a game that players can download and start playing without paying upfront — the game is free at first, but may include optional paid features, ads, or other monetization elements.
How to choose the best monetization strategy for a free mobile game?
Choose based on your game type, audience, and user behavior: evaluate whether ads, in-game purchases, subscriptions, or a combination makes sense; analyze competition; consider user willingness to pay; and aim for balance so monetization doesn’t hurt user experience.
What are the challenges or drawbacks of free-to-play monetization models?
Potential drawbacks include user churn (free users uninstall when bored), negative user experience if monetization is intrusive, revenue dependence on a small fraction of paying users, and balancing monetization vs. retention.
