Eli5 Game developer earnings

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How do game developers earn money? Specifically those who make their games free and don’t have in game ads. Games like Call” of Duty Mobile”, PUBG, DDLC etc or free online games like short ‘Miniclip’ games.

In: Economics

Usually, when games are free, there’s purchases in the game which allow the developer to earn money. Call of Duty Mobile, for example, allows players to purchase boxes, which give the player a random skin for customizing their character, or a “season pass”, which increases the rewards given when the player wins a game.

There are however games that are free and do not give the developer money, like those short Miniclip games. Some of them have ads, but usually they’re made by a person who makes games as a hobby and publishes them for free.

One method of payment is through advertising – every banner ad you see at the bottom of the screen or video between levels pays out a fraction of a penny to the developers – multiply those fractions of a penny by large player numbers and they can turn into reasonable sums of money.

Other money can be earned through in game transactions – a lot of people will ignore these, but every skin sold is money incoming.

A lot of games will also run as loss leaders for marketing reasons. A mobile version of a pc or console game is basically a mini advert, and while the developer may lose money on the mobile release, that money will hopefully be paid back in earnings from new players who then started playing the full (paid) games. They aren’t a loss making game as much as they are an advert (and after all, billboards don’t make profits directly either).