About 5 years ago, Rovio, the Finnish game developer, launched “Retry” in the iOS App Store. The gameplay was challenging and loosely inspired by the 2013 sensation “Flappy Bird.” Players flew a plane through a two-dimensional 8-Bit-style world and attempted to reach checkpoints. Once they reached a checkpoint, players had the option of either paying in-game currency to unlock the checkpoint as a restart location, or they could watch a video ad to unlock the checkpoint for free.
“Retry” was the first mobile game to use rewarded video ads as a feature of the gameplay rather than solely as invasive advertising. Ever since, rewarded video ads have been an integral part of ad monetization, because, if implemented the right way, they offer a rare win-win situation: the game’s developer generates additional revenue, while the player is rewarded for his/her time spent watching the ad.
The challenge for developers is choosing the right reward that generates recurring, lasting incentives for players to engage and re-engage with video ads throughout their lifetime. Here are 6 of the most effective reward types explained.
1. Soft Currency
Free-to-Play (F2P) games usually use two types of in-game currency: A so-called “soft currency” that is earned by completing tasks in the game (collecting coins, finishing a level, harvesting crops, etc.) and a premium or “hard currency” that can only be obtained by spending real money (dollars, euros, yen, etc.). Incentivizing players with soft currency is a great strategy, and therefore soft currency is the most common reward for watching video ads. The player can immediately spend the additional soft currency on something valuable (heal his troops, acquire more ammunition, spin the slot machine another time, etc.), while the developer receives ad revenue without cannibalizing the premium currency demand which is crucial for monetization with in-app purchases (IAP).
Soft currency rewards offer another benefit: flexibility. It is crucial that the reward adapts based on the player’s in-game progress and profile. Otherwise, ad engagement will taper off further down the player lifespan. Making rewards dynamic requires flexibility and granularity. If you incentivize players with premium currency in low quantities, you will face the problem that the smallest amount you can provide is one unit which could be very valuable. Additionally, later on in the player lifespan, the smallest possible (dynamic) increase is a full unit. An increase from one to two units is a 100% boost and likely overkill for retention. Game developers are therefore much better off offering soft currency. A base reward of 250 coins can easily be adjusted to 275, 300 or further, thereby keeping players incentivized without hurting the game economy and IAP monetization.
Almost all game economies that feature a building or upgrading mechanic use countdown timers that require the player to wait for things like the new castle or latest engine upgrade to be completed. Typically, timers only run for minutes in early gameplay, but quickly increase to hours and even full days as the player gets deeper into the game. Players can typically accelerate the timer by spending currency. This game mechanic is an excellent opportunity to incentivize players to watch video ads in exchange for accelerated timers. From the player’s perspective, every decrease in time is appreciated (shave off 1h from a 12h timer). It makes his/her goal more attainable, which leads to better retention. There is also the possibility that the player is more willing to erase the last 20% of a timer by spending currency, not thinking that he just “wasted” 10 diamonds on a timer, but rather that he saved 10 diamonds (off the original 20 diamond price) by watching a couple of video ads. Depending on the setup of the game economy, the developer has great flexibility in adjusting the rewards, since time can be broken down into very small units.
3. Energy and Lives
If a game has an energy system that limits the number of successive rounds that can be played in a sitting (think Candy Crush or CSR Racing), giving out additional energy as a reward is a good strategy because it offers another win-win. The player enjoys the immediate benefit of being able to play another round while the developer actively boosts player retention without hurting the revenue potential of the energy mechanic. Players that are willing to spend real money on unlimited energy/gameplay will still do so, while other players can utilize the video ads to continue their play. Either way, the developer boosts their revenue.
4. Consumable Items
If your game economy offers consumable items (ammunition, shields, boosters, etc.) providing small amounts of these as rewards for watching video ads is a great opportunity for the following reasons: First, by definition, these items can be consumed so there will be a continuous demand that incentivizes the player to engage with video ads more frequently. Second, offering small amounts of a consumable can have an “advertising effect” where players are introduced to the utility of these items, thereby increasing the perceived value. This increases the likelihood that players will acquire the item either by watching video ads or through IAPs.
5. Vanity Items
Vanity items are purely cosmetic. Their sole purpose is customizing characters, cars, buildings, weapons or backgrounds to the players liking. Because they do not alter gameplay and win/loss ratios, vanity items such as “skins” have become highly popular in competitive player-vs-player (PvP) games such as Riot’s “League of Legends.” The advantages of offering vanity items as rewards for video ads are obvious: the developer can easily generate an endless amount of cosmetic items across different levels of rareness, value, and desirability. Sometimes, all it takes is changing colors, patterns, logos, and/or names to create dozens of new items. A portion of vanity items can even be exclusively available as incentives for watching video ads. Those items become even more desirable while preventing cannibalism of other vanity items obtained by spending currency.
6. Loot Boxes and Gacha
Rather than offering players a distinct, pre-defined reward in exchange for watching a video ad, consider offering a loot box or gacha (virtual packages with a random-chance assortment of in-game items). After completing a video ad, players receive one or multiple randomly chosen item(s). This introduces an element of chance into the video ad reward process and thereby further “gamifies” the monetization strategy. Players are likely to return more often to satisfy their desire to obtain more loot, possibly triggering a “collect them all” mentality.