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How Clash of Clans Makes Hundreds of Millions from IAPs

In-app purchases (IAPs) are the lifeblood of sustainable revenue for any mobile game monetization strategy. But more than that, when implemented strategically, IAPs can create a win-win scenario for both developers and players.

The key is in striking a delicate balance. Players need to perceive value in what they purchase, whether it’s special items, aesthetic customizations, in-game currency, etc. However, they shouldn’t feel that they are in a pay-to-win scenario that impacts the core game loop. If you can achieve this balance, players are more likely to spend – and keep spending. Of course, getting there is easier said than done. Finding the right IAP strategy for each game requires a deep understanding of player motivations and a data-driven approach.

A great example to learn from is Clash of Clans. This game has nailed its IAP mobile game monetization strategy. In this article, we will explore how they do it and what we can learn from them. But first, let’s go over some of the basics.

In-App Purchases Optimization for Games
Metrics that Matter:

If you cannot measure it, you cannot improve it,” said the wise Lord Kelvin. And while he wasn’t a game developer (that we know of), he had the right idea! Here are some key metrics to track and analyze:

  • Average Revenue Per User (ARPU): Measures the average amount of money generated by each player, indicating the overall profitability of your IAP strategy.
  • Conversion Rate: The percentage of players who purchase out of the total player base, highlighting the effectiveness of your IAP integration and visibility.
  • Lifetime Value (LTV): Estimates the total revenue a player will generate throughout their engagement with the game, guiding long-term retention strategies.
  • Purchase Frequency: Tracks how often players buy IAPs, aiding in optimizing the timing for promotional offers and new item releases.
  • Retention Rate Post-Purchase: Assesses how making a purchase affects player retention, indicating the impact of IAPs on long-term engagement.
 
Player Motivation:

Players spend for a few different reasons. Apart from understanding these reasons, you should factor in value for money, and getting to the right price point for each IAP. Spending time understanding player motivation isn’t simply an intellectual exercise–it’s a crucial part of the process. Let’s briefly touch on these. 

  • Desire to Purchase: Identifying what drives players to spend is very important. Is it to gain a competitive edge, to express themselves, to improve the overall gaming experience? Understanding these motivations can help you create IAPs they will respond to. 
  • Value for Money: Players need to feel they’re getting their money’s worth. Diverse pricing bundles can cater to different player types, from those looking for a slight edge to those willing to invest more.
  • Price Elasticity: Experimenting with price points through A/B testing will help you find the sweet spot where you’re maximizing revenue and making players happy. Adjust based on player feedback and purchasing behavior, aiming to create a win-win for you and your players. 
 
Consumables vs. Non-Consumables:
  • Consumable IAPs: Consumable IAPs (like game currency or boosts) should enhance the game but not be necessary to progress. This can help avoid pay-to-win scenarios. 
  • Non-Consumable IAPs: Non-consumable IAPs (like skins) add a personal touch and don’t affect the game’s balance. They generally emphasize style and personal expression or gaining in-game clout.

By always validating and updating your strategies based on what players say and how they act, you can find the best ways to price your in-game items. The main goal is to make players feel good about buying, not just once but over and over. 

 
Clash of Clans: A Playbook for IAPs

Clash of Clans made $482 million in IAP revenue in 2022, with over 1.8 million daily active users (second only to Subway Surfers). Holy cow! The goal, then, is to reverse-engineer their success and see what insights we can uncover. As we go, think about how you might apply what you learn to your own IAP strategy. Let’s begin!

1. Balancing Consumables and Non-Consumables:

Gems: The quintessential consumable, gems fuel faster construction and troop training. For impatient players eager to climb the ranks, they’re invaluable. Yet, Clash of Clans ensures progress remains attainable, albeit slower, for free-to-play users, preventing pay-to-win scenarios.

Growth Metrics for Mobile Games

Hero Skins and Decorations: These non-consumables add a layer of personalization, letting players flaunt their individuality and dedication. The “Pumpkin Barbarian” or the “Crystal Queen Archer” don’t impact gameplay but fuel emotional investment, encouraging long-term engagement. Games like Fortnite also put this principle at the core of their monetization strategy.

2. Understanding Player Demographics:

Hardcore Players: The Gold Pass, a monthly subscription offering exclusive rewards and bonus resources, targets those players seeking an edge. Its success shows Clash of Clans understands the premium placed on time optimization by dedicated players.

Player Spending Behavior Analysis

Casual Players: Limited-time offers and visually appealing bundles featuring discounted gems or resources cater to casual spenders who crave occasional boosts or want to catch up with friends. The “Builder Potion” or the “Cyber Special Bundle” offer instant gratification at an attractive price point.

3. A/B Testing and Iteration:

Clash of Clans constantly tweaks its IAPs based on data and player feedback. For instance, it introduced the “Seasonal Bank“, a tiered reward system for active players, after testing different reward structures and price points. This data-driven approach ensures their IAPs remain relevant and enticing.

Analytics for Mobile Games
Key Takeaways

Clash of Clans is a textbook example of how to implement IAPs without compromising the player experience or the core game loop. Its success emphasizes the importance of:

  • Variety: Offering a balanced mix of consumable and non-consumable IAPs appeals to diverse player motivations.
  • Targeted Pricing: Tailoring IAPs to specific player segments, like the Gold Pass for hardcore players, maximizes revenue potential.
  • No Pay-To-Win: Creating a compelling gameplay loop that incentivizes, but doesn’t force, spending.
  • Limited-Time Offers: Creating a sense of urgency with temporary deals encourages impulse purchases and keeps players engaged.
  • Data-Driven Optimization: Constantly testing and iterating based on player behavior and feedback ensures IAPs remain effective.
  • Player Psychology: Understanding player motivations (factoring in demographics) and tailoring IAPs accordingly.
  • Data, Data, Data: Leveraging data and player feedback to constantly iterate and optimize.

It’s also important to note that Clash of Clans doesn’t rely solely on IAPs for engagement. Regular content updates, clan wars, and seasonal events keep players hooked and incentivize spending. This holistic approach creates a vibrant ecosystem where IAPs feel like natural extensions of the gameplay experience, rather than intrusive monetization tactics.

By following these principles and analyzing the strategies of games like Clash of Clans, mobile game developers can unlock the true potential of their IAPs, building sustainable businesses while keeping players happy and engaged.

Remember, it’s all about finding that sweet spot where player satisfaction meets profitability. For mobile games, the optimization of IAPs is a continuous journey. At Yodo1, we partner with game developers to hone their mobile game monetization strategies, bring in more players with tailored game growth strategies, and ultimately scale their games to new levels. And we do it well, with over 10 years of experience and over 3 billion downloads across our games. Check out Yodo1’s Growth Accelerator Program to learn about all the ways we help games grow.