What are 'skip-its' and how will they affect ad monetisation in 2024?

• Skip-its give players the opportunity to earn an in-game reward from rewarded videos without actually watching it
• Although this method will mean that ad revenue may be lower in-app purchases will receive a boost as skip-its are priced higher

This article was originally published on GameBiz Consulting

The quest for the perfect monetisation balance is a complex challenge in the world of mobile games. It's a crucial factor that can make or break a title's success. As a result every developer actively explores various methods to discover the most effective approach. 

One such method is the implementation of what the industry has dubbed 'skip-its'. Rewarded videos are featured in many mobile games, but some players are put off by the need to watch these ads to gain a reward. 

Enter 'skip-its'… These allow players to skip rewarded ads altogether for a small fee. But how exactly do they work, and how could they impact a game's overall revenue?

In this guest article, GameBiz Consulting’s head of ad monetisation, Božo Janković, answers those very questions with a deep analysis of skip-its and their impact on monetisation.

Skip-its, also known as skips, skips-its, and tickets, offer the player the option to earn an in-game reward from a rewarded video ad without watching it.

At the heart of most hypercasual and casual mobile games is the traditional ad monetisation model - a necessary, though often maligned, source of revenue. Players often find themselves in a love-hate relationship with in-game ads: they’re a ticket to various rewards, yet they interrupt the flow of gameplay if not implemented correctly.

However, the rise of 'skip-its' is challenging the norm, introducing an option that allows players to bypass ads for a small fee yet still reap the rewards as if they had watched them. This concept presents a different angle to player interaction with ads; it is a major shift in user experience that introduces new dimensions in revenue generation and user engagement within the mobile gaming industry.

In this article, we delve into the world of 'skip-its', exploring whether this model has the potential to reshape the ad monetisation landscape.

What is a skip-it and how does it work?

Skip-its, also referred to as skips or tickets, are a novel game monetisation model that offers the player an option to earn an in-game reward from a rewarded video ad without watching it. A skip-it is essentially an in-game currency, usually acquired through in-app purchases with real-world money in the game store. 

When a player buys a skip-it, they typically must use it to claim the reward, foregoing the option to watch the video. This trade-off introduces an interesting dynamic: while there is an expected decrease in ad impressions, the overarching objective is to boost overall revenue through the sale of 'skip-its'.

Even when considering standard app store taxes, the revenue earned per skip-it in the game is substantially higher than what is typically earned from a standard rewarded ad impression in the U.S.

How much do skip-its cost in mobile games?

When analysing the pricing of skip-its across various games and comparing them to the most popular in-app purchases, it's evident that developers who have implemented skip-its are experimenting with different pricing strategies to optimise revenue.

Our analysis of over 50 top-selling games reveals that skip-its remain an emerging monetisation strategy adopted by only a few.

In our analysis, we observed that skip-its can mainly be purchased and rarely obtained for free. The only notable exceptions are Mob Control and Going Balls. In the former, early in the game, players are awarded five skip-its to introduce the concept. Interestingly, in Going Balls, users are offered skip-its as a reward for watching a rewarded video.

In "Mob Control," the range of skip-its varies between 14 to 30 cents each, offering different bundles to suit various player spending habits. The game also features diverse in-app purchase options like special bundles, booster packs, and a season pass, with the season pass and "No ads" offer ranking high among player choices.

"June's Journey" and "Going Balls" offer skip-its in the lower price range (10-20 cents and 5-12 cents, respectively), indicating a strategy to make them accessible to a wider player base. In contrast, "Dreamdale" and "Port City" have similar pricing strategies for skip-its, leaning towards the middle range.

Until skip-its were introduced, users did not have many opportunities to control their ad-viewing experience in the context of in-app purchase options. Namely, games that show users interstitial ads usually note that any IAP removes forced ads; some even allow users to make a purchase with the sole purpose of removing interstitials forever.

In most cases, these were one-time purchases that cost anywhere between $0.99 and $3.99.

From the above, there are clear differences between skip-its and previous ads-related IAP options:

• Skip-its allow users to claim rewards from rewarded video ads without actually watching ads (so skipping them) while previous IAP options allowed users to remove unwanted, forced interstitial ads.

• Skip-its are bought in packages that contain a certain number of skips (10 to 250, from the above examples) but can be spent. This allows for repeat purchases. As mentioned, on the other hand, previous “remove ads” purchases were removing forced ads forever.

We observe different monetisation strategies when comparing skip-its to other popular in-app purchases, like the no-ads options in these games. For instance, in "Mob Control," the no-ads offer is priced at $2.99, which is similar to the cost of 10 skip-its. 

Market context and revenue considerations

In 2023, the mobile gaming landscape reflects a complex tapestry of evolving trends and enduring practices according to Data.ai. With consumer spending slightly declining and downloads falling to 88 billion, it seems more important than ever before for publishers to diversify their revenue strategies, ad revenue being one of the options.

For example, the revenue from mobile ads alone has ballooned to a staggering $362 billion, an 8% YoY growth, underscoring the critical role of new ad monetisation strategies in this transformative period.

Rewarded video ads are a well-established ad format that has been in use for years. The fill rate in tier 1 countries is close to 100%. However, in emerging markets such as Saudi Arabia, Brazil, Mexico, and India, the fill rate could be a challenge despite rewarded video being probably the most used ad format.

When it comes to eCPMs, again, tier 1 countries are leading the way. According to Appodeal, the average eCPM on iOS reached just above $15 in the US, $10 - $14 in countries such as the United Kingdom, Australia, Japan, etc., and it can be even below $5 in countries such as Brazil, Turkey and Mexico.

Another important thing to remember is that eCPMs can be quite volatile and depend on seasonality and many other factors, so the eCPM can vary up to 40% depending on all the different factors, even when looking at the data for a single country.

Additionally, as we have pointed out in our previous article, Is eCPM An Overrated Ad Monetization Metric, eCPMs decrease with every single ad view for the same user, meaning that the developer gets less money, even though providing the same reward for each ad.

Again, going back to our pricing analysis of skip-its, we see that a single skip-it usually costs north of 10 cents, which would be the equivalent of $100 eCPM. As we see above, this is an unreachable objective for most games, even for countries such as the United States.

So, skip-its are a convenient way to increase the revenue per reward claimed by allowing users to make an IAP transaction rather than trade in their time (needed to watch a rewarded video ad).

Also, for countries in which the fill rate might not be that great, skip-its allow publishers to offer a reward to users every single time, as opposed to situations in which the ad wouldn’t be available due to limited demand.

Implementing skip-its allows for revenue diversification and a more controlled monetisation environment, balancing out the eCPM inconsistencies that may arise due to market dynamics or policy changes. However, to achieve this, there are several pitfalls surrounding skip-it implementation that developers need to consider.

Navigating the pitfalls of skip-its integration

Incorporating skip-its into a mobile game's monetisation strategy comes with its set of challenges and considerations. 

One obvious question is: Will skip-its negatively impact ad revenue? The answer is yes! Since every skip-it used means one ad will be skipped and one fewer ad impression generated, this will consequently lead to lower ad revenue as well.

However, as we have pointed out, skip-its are priced much higher than ads, so for every ad impression and lost ad revenue, the publisher will earn more from the IAP transaction. 

Pricing skip-its is another delicate matter. They must be valued such that they're preferable to watching ads and not so expensive that players disregard them as a viable option. This involves carefully analysing the game's economy and user spending behaviour to ensure skip-its are an enticing yet balanced feature within the game's monetisation mix.

Beyond immediate revenue, the integration of skip-its can inadvertently impact player engagement and long-term retention. If players can expedite rewards, they may spend less time interacting with the game, which can dilute their connection to the game world and its community. This is similar to any other in-app purchase available to users.

Moreover, how players perceive skip-its is critical. If gamers feel forced to buy them to progress or avoid watching excessively long, rewarded video ads, it could foster a negative view of the game, and they may become dissatisfied with the game as a whole. They must be carefully calibrated to avoid disrupting the challenge and progression that many players enjoy. 

Maintaining the game's integrity is paramount; otherwise, skip-its could detract from the satisfaction derived from overcoming in-game obstacles.

Another challenge that might be overlooked is handling the most sophisticated players - those who are ready to crack down on the numbers in the spreadsheet and who might not have watched rewarded video ads but start buying skip-its as a cheaper alternative to IAP packages that they were previously buying.

Here’s one example:

Let’s say that the user regularly buys a pack of 100 coins that costs $9.99 (so each coin is worth 10 cents). The rewarded video ad allows users to watch an ad and earn 5 coins for free, but the player doesn’t opt in because they don’t want to waste time on ads.

The publisher introduces skip-its priced at 20 cents each. This means that the user could buy a skip-it (for 20 cents) and earn five coins for skipping an ad with it instead of paying 50 cents for it (via the IAP pack mentioned in the beginning). 

So, there is a potential danger of cannibalising existing IAP revenue if the users calculate the costs of coins via different purchase options available and they were previously not watching rewarded video ads.

Finally, a key challenge with skip-its is ensuring players understand their value. As they are a new model and differ from standard in-game currencies, it's important to communicate their purpose and advantages to players effectively. If the value of skip-its isn't clear, players may not utilise them as much, which could impact their effectiveness in generating revenue.

How to implement skip-its into your game

Incorporating skip-its into a game requires a tailored approach, as third-party services like ads do not offer this feature but need to be developed internally, just like other in-game features such as coins or gems. Here is what you need to consider when implementing skip-its into your game:

• Custom Development: Understand that skip-its are a unique feature that must be developed in-house. Each game should design skip-its to fit its specific monetisation strategy and player experience.

• Functionality Design: Decide how skip-its will function in your game. Will players always have the option to skip ads if they have skip-its, or can they still choose to watch ads?

• Pricing Strategy: Set a price for skip-its. This requires analysing your game's economy and player spending patterns. Offering different bundles can cater to varying player preferences and spending behaviours.

• Implementation: Integrate Skip-Its into the game's interface and ensure they are seamlessly woven into the gameplay. They should be easy to access and use.

Need help implementing skip-its into your monetisation strategy?

Skip-its represents a novel model in mobile game monetisation, attracting attention for its potential impact on the industry. As we observe their integration and effects, it's crucial for developers to consider the best practices for implementing skip-its into their games.

If you're considering adding skip-its to your game and would like advice on effectively integrating them into your monetisation strategy, the game business consulting team is ready to help.

Edited by Paige Cook