Mobile Monetization: the Old Playbook is Caving

Mobile gaming is an $82 billion market that grew less than inflation last year. The broader mobile economy (non-gaming apps, AI subscriptions, everything else) surged 10% while Gaming managed 1.3%. In real purchasing-power terms, that’s not growth. It’s a slow retreat.

It started earlier than last year. After hitting $86 billion at the pandemic peak in 2021, mobile gaming IAP revenue fell 9% in 2022 and another 2% in 2023 before recovering 4% in 2024 to $80.9 billion. The 2025 growth of 1.3% means the recovery is already decelerating.

These are nominal figures. Adjusted for cumulative inflation since 2021, the peak was effectively higher and the gap to recovery is even wider.

Worse so, gaming downloads fell 7.2% to 50.4 billion. Time spent in games grew just 0.9%. And for the first time ever, non-gaming apps surpassed gaming in total IAP revenue — driven largely by AI app subscriptions eating into consumer wallet share.

The traditional mobile monetization playbook (acquire users at scale, monetize through IAP and ads, optimize the funnel) is mathematically compressing. The studios that grew in 2025 didn’t do it by running the old plays harder. They did something structurally different.

The Numbers Behind the Squeeze

The Sensor Tower State of Mobile 2026 report paints a clear picture of what’s happening.

Global mobile gaming IAP revenue approached $82 billion. But at just 1.3% year-over-year growth, the ceiling is getting uncomfortably close. Meanwhile, overall IAP across all apps hit $167 billion, up 10% YoY. Gaming’s share of the mobile economy is shrinking rapidly.

The concentration problem is stark. Moloco’s research shows the top 2% of high-value users account for 35–45% of all IAP revenue, and the top 5% generate 48% of total IAP globally. The player base is bifurcating: a shrinking pool of committed spenders propping up the numbers while the vast majority never opens their wallet.

On the acquisition side, gaming UA spend hit $25 billion in 2025, up 3.8% YoY, but downloads fell 7.2% over the same period. Studios are spending more to reach fewer people. The pattern in the Sensor Tower data is clear: the studios that grew in 2025 did it through sharper monetization and live ops discipline, not by spending more on acquisition.

Hybrid is more a stall than a strategy

The industry’s dominant response has been hybrid monetization — layering ads on top of IAPs to capture revenue from non-payers too. The shift has accelerated broadly, and among major segments, hybrid-casual has been a standout performer. It’s the most popular adaptation, and it makes sense intuitively.

But hybrid doesn’t solve the underlying structural problem. It still treats monetization as something separate from the gameplay experience: an interruption (ads) or a gate (paywalls).

You’re optimizing two parallel revenue streams that both, in different ways, work against player engagement.

• Push ads too hard and session quality drops.
• Lean into IAPs and you’re back to monetizing the same small slice of players who were already spending.

The advertising side has its own headwinds. Apple’s App Tracking Transparency framework has shifted the iOS-Android ad revenue balance toward Android, reversing a longstanding iOS advantage.

The targeting precision that made mobile ads lucrative is eroding, and the platforms themselves are acknowledging it. Google Play is now allowing U.S. developers to use alternative billing systems and link to external webshops, and the recent Google-Epic settlement (pending court approval) opens the door to registered competing app stores on Android by mid-2026. When the platforms start opening escape hatches from their own billing infrastructure, that’s a signal about where they see the current model heading.

Hybrid monetization isn’t wrong. But it’s an optimization of a compressing system, not a structural answer.

What If Monetization Was the Gameplay?

There’s a different model. One where the spend isn’t layered on top of the experience but woven into it. Where players spend because they want to, not because they hit a wall.

Competition-based monetization works like this:

• Players enter head-to-head or tournament-style competitions: both free-entry and real-money.
• The winner of the competition takes the pot, and the developer gets a percentage.
• In a 1v1 match with a $1 entry, the winner could take $1.90, with the platform taking a small cut per match. At scale — across millions of daily entries — that margin compounds into a real revenue line without ever interrupting the player experience.

Monetization comes from an entirely different angle. It becomes directly tied to the game design, feeding off the stickiest retention loop in gaming — competition.

The acquisition model is different too. On a recent livestream hosted by Beamable CEO Jon Radoff, Justin Graysmark — who has shipped dozens of skill-based titles — shared that he achieved millions of installs purely organically, with zero UA spend. When competing for real stakes is the core experience, players tell their friends. The mechanic markets itself.

Skill-based gaming (also called cash gaming) isn’t a niche. Skillz has processed billions of tournament entries across 14,000+ developer integrations. It’s a real category with real scale.

It’s not right for every game. The sweet spot is games that are easy to learn, have genuine competitive depth, and support head-to-head or score-based formats — puzzle, card, arcade, sports, and casual strategy genres have all proven out. Skillz’s recent Pro SDK announcement, alongside their $75 million developer accelerator, are designed to expand that footprint into new genres.

Backend + LiveOps + Monetization in One Stack

The Sensor Tower report surfaced another finding worth highlighting: the studios that grew in 2025 didn’t just have better monetization. They had better live ops — consistent content cadence, fast iteration, and data-driven updates. Revenue followed their operational discipline.

This is the logic behind the Skillz acquisition of Beamable’s technology in February 2026. Combined with Skillz’s competitive infrastructure, the platform covers meta systems, LiveOps, multiplayer, and monetization in one stack — including the payment processing, compliance, and jurisdictional complexity that most studios can’t afford to build or maintain on their own. Developers focus on the core loop while the platform handles the plumbing.

The combined platform debuts at GDC on March 11 in the session “Powering the Next Generation of Competitive Creators.”

The Takeaway

Mobile gaming IAP grew 1.3% last year. Downloads fell 7.2%. UA spend rose 3.8% to reach fewer players. Non-gaming apps took the IAP crown for the first time. That’s not a bad quarter. That’s a structural shift. The studios still growing are the ones that found ways to make monetization intrinsic to the player experience — not an interruption of it — and paired that with the operational discipline to iterate fast.

The old playbook still generates revenue. It just generates less of it every year, for more effort and more spend. At some point, optimizing a compressing system stops being strategy and starts being inertia.

• If you’re evaluating your monetization stack, the Skillz Pro SDK is a good place to start.
• If you’re a studio with a competitive game concept and want support building it, the $75M Developer Accelerator program is worth a look.
• If you’re headed to GDC, come to the session on March 11 for a full exploration of the new capabilities of the Skillz and Beamable platforms.

The 1.3% problem isn’t going away. But what you do about it is still up to you.  

  This post reflects a Skillz and Beamable perspective on the evolving mobile monetization landscape. All cited data points are sourced from third-party industry reports and public filings.