Hybrid monetization done right is a true investment- one that’s easier for games employing flexible backends, power systems, and economies built to leverage a multi-pronged monetization strategy.

This is why many hybrid apps we see today are less than two years old, with the exception of some large publishers who made a big investment implementing hybrid monetization into their popular legacy apps or bet on hybrid from the start. I suspect that much of the 20% YoY increases of apps using hybrid are new entrants to the market. If your ARPDAU is below 50 cents, then you can add 5-10% net revenue by adding in vanity IAP to an IAA game or putting ad monetization into an IAP game without much risk of cannibalization.

But to really succeed at hybrid, such as a 70/30 or 40/60 split -without cannibalization- requires consideration of technical challenges serving segmentation, video ads, and mediation or design challenges with faster content and power progression. This is alongside investment in retraining or hiring product talent to deploy best practices in both monetization streams. You could even hire a direct sales team if you’ve built a recognizable brand.
Speaking of brands, if you are building a new game for IP holders, it’s important to know IP holders may not allow ad monetization next to their brand. That means those minimum guarantees and revenue share agreements are all the more expensive when you also lose the ability to add 20% net revenue from savvy ad monetization.

Many monetization models can work across gaming genres because the heart of this question lies in how your audience likes to progress: by handing over their attention or their wallets? The important considerations are target audience, ROAS payback period, max LTV, and protections from an economic principle called the “Substitution Effect”. I explain using the substitution effect to balance ad load vs. IAP in your hybrid game in my most recent blog post here for our astute readers.

The name of the hybrid game is slightly less ad friction than other games your audience plays. Your target audience dictates how much ad monetization you earn before cannibalizing IAP spend or lowering retention, judged against available substitutes. As long as your rewarded ads are more valuable to players or ad friction is lower than available substitutes in that subgenre, then there is no advantage churning to another game.

Generally, incorporating IAA alongside IAP monetization will earn revenue quickly to reduce your ROAS payback period, but without payer segmentation it limits your overall LTV. On the flipside, IAA-only will give you one of the fastest ROAS payback periods if your CPI is low enough but your LTV will be severely capped. That’s why primarily hyper and hybridcasual apps use IAA: this value trade off on genre-wide low LTVs is positive against substitute games who use a similar strategy.

If available substitute games are largely IAP only and you can stomach long payback periods, then IAP only is best. It builds brand loyalty to pull in organics and no cannibalizing ads pulling down your high LTV. Some games in these genres incorporated hybrid successfully, but they also target a slightly more casual niche inside core. An example is Whiteout Survival by Century Games- an RTS game that presents as a hypercasual for the beginning of gameplay.

ROAS is an important summary metric that tells you how quickly (if at all) you are earning back your money against your CPI. This lets you manage cash flow across a portfolio of games that have different payback periods, but it’s only the starting point as a bridge to LTV in judging your game as a complete investment.

This is why in my Hybrid Monetization 2024 report with Gamesforum Ltd showed both hybrid, IAA, and IAP gamemakers rated LTV as their highest priority metric to improve in the next 6 months, while planning against the orchestration of LTV, CPM, and CPI trends by geo across many different teams is their number one challenge for 2025.

Your cohorted LTV reveals not only the earning ceiling of your investment, but if you are growing that value over time across retentive cohorts and if you get granular this can be split by install source. ROAS is essential as a cost center metric to optimize your early player experience and keep marketing wheels turning, but your top profit center metric that showcases your game’s potential years into the future is always LTV. After D60, your target ROAS for that cohort is but a dream that could go up in smoke due to rising CPIs, a change in marketing creative, or targeting strategy- yet you still have this user cohort to improve upon that LTV as long as they remain engaged in-game.

Smaller studios are more daring to test winning monetization strategies from other genres to gain a ROAS advantage and steal market share. Small studios need faster ROAS paybacks, so they are more willing to incorporate ads through IAA only or hybrid models and then extend their LTV ceilings by offering IAP pay-for-power progression.

This gives them the best of both worlds with lower CPIs and larger D3 revenues, which is the cutoff period for most LTV prediction curves to filter back into marketing algorithms that unlock budget.

As outlined in Hybrid Monetization Trends, IAA only games have upgraded with a basic but LTV accretive IAP store that sell ad blockers such as No Ad 30 day subscriptions or rewarded video ad skips which give the same rewards without wasted time. I see mini games and in-game tutorials showcasing casual gameplay for the first few levels, so they earn high ROAS on hypercasual CPIs before dropping players into midcore gameplay that may churn players, but highly coverts retained players.

Larger studios have deep pockets to sustain long payback periods and build brand loyalty- a key protection against the substitution effect. These games stay IAP only because they earn high LTVs, even if CPIs are high and ROAS takes 10 months to pay back. A few games in each casual subgenre stand out where hybrid games are the norm by marketing based on their lack of ads in-game (like Royal Match by Dream Games or Match Factory by Peak Games). This only works for 1-2 standout games, and studios employing this strategy must leap over high production cost bars with deep UA pockets.

It’s important to consider Paying Users a lagging indicator of game health, because on average new DAU take about three days to convert with a very long tail across 60 days. Marketing campaigns and new liveops that increase installs or reactivations often lower the share of paying DAU because you’re diluting that pool- however we expect to see paying users rise over time in a healthy game.

Paying users so predictably increase that gamemakers more often use weekly active payers as a proxy for game health, because many payers only make a single purchase and their presence can mask economic stagnation.

Paying users should be more stable than DAU trends that largely contain game tourists who cruise and churn, because payers have already invested in progression.

DAU fluctuations not accompanied by retention or DAU/WAU changes are more likely caused by marketing changes like targeting lower spend geos who don’t convert to paying users at the same proportion as previous install cohorts.

Days where DAU upticks are prevalent may also represent game liveops that start by giving out more rewards to enable players to progress rapidly before pinching them towards the end to create conversion pressure. These “faucet” liveops generally bring DAU into the app to reap rewards while an increase in payers would come towards the end. Then liveops turn into a “sink” to capitalize on increased demand via IAP boosters, vanity content, and premium currency.