Mobile gaming appears to be on a downward slide, but it’s not all gloom and doom. Real-money skill games are bucking the trend, with revenue set to triple in the next 5 years.
Real-money games can achieve positive ROAS in just 3–4 months, versus years for most casual games.
The rising star in skill games, Papaya, is raking in an impressive $2 million a day with just 4 games in their arsenal.
The barriers to entry in this market are steep, but LinQ levels the playing field with a full tech stack to help game publishers pivot to RMG in record time.
Where is mobile gaming headed?
According to a Sensor Tower report, mobile games brought in $53 billion in revenue in 2023, down 2% YOY. At the same time, worldwide mobile game downloads dropped for the first time ever, with a 10% decrease in 2023 over 2022. Many games with past successes may be facing future struggles when it comes to effective monetization.
With a mature market heading toward possible stagnation, mobile game developers are exploring new revenue streams beyond the standard mechanisms of in-app purchases and advertising.
The good news is developers who have already put years into polishing games and attracting massive audiences can continue to experience growth by leveraging new monetization opportunities.
Growth opportunities in casual games
Within the mobile gaming market, about 50% of all revenue is driven by casual games. The highly popular genre includes free-to-play games with short sessions and simple rules that anyone can master.
The one category rapidly gaining traction is skill games, a subset of casual games.
In 2023, skill games alone generated $13 billion in revenue, with 30% YOY growth — far outpacing the overall growth of the mobile gaming sector. The category is projected to take off and reach $40 billion by 2028.
Game publishers can tap into the huge potential of this category by converting existing titles to real-money skill games (RMG) and taking advantage of cross-promotion opportunities to monetize large player bases.
What are RMG skill games?
Real-money skill games are casual games based solely on the player’s performance. Think card games, puzzle games, and bingo. Most players are in the United States and India, with smaller emerging markets in the UK, Germany, and Mexico.
Players go head-to-head with other real users in skill-matched tournaments. To ensure fairness, every player is given the same starting conditions. Skill is more prominent than chance — the outcome of the game depends on which player is the fastest or performs the best, and the prize money goes to the winners.
What makes RMG skill games attractive is that users can deposit money to participate in a tournament, and then cash out winnings by withdrawing to a bank account. The wager element makes games exciting when real money is at stake.
Real-money gaming offers developers a prime opportunity for continued revenue growth. As an extra layer on top of traditional monetization schemes like in-app advertising and in-game purchases, RMG mechanisms maximize user engagement and generate new income.
Players on the RMG market
Despite RMG's appeal, only a handful of companies have implemented it successfully.
Papaya Games leads the charge, holding over 450 million tournaments per month with an estimated $2 million in revenue per day. They develop and publish their own games with in-house RMG capabilities, focusing on just four titles in their portfolio. Full control of game development and the tech stack means they can take game design and optimization as far as they want to. This strategy is a great model for success, but it takes considerable time and resources to integrate real-money technologies.
AviaGames develops their own games and RMG infrastructure, similar to Papaya. What makes their offer unique is the Pocket7Games platform, with 15 skill-based games linked to a single wallet. They run 100 million tournaments a month and have an estimated annual revenue of $125 million.
Skillz takes a different approach, offering a third-party game publishing platform that integrates RMG mechanics for game developers. In 2023, Skillz hosted over 200 million tournaments per month via the platform. However, developers are limited by a technology stack that lacks flexibility, with an unrealistic 50/50 revenue share.
Would-be skill game developers have a choice: build your own RMG stack and maintain full control over your game content, use a third-party platform to integrate RMG infrastructure and publish your game, or develop white-label games for partners.
Many game publishers are daunted by the complex legal and financial aspects of RMG, and rightly so — it’s taken years for the likes of Papaya and AviaGames to prepare RMG solutions. What’s surprising is that Papaya leads the RMG category with revenue from just four games. Laser focus on game play may be their main advantage.
Companies with great games to offer have the potential to make it to the leaderboard alongside Papaya. The key is to overcome the challenges of converting games to RMG by using a flexible plug-in solution to integrate payments and banking systems.
The challenges of RMG
A real-money game depends on all of these components to be successful:
Great game play
User acquisition at scale
Cash-in, cash-out, and compliance
User liquidity and player matching
Gaming companies have all the expertise they need to develop game play and user acquisition. But the financial aspects, compliance, and player matching are unique stumbling blocks on the path to RMG implementation. These are some of the biggest obstacles:
Government regulations vary by country and state, making the landscape difficult to navigate.
Integration of banks and payment processors is cumbersome — each processor approval takes up to 18 months.
Friction is high for users in payment scenarios, due to lack of native embedded solutions.
Player pools need enough liquidity to ensure fair matchmaking and keep players in the game.
There is one solution that effectively solves all these problems: LinQ.
A comprehensive solution for RMG
LinQ provides in-house legal expertise, off-the-shelf player matching, and a full fintech stack that’s natively embedded into games before publishing. These essential services form the core of the RMG solution.
Age verification and KYC
Cash games restrict play by age and require users to confirm that they are over 18 years old. Player location also needs to be verified to comply with local laws and regulations.
LinQ’s solution has built-in age verification and KYC, as well as geo-location services and geo-fencing by country and across all 50 states in the US.
Fraud detection
The LinQ solution includes fraud prevention in partnership with Kount and Equifax. Fraud is detected by both unsupervised and supervised machine learning models and proxy piercing technology. Fraud checks run in under 250 ms to keep players in the game, uninterrupted.
LinQ’s proprietary fraud alert system monitors user behavior based on Device ID. Suspicious accounts and transactions are temporarily suspended until the LinQ support team can investigate.
Cash in and cash out
For companies that can’t afford to spend years on integration (and honestly, who can?), LinQ makes payment scenarios fast and friction-free with a complete built-in fintech stack. Our cash-in partners are embedded for automated deposits, including Apple Pay, Visa, Mastercard, Discover, AmEx, and local solutions. Multiple cash-out partners are fully integrated, offering next-day withdrawals via Automated Clearing House in the US and 1–2 day withdrawals in the UK and EU.
We route all payments through our embedded solution for 24/7 failsafe operation, with transactions completed in 100 ms.
Solutions for player matchmaking and liquidity
Fair matchmaking and player liquidity are essential to keep players in the game and increase spending. What this means is that each round must have enough players participating to match people’s skill level and keep multi-player games interesting. When players are pitted against others with the same skill level, they are more engaged and more likely to keep playing.
LinQ offers unique off-the-shelf solutions and User Matching as a Service to solve player liquidity and increase player retention.
Make your RMG move now with LinQ
The skill game market comes with a host of challenges, but the opportunities are promising.
LinQ is the only natively embedded solution that can help developers enter the RMG market in 4 weeks. Whether you have existing games to convert or you’re designing hot new skill games, the LinQ API lets you integrate critical infrastructure with the flexibility for full feature development and fast iterations.
Focus on your game play and your player base — let LinQ take care of the legal, compliance, payments, matchmaking, and all the rest.
Interested in learning more? Reach out to our team or subscribe to our updates.
