Mobile gaming has always been comfortable spending aggressively on growth. In 2025 alone, the industry spent an estimated $25 billion on user acquisition, according to AppsFlyer. For studios under $1 billion in revenue, marketing absorbs around 25% of what they make – significantly more than the 15% average across other software businesses, according to Bain & Company. Spend to acquire, acquire to earn, earn to spend again.

For years, this has been accepted as the cost of doing business. After all, spending money to make money is a longstanding growth principle. But the returns on the UA treadmill are getting thinner with paid install share for mobile games increasing 10% year-over-year on both Android and iOS platforms in 2025 (according to Appsflyer research). 

Studio execs are demanding shorter payback periods and therefore the UA teams may be forced to cut  channels that no longer fit the criteria; channels that are challenging to improve because of limited targeting capabilities and optimization levers. The studios still scaling UA aggressively are doing so in a much tougher environment than a few years ago, and sustainability remains unclear. 

So here's a question worth sitting with: if the current pillar of mobile gaming UA, “spend money to make money”, is facing challenges, where else can the budget be effectively spent  to support a game’s revenue?

The Revenue Share Studios Already Hate

Before getting into that, it's worth acknowledging the state of revenue sharing in gaming.

The industry has been conditioned to primarily associate revenue sharing with being on the wrong end of someone else's leverage. Apple and Google's 30% platform cut has been a source of frustration (and litigation) for years. When studios hear "share your revenue," their instinct is to go on the defensive. They've spent a long time watching platform holders grab value from the games and ecosystems they built.

When someone suggests sharing revenue with players, studios might think, “Oh god, not another cut.” But this is a different proposition compared to the platform revenue share model studios have spent years pushing back against, and conflating the two is a huge mistake for studios.

Who Benefits from all this Spending?

Studios are not being asked to spend more, rather they're being asked to reconsider who receives the budget they've already committed to. Right now, a good chunk of money flows to advertising channels whose primary job is to deliver installs, while juggling quality and volume. Additionally, remarketing saw an increase in investment with global spend reaching $31.3B in 2025, up 37% Year-on-Year. While both tactics can support growth, long-term value can still remain a problem.

That long-term value is precarious. Average Day-1 retention across mobile games sits at around 29%. By Day 7 it's 8.7%. By Day 30, just 3.2% of acquired users are still playing – meaning about 97% of the players you paid to acquire are gone within a month. You spent real money to bring them in and the marketing channels got paid, but the player left.

First-party rewards flip this logic as a new engagement lever to invest in. You invest budget within the game to retain your most engaged players (and spenders). The money stays closer to the product, closer to the experience, and closer to the active playerbase who determine whether your LTV projections hold up or collapse. Real-money rewards become a part of the game's value proposition indefinitely and strengthens player loyalty.

To Give and Receive

Giving money to players is a conceptual leap for many studios because free-to-play monetization has traditionally been designed around value flowing primarily in one direction to drive a game’s revenue. The idea of deliberately putting money into players' pockets challenges some long-standing assumptions about how player value is created.

There's also a legitimate concern about cannibalisation. If players are earning rewards, does that reduce their willingness to spend? The data suggests the opposite: a Mistplay report found nearly 60% of high-value spenders would be more likely to spend in games if they could receive redeemable points or monetary rewards from their purchase, alongside half of overall spenders. While reward systems can take many different forms, the data suggests rewards deepen player investment in the game.

The comparison to Apple and Google doesn't help. Executives who have spent years resenting a mandatory 30% platform tax aren’t naturally primed to voluntarily share revenue with anyone. The tax feels like an extraction by a gatekeeper with no value to the player, while rewards are a deliberate investment in the people who make your game worth building.

Market Moves

The broader data suggests studios are already sensing that the UA-first model has limits, with the average number of acquisition partners per app declining from 6 to 5.3, a signal that studios are becoming more selective about where UA spend actually goes, rather than simply scaling it at all costs.

A handful of studios are building proprietary reward experiences from the ground up. Tripledot Studios,  Bluetile, and others have developed their own approaches to player incentives, recognising that the studios who own the reward relationship own the retention lever. But building real-money reward systems that are sustainable and genuinely improve long-term retention can be difficult, even for sophisticated operators. 

The challenge is building a reward experience that feels genuinely valuable, that integrates naturally into gameplay instead of disrupting it, and that delivers rewards with real-world utility rather than in-game currency that players have learned to discount.

The New MO

Mobile gaming has always understood that you have to spend to grow. UA at scale will always have a role, but as acquisition costs rise and the return on the next install decreases, studios need to look at new avenues for growth. Thankfully, the most valuable growth lever is already inside the game: current players who are already significantly closer to achieving long-term retention than a sea of potential new installs where user quality can be a roll of the dice.

Paying players isn't charity. It's the most logical evolution of the spend-to-grow model that built this industry. The money was always being deployed somewhere. The question is whether it was working as hard as it could.