How do app games that ‘give’ you money actually gain profit?

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There are adverts about games that say you can generate ridiculous amounts of money just by doing/playing x. Although this is obviously not efficient for the user, how do companies that claim these things gain profit?

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Presumably they take in more revenue from selling ads or selling user data than they pay out in payments to users. If you don’t pay for a product or if you make money from a product, YOU are the product.

They’ve calculated that the economic profit is worth giving you the money to do X. Say you invite 10 friends and they give you $1. Well if they can convert 20% of new users and the average user spends $10, they’ve theoretically just earned $2. So they get to keep a dollar after giving you a dollar.

That’s just the 5 year old explanation btw. It can get very complex.

They say you “can” but not that you “will,” and that’s a big difference… You will need to do a lot of things that depend on other things, you will need to install some games that are not free, buy items with real money, have a handful of friends doing the same.

So in the end, a lot of people installs their games (earning money to the game) but not qualify for the financial reward because nobody but a few will qualify.

By misleading users about the amount of money they can realistically make playing these games, while simultaneously bombarding them with ads and selling their personal information to third parties.

By not paying out.

Say, they require a certain number of points to get paid, but then they stop giving you points before it reaches that.

Or by being basically a gambling app- you buy virtual currency that you can then spend on chances to earn money, but the game is designed so you always lose more than you make.

This is all explained in the reviews of said games.

Seems to be they let you “win” between £80/90, but the minimum withdrawl is £100 and you’ll never get there

Another thing to keep in mind is that such companies are not necessarily making a profit at all.

It is common to imagine a company starts small doing something that makes a few bucks of profit, then reinvests that profit in growth until they are massive and raking in the cash required to support themselves. That isn’t the only path though.

There are many businesses where you can’t start really small and make money. You can’t really profit by selling gas out of a hand cart like a hotdog vendor, you need a station that costs millions to build. You can’t really have a mom and pop steel foundry operating from the backyard shed.

Instead businesses start by attracting investors that will give money to allow the company to grow and operate during a phase where they don’t make money, but actually lose it. Also the goal often isn’t to grow to the point that they grab significant market share from the major players in the industry. Instead the goal is to at some point be bought out by one of the major companies for a price that will recoup the investment.

The interesting factor here is that the company *never needs to be profitable!* They just need to be interesting enough to be bought out, and one way is to have a large user base that can be sold along with the company to a bigger buyer. If a big company wants to start an app it may make more sense to purchase a user base of millions of people rather than spending years trying to build it themselves and perhaps even failing.

So your question of how they gain profit may not even be applicable.

Obviously I would have to know the specific game to be able to give an exact answer. However most of them work by making you view ads and they paying you some of what they collect from the ad. For example:

The game gets paid one cent for everyone that watches a 30 second ad. The game then pays you the “player” half a cent for ever commercial you watch. In this model the company is making 50% of the revenue from the ads.

They then claim that you could be making over $400 a month just playing this game!!! (that is watching ads for half a cent, 24 hours a day, every day for 30 days)

Depends on the app, games that promise it gain money through a buttload of advertisements.

However for things like MistPlay, AppBounty, etc. the way they’re working is they collaborate with the developers to basically get free beta testers. So instead of paying beta testers to make sure the game works, they pay MistPlay to host it and get their users to do it for free.

Think of it similar to how some game companies use YouTube sponsorships as advertising, it’s easier and more effective in the long run to pay Markiplier $5,000 to play your game and get millions of people seeing it, rather than repeatedly pay for traditional advertising and marketing.