Personalized content, engagement, and monetization in a mobile puzzle game

Louis-Daniel Pape, Christian Helmers, Alessandro Iaria, Stefan Wagner and Julian Runge

International Journal of Industrial Organization, 2025, vol. 98, issue C

Abstract: Digital technologies have reduced the cost of collecting detailed information on consumer characteristics and behavior. Despite the large literature on the consequences of using these data to personalize prices, little is known about content personalization. Using detailed player-level data from a mobile puzzle game and a novel structural model of player behavior, we investigate the effects on revenue of personalizing game difficulty using observable player characteristics. Our results show that, while average difficulty across players is successfully set by the game developer to maximize revenue, personalization can further increase revenue by 71%. Personalized difficulty leads to an overall increase in player engagement and, consequently, revenue generation in the form of in-app purchases. Although the largest relative increase in revenue comes from the smallest spenders, most of the absolute increase in revenue comes from a further increase in spending by the largest spenders.

Keywords: Non-price discrimination; Content discrimination; Price discrimination; Personalization; Digital products; Mobile apps; Online games; Freemium (search for similar items in EconPapers)
JEL-codes: D40 L11 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:98:y:2025:i:c:s0167718724000833

DOI: 10.1016/j.ijindorg.2024.103128

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