Gaming strategies fuel the rise of new consumer apps

This article summarizes an episode of VC10x’s video series featuring Phylicia Koh, general partner at Play Ventures.

Phylicia Koh, general partner at Play Ventures./ Photo credit: Play Ventures

For years, one rule dominated the app market: gaming apps generated the most revenue. According to Phylicia Koh, a general partner at Play Ventures, that is no longer true. Changes in how people use apps show that gaming-style monetization is becoming the model for other consumer apps.

Play Ventures supports this shift with a US$142 million fund, issuing checks ranging from US$1 million to US$5 million worldwide. About 30% of its portfolio is in Europe, with another 15% to 20% in North America.

A new leader in the app market

Gaming set the blueprint for in-app purchases, and recent market analysis pinpoints when the balance finally changed.

That change happened this year
Koh says, “In 2022, consumer [in-app purchase] spend was still about half of what it was in gaming. But we saw the way the winds were blowing. Earlier this year, [market analysts] for the first time reported that consumer [in-app purchase] spending actually exceeded gaming spend.”

This change is also causing talented people to move to new kinds of apps
Competition in gaming remains intense, with decade-old titles like Candy Crush still generating over US$100 million in April 2025 alone.

Koh explains, “Free-to-play gaming is a 20-year-old market, and it is mature. Many gaming founders saw there were other opportunities for them to take their know-how and skill set and go and apply [them] into new spaces to solve exciting problems.”

The plan for a playable app

Koh gives a method to find out where ideas from gaming will work. A playable app must have four features.

• Controllable outcome: User actions must influence results, creating a sense of control and progress, even if outcomes vary each time.
• Intrinsic motivation: The app should support goals users already care about, such as learning, fitness, or mental wellness, not just entertainment.
• Social integration: Users should be able to play with or against others. Social ties increase engagement and return usage.
• Willingness to pay: Users should be able to play with or against others. Social ties increase engagement and return usage.

The best apps help people with their real needs instead of just entertaining them
Koh notes, “If I put in effort, can I have some success? Sometimes that’s learning, fitness, or mental health. When you combine entertainment with something more intrinsic, like wanting to be healthier, those are very powerful motivators that strengthen baseline user acquisition.”

Even when users are motivated, it is still hard to keep them for a long time
“We know from games that the best retaining products often have a social element,” Koh argues. “Whether it’s cooperative play, competitive play, or being in a clan together working on a mission, those social things can be really powerful in driving retention.”

The hidden limit of subscriptions

This plan also highlights a flaw in a common revenue model. The popular subscription model has a financial weakness that many overlook.

Subscriptions offer speed
Koh acknowledges that “subscriptions are much easier to spin up and run” because founders can “see return on ad spend at a much faster clip” than with free-to-play models. This makes them an attractive starting point for businesses needing immediate revenue.

Why adding simple game features fails