I had a friend reach out to me today about some advice. He’s a well established and respected financial consultant dealing with bank financing and equity investments. He was being solicited by someone to invest in creating an Android app game with the promise of passive income through ads. My friend, who isn’t a technologist, wanted to know (a) whether this is even possible and legal, and (b) if so, whether it might be a good investment idea to consider.

I’m starting out with a disclaimer that nothing I write here is financial advice, ever, and I haven’t been involved with the nitty gritty of Android app publishing and monetization in basically forever, so what I’m writing is more likely to be wrong than right. With that said, let’s soldier on.

In regards to the first part, yes, this is a totally valid channel to make money off Android apps, and how the majority of non-multiplayer, free-to-play apps make money. You can spend funds on developing a game application, publish it to the Google Play Store, spend some marketing budget to create ads to get users to download your game, and then show more ads inside your game that earn you money. It’s a legitimate business strategy and you will be able to cherry-pick many successful gaming apps that leverage it (eg: ChatGPT tells me “Helix Jump by Voodoo” is an example of this “ad-supported” model, here’s a thread with all major revenue making strategies for gaming apps).

The second part of the question is more dicier to answer. The person soliciting the investment said he would be willing to accept any amount ranging from 50K to 500K INR for the dev/marketing costs, already had a couple of games developed that can be deployed immediately and the passive income from ads can recoup the investment in 6-8 months. Without knowing more about the team, the game idea, their execution and their marketing strategy – as a general rule, this is where alarm bells are going on inside my head.

The gaming ecosystem on the Google Play Store is a hyper-competitive market, where the few popular gaming apps are making the bulk of all the revenue and the vast majority of gaming apps are making no revenue at all. Getting an initial set of users, and ensuring your game is good enough that they continue to spend time playing it (so that you can show them ads), is going to be challenging – considering your users have literally thousands of other options out there! The offer mentioning that they have a couple of games already developed, seems to indicate that they’re using some template Android apps. In the world of Android apps, it’s very easy to change some strings, some assets, some game dynamic variables and repackage it as a “new” game.

I’m still curious if there was a niche being pitched that might be profitable, or if proof can be shared of existing games that other investors have backed that are net positive (or even cash-flow positive, to be honest), or if they have successfully contracted an engagement farm to foil Google into paying out ad revenue without legit users actually playing anything. But, more simply, I think this was an attempt to lure a “small amount” of capital from someone who would be willing to experiment with a new income stream in an unconventional market, wouldn’t have the domain knowledge to understand the intricacies of risks in that market, and wouldn’t mourn the loss of capital if things went south.

My blanket advice to me friend was to stay away from it.