If people cannot progress in your game, they are probably not going to cough up to have fun, and if the game is too difficult to have fun in, the number of DAU will likely decline rather fast. This doesn't apply to all games though.
This is all good and obvious, but what I want to focus on is actually games that looses revenue because of the opposite; the difficulty being too low. There are several examples of this on the app store, but lets take a recent one and look at what specifically makes that game too easy to revenue.
To understand the overall point, the various economies of Dwarven Den needs to be understood. The main mechanic in Dwarven Den is mining blocks. The player has limited moves to mine embodied through energy (red crystals) and uses a portion of energy each time a block is mined. The player faints if energy reaches zero. easy enough.
Based on the player's progressively improved equipment, a starting energy is provided and crystals can be mined to replenish some of the energy spend, with no maximum limit. Besides the energy, the player can opt to use 'tech', similar to mana, to use abilities that helps the player solve the puzzles, either through guiding towards wanted objectives or clearly the path with bombs, saving the player some energy. Ok ok, you get it. Here comes the Crimes.
Dwarven Den plays on the very effective life economy, with 3 lives to start with and a 30min downtime on each life. Very standard. Very good. But the problem occurs before the economy is even in play, because most player won't loose a life for a very long time. The game simply gives the player too much energy, through items and pick-ups in-game.
The game was launched with 100 levels - which granted, is a fair amount - but given that gameplay sessions of each levels not being based on time, but rather actions, like moves in a match three, levels can be fairly long. Let me paint you a F2P picture.
I didn't loose another life until the 29th level - where I lost all three lives. Simple calculation, taking progressively larger puzzles into account we are some 3 hours into Dwarven Den by now, a session split in two I might add.
Now, you might intuitively think that prior experience and my background plays a significant part in my level-to-life-loosing ratio, and surely it does. But going through the first twenty levels again, the challenges presented are not very difficult to overcome.
Gameplay-vise, Dwarven Den does not do anything wrong. The player is presented with a variety of interesting choices to choose his/her own path, selling, forging and purchasing items to improve the player's chances of success. In addition, the feeling of progression is very well balanced in the game, forging a new pick axe and testing it out, presents intrinsically fun mechanics, repeatedly reengaging the player.
Unfortunately, looking the monetization and the revenue the game generates, Dwarven Den does not manage to kick the players out of the game, leaving them lusting for more. The implemented timegate fails. Surely Dwarven Den will generate revenue, because it is a good F2P experience. The essential crime committed is that, Dwarven Den simply isn't hard enough, to reach that potential revenue through monetization and difficulty walking hand in hand.
This is probably the reason why Dwarven Den has yet to break into the top 100 Grossing in the U.S. and UK.
There are many games like this! The important thing to take away from this, is that the design of the monetization, should not only synergize with the mechanic and the gameplay loop, but also make sure that the difficulty is balanced, to match the monetization. Otherwise you are robbing yourself of good revenue.