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Summary:

On the heels of ECD Systems CEO Jack Hart’s article exploring the methods of growing revenue for casual games, IGA Worldwide said it has signed an in-game advertising deal with casual games publisher Merscom. Chapel Hill, N.C.-based Merscom makes downloadable titles for the PC, as well […]

On the heels of ECD Systems CEO Jack Hart’s article exploring the methods of growing revenue for casual games, IGA Worldwide said it has signed an in-game advertising deal with casual games publisher Merscom. Chapel Hill, N.C.-based Merscom makes downloadable titles for the PC, as well as Nintendo DS games — the kinds of games that might experience pressure to grow ever more polished (much like the giant console games did) as competitors try to one-up each other with better graphics and better sound design, thus necessitating higher budgets and schemes like in-game advertising.

How casual games will deal with advertising content is still up in the air. In-game advertising has worked beautifully for some titles, but of course it’s all about context — seeing Best Buy (BBY) signs in the world of GTA III makes sense; seeing them in World of Warcraft, not so much.

There is a reluctance to repeat the mistakes of others. At Casual Connect conference in Amsterdam earlier this year, Microsoft (MSFT) Casual Games’ studio manager Chris Early cautioned against going crazy with in-game ads. “If we get to the point of getting like commercial television on cable channels where ads are so intrusive of the experience,” he said, “then people won’t play anymore.”

Very true. And right now the market for so-called “casual games” is bifurcated. We have, essentially, two groups, with some blending in between: On the one hand we’ve got pay-to-download games, usually installed to a PC, although Xbox Live Arcade games install to your console. The bulk of revenue in this camp comes from purchased downloads, and its consumers have demonstrated more sensitivity to in-game advertising. There’s also the sliver of retailed games — again, same in-game ad sensitivity problem. In the second camp are all those free web games on Pogo.com, Kongregate, and other sites that rely mostly on good old-fashioned page views to sell advertising. There is some room here for in-game advertising, but implementation is tricky. Each game, often designed by an independent developer, would likely have to have ads customized to fits with its theme.

And then there are micro-transactions, honed to perfection primarily by casual MMOs like MapleStory and Habbo Hotel, although some titles on Xbox Live Arcade are experimenting with pay-to-download additional content as well. Is there any reason that micro-transactions can’t edge their way into both downloadable games and to free web-based games? The fact that I actually spent a real U.S. dollar on Facebook to send someone a gift — and I am a rational person! — seems to suggest that there is a future for eking out a little bit of money, bit by bit, from casual gamers, especially on sites like Kongregate where it could be tied to the social networking aspect. (“Buy your customized leaderboard for $1.00, feature it on your blog” or “$1.00 to challenge a friend head-to-head” — anything that adds persistence to the network.)

Hm, these are thoughts to bring up with the people who are currently in the trenches of casual game development and publishing. How far have they gotten in making revenue models as innovative as some of their titles?

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  1. I always prefer Casual game and believe major ratio of world love playing game but out of that 90% of people don’t have time to play long game and hence will never invest directly in buying or paid download Game. I love playing PacMan from my college day and still play whenever I get time..the base line is for majority online game are easy way for entertainment during small break in hectic life..

  2. One of the main reasons why I have totally given up on TV and Radio is because of advertising. I hate very few things, but I REALLY HATE advertising, advertisment is a true parasite on society . As a consequence I play online games instead. If ads make it into the online world, the first thing I will be looking for is a way to block them (permanently). If you make them impossible to block, I WILL drop the game and find another.

    Guys and Girls this is your only chance to stop these parasites from destroying the online landscape. Review your revenue strategies and drop the bond with the systemic liars.

    Oh and if any advertisers are reading this, you advertise your product on the online world and I will make a point of NOT buying it.

  3. Blasted Adverts Friday, October 12, 2007

    I never watch live television anymore. I Sky+ it and then watch it back when its finished recordrding just so I can forward the adverts. If adverts become as pervasive in casual games as they are on TV I will stop playing them!

  4. Erik Schwartz Friday, October 12, 2007

    One of our first experiments with ads in Yahoo! Games was with P&G (this was in early 1998).

    We tried various levels of integration, from really low key to fairly deeply integrated. The most intrusive was Pringles in checkers. The checkers pieces were replaced by the little pringles guy (in two colors) and whenever you jumped someone there was a crunching sound.

    The audience didn’t seem to mind. The problem was there was no real metric for the advertiser to test the efficacy of the ads. It’s really just a branding play, there is no easily demonstrable ROI. Click through was essentially zero.

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    This is a proven system of making money through the internet. Anyone can do it. I have made thousands using this software. And you can too.

  6. I think its quite funny. Playing Battlefield 2142 in September and I could see Lloyds TSB Student Account billboards. Shooting people and this board appears. Just because I see it doesnt mean I’ll go straight to Lloyds and get an account. It makes me laugh, thats about it.

  7. Doug Chalmers Friday, October 12, 2007

    “seeing Best Buy (BBY) signs in the world of GTA III makes sense”

    Sorry? You’ve obviously never seen a GTA game, or really thought about what you’re saying. If there was a sign for Best Buy in GTA it would be “Worst Buy”. Every single sign in the GTA worlds are satirical, advertising in GTA would be against everything the series stands for! I realise you’re just grasping for an example but you should be picking FIFA or another sport title, where they already have adverts built in.

    e.g. Would Best Buy be happy if you could walk into one of their shops in a GTA game and kill all their customers and employees? No, I don’t think so. Fine for so-called casual games and second life and all that girly crap but GTA will never NEED nor WANT adverts.

  8. There are tons of free games on the internet. Though for majority playing games are just to kill some time, games are addicting and some will eventually buy them if they have to.

  9. Jonathan Greechan Friday, October 12, 2007

    Check out what the guys at PlayFirst (www.playfirst.com) have done with ‘Diner Dash: Hometown Heroes’. This downloadable casual game has online connectivity that allows you to purchase upgrades and personalization to your character, diner (environment) – as well as game enhancements like new levels. It also has multiplayer capabilities which can potentially bring in a lot more revenue opportunities as well. I’m not sure how it’s performing but I think this is a glimpse into the future of downloadable casual content.

    On the web game side, micro-transactions, online games with community (aka social networking) and multiplayer are definitely the future. Right now most of the big portals are looking to introduce systems that tie a catalogue of free web games into a cohesive community like Pogo.

    And while I understand the cautious approach to introducing advertising into casual games, the opportunities there are endless. First off, you have a demographic with purchasing power (women 35+) who presumably are less adverse to advertising than, say, a 17 yr old playing Halo. After all, the web casual games are free. Then you also have a two-way medium with tons of interactivity. The time to market for integrated sponsorships and such is small as well (since these are smaller games).

    IMO, web-based play and advertising is going to be the main focus in the industry for the foreseeable future because (1) it is the most obvious way for portals to stick to their main business model (not taking players off their site when they download a game), and (2) it is the quickest way to combat the issue of 99% of downloads not converting to a purchase (rough industry average).

  10. worst idea ever. the two worst classes of people in my opinion are lawers and salesmen.

    as a long time online games ( 12+ yrs and counting), and successful in real life, the very last thing I want to see is an ad placed in the game that i play to get away from the bullshit of real life.

    you can kiss my gaming dollers goodbye if I ever see an online ad in any game i play.

    and thats the general opinion of everyone i play with as well.

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