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Just weeks after Om brought news of Google’s game-focused advertising initiative, another — albeit much smaller — player is throwing its hat into the ring as well. After a year in beta, Alex Terry, CEO of Mountain View, Calif.-based startup NeoEdge, tells me that their own […]

Nolan BushnellJust weeks after Om brought news of Google’s game-focused advertising initiative, another — albeit much smaller — player is throwing its hat into the ring as well. After a year in beta, Alex Terry, CEO of Mountain View, Calif.-based startup NeoEdge, tells me that their own game advertising network, NeoAds, is officially launching this week.

With such a mismatch of competition, this news might call to mind Verne Troyer attacking Yao Ming with a wiffle bat, but Terry’s brought a secret weapon in the form of his newly appointed board chairman: Nolan Bushnell, who in addition to being the co-founder of Atari, kinda sorta helped launch the entire game industry.

This is not just a vanity appointment, the two men assured me in a conference call; Bushnell will advise game developers in NeoEdge’s network on how to polish their titles for maximum entertainment and stickiness.

NeoAds will largely concentrate on casual games, at least at first, so Bushnell appears to be the ideal veteran for the job since given their simplicity and ease of play, many of the most popular web-based games resemble Atari titles from the 70s.

But how does NeoAds work, and why did Bushnell, who hasn’t been closely involved in the game industry since the 80s, return to the fray? Highlights from my conversation with the two men are below.

Casual Games: Great Potential, Poor Economics

“The casual game space is wonderful but has had bad economics,” Bushnell said.

As both a supporter and watcher of the casual games market, he’s noticed the disjunct between the audience for games and the platforms on which they ran. “When you looked at the console game market, the domestic market got stuck at about 15 million,” he noted. Meanwhile the audience of players in the casual market, primarily defined as simple web-based games, totals some 80 million in the U.S., comprising 34 percent of all American Internet users, according to Parks Research.

Roughly 98 percent of those casual gamers, however, don’t pay to play, Terry noted. “We’re not saying the purchase of games goes away,” he said, but at least an ad network will make that audience monetizable.

neoedge-ad-frame.png
DRM Meets ARM

As an open ad network, NeoAds provides digital rights management in an effort to reassure publishers. At the same time, it deals in advertising rights management, creating advertising inventory and distributing revenue to partners based on clicks and impressions via ads embedded in a game’s pre-roll and interstitial.

Terry said the service will be available for downloadable games on the network, opening the possibility that titles for the hardcore gamer market might also work in this space. They already have partnerships with numerous established publishers, and via their site MostFun.com, indie developers can also apply to join.”I like that it mimics to a certain extent the living room and the television,” said Bushnell.

And while impressions are their main focus, Terry told me they’re also seeing impressive clickthrough rates between 2 percent and 6 percent. “One of the things that seems to matter is how tightly the ad frame is integrated into the game,” he said. (See screenshot above.) They also work to partner advertisers with contextually appropriate games — Nestle with the sim game Chocolatier, as a potential example.

Going Up Against Google

As for the prospect of competing with Google’s ad-based network (by far the largest among several other competitors in the ads-for-games space), both Terry and Bushnell sounded positively blasé. “So far AdSense for games seems like regular AdSense,” Terry opined, audibly shrugging. “We’’ll have to see what it looks like.”

When it comes to architecting dynamic ads into games, Bushnell added, “There’s a bigger technical twist, there’s a lot of stuff that goes into it. It sounds simple but it’s really not.

“They’re very good at announcing,” he said of Google, but when it comes to execution, “They’re going to need some help.”

How this space shakes out is anyone’s guess, but Bushnell is excited by the prospect of having an immediate revenue stream for game developers. “When you change the economics and allow easy publishing, you unlock the floodgate to creativity….You have the chance of unintended consequences on the positive side.”

But will Bushnell himself create games running on NeoAds?

“We’ll have some announcements,” the Atari co-founder said, somewhat coyly. For now, he remains careful about dispensing chairman wisdom to developers on the network. “You gotta dance around that,” as he put it. “Everyone’s a prima donna; I give [advice] where it’s welcomed.”

But what developer would hesitate to take design advice from, you know, the father of videogames?

Bushnell chuckled with his distinctive bass rumble, “You’d be surprised.”

  1. I used to give great respect to Nolan Bushnell until he showed how out of touch he is with the current gaming landscape recently. Nolan himself fails to understand that gaming can be much more than just the basics of what Atari achieved back when the product of gaming was severely limited by the hardware available. This is off topic, but i felt I needed to say it. Casual gaming is fine, but why paint the entire industry into that mold only? If ads help to offset cost from development fine, but just don’t let it detract from the experience already given.

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  2. Willy Higinbotham is the father.

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    1. absolutely right. he and his ingeneurs.

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  3. Google (GOOG) announced their “AdSense for Games” at the Casual Connect show in Seattle this past July. But I still haven’t seen anything substantial deployed.

    If Neoedge (is that the same as Neoedge Networks?) gets any traction with this new ad network for games, I’ll bet they get bought within six months by one of the companies that’s making a big push in the games and/or casual games space.

    Companies that I’ve noticed with an active interest in this area include: Google, Electronic Arts (ERTS), RealNetworks (RNWK), Microsoft (MSFT), Fox/News Corp (NWS), Time Warner (TWX), and Yahoo (YHOO).

    What other companies have you seen acquiring game or advertising startups?

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