Casual Game Ad Space Heats Up

from GigaOM by Wagner James Au

Yesterday Jane brought news of Google actively reaching out to game developers to partner with its Adsense/Adscape network. I just got word that San Francisco-based casual game ad network Mochi Media is partnering with London-based MyGame.com, a casual game site with a user-created flavor.

MyGame.com is also an offshoot of King.com, a truly gigantic game network that boasts 10 million active monthly users (according to a spokeswoman) that recently partnered with RealNetworks (RNWK). Mochi Media's MochiAds division creates a revenue source for Flash game developers; it already has partnerships with massive casual hits like the beloved Desktop Tower Defense. MyGame has a comparable program in which developers can upload their games and — if the games prove popular — share revenue with the company. (More or less a YouTube-meets-casual games proposition, not unlike Kongregate.)

Where is all this going?

Hard to tell, but with Google (GOOG) sniffing around, there's sure to be even more activity in this space — partnerships made, buyouts offered, startups launched, and so on. At the same time, it's difficult to determine how much revenue can be generated from advertising linked to casual games.

As it happens, Gamasutra just published a great article on business models for Flash games featuring extensive conversations with Kongregate CEO Jim Greer and MochiAds CEO Jameson Hsu. While Hsu touts developers who make thousands of dollars monthly with Mochi, Greer emphasizes the modest income even at the upper level: "Let's say Armor Games gives you a sponsorship for $2,000," he says. "You get another $1,000 from ad revenue, another $1,500 from prize money, maybe Miniclip licenses your game for $5,000…you might make $10,000 to $15,000 on your Flash game — and that's a really successful Flash game." Greer prefers the model used by Electronic Arts' (ERTS) casual game site Pogo, which gets ad revenue for their free games, but also charges a modest subscriber fee for added benefits. (About 1.5 million Pogo players out of some 13 million have paid that $40 yearly subscription.)

All in all, this reminds me of the tumult over YouTube and other user-created video sites from the last few years — before Google took out its checkbook. If that history is any guide, expect a lot of furious activity and money spent over this war for casual game eyeballs, followed by the industry's morning-after question, "OK, explain again how we make money from all this?"