Major portal web sites get a lot of traffic, but sometimes the visitors don’t stay for long. Video games, on the other hand, are extremely sticky. NeoEdge Networks, a start-up whose chairman is Atari founder Nolan Bushnell, is making it easy to put the two together so that visitors can play games on the big web sites and thereby stay longer.
The Mountain View, Calif., company has a casual game ad network that has been feeding ads to online game web sites; the ads are reaching five million gamers a month. Now it is expanding the business with widgets that can embed games into the major branded web sites. NeoEdge Networks inserts video ads into those premium downloadable games. The white-label gaming channel is dubbed the NeoEdge Gaming Channel. I think it’s a formula that can broaden gaming to new audiences and could be great for making portals more engaging places to hang out.
Consumers visit the heavily trafficked sites and play free games without moving to another web site. The consumers playing the games stay longer and view video ads with every round of the games, making the game publishers, advertisers and portals happy. NeoEdge gets a cut of the ad revenue, as do the game publishers and branded web sites.
The 300-plus games that are enabled to run NeoEdge’s ads have drawn a lot of gamers. Now, with the NeoEdge Game Channel, it can extend the model to social networking sites, blogs, and media sites. Advertisers working with NeoEdge include Bounty, Netflix, Ford, Folgers, Oil of Olay, and Visa.
PerfSpot, a social network with eight million members worldwide, will be the first portal site to use the game widgets from NeoEdge Networks, the companies are announcing today. (Here is a link to the widget for PerfSpot). NeoEdge can take an existing game and use its patent-pending technology to insert a 30-second video commercial into the game. The typical game in the NeoEdge Game Channel isn’t a Flash-based web game but rather a $20 downloadable game that is more appealing and have a higher-quality gaming experience, says Ty Levine, vice president of marketing at NeoEdge.
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He says that surveys show that at least 85 percent of gamers will watch a short ad if it means they can play a $20 game for free. Levine says that the online video ads generate revenue of about $25 CPM (cost per mil, or thousand). That’s a higher value that the simpler Flash-based web games.
Asked if the games might distract visitors away from the branded site, Levine said that the content is complimentary, like newspapers having Sudoku or crossword puzzles. Rather than going somewhere else to enjoy a crossword puzzle, a newspaper reader can enjoy it without going to another media source.
Game companies can benefit because they can get new users. These companies already get hardcore fans coming to their own sites. But here they can snag more casual players who come to a portal for another reason and can casually discover a game to play. That explains why Yahoo Games is one of the top game sites, Levine says.
The company calls its widget a “game channel,” where games rotate through the widget on a regular basis. Levine says more portals of the major brands will be signed up over time. There is competition. Hordes of companies are starting casual game web sites, but it’s hard for those small sites to gain traffic. Wild Tangent, based in Redmond, Wash., is a competitor, but many of Wild Tangent’s games are for both hardcore gamers and casual gamers, while NeoEdge focuses on casual. Eyeblaster, Google’s Adscape, Exent Technologies, and Oberon Media are also rivals who are embedding ads into games. The good thing is that casual games are growing, with sales expected to hit $1.15 billion in the U.S. by 2011, according to analyst firm DFC Intelligence.
NeoEdge Networks has 47 employees and it was founded in 2003. It has raised more than $20 million to date from investors including Vimac Ventures and Jefferson Partners. It’s noteworthy that Bushnell, the “father of video games” is chairman of NeoEdge. In an earlier interview, Bushnell told me, “I believe strongly in the casual games space because it is where most of the people are and where the money is.”
VB’s research team is studying mobile user acquisition: Chime in here, and we’ll share the results.