In-game ad firm Double Fusion has acquired the assets of rival NeoEdge Networks, which focused on social and mobile in-game ads.

The consolidation reflects lots of changes in the market for ads that run inside games. Much of the revenue in social and mobile games is moving toward the free-to-play business model, where users play for free and pay real money for virtual goods. About 95 percent of Zynga’s revenue is based on virtual goods.

The in-game ad companies insert advertisements into games at appropriate points, such as when a round of game play ends. NeoEdge can add a 30-second video ad to an online game to help publishers make money from free games. On Saturday, we broke the news that in-game ad firm IGA Worldwide laid off seven of its 22 employees.

NeoEdge raised a round of $3 million a year ago, but there was also a messy fight between company executives and one of the company’s investors, VanEdge Capital, headed by former Electronic Arts executives Paul Lee and Glenn Entis.


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Double Fusion has also added a New York sales office and added distribution in Canada. NeoEdge and its partners add over 100 million monthly video impressions in numerous casual and social games to Double Fusion, which has a global network of 3 billion monthly impressions in games from publishers such as Ubisoft, THQ, and 2K Sports.

“This acquisition highlights our commitment to deliver a complete 360 degree in-game advertising solution for our clients and partners,” said Dan Chambers, Double Fusion’s head of sales, in a statement. “Gaming has become much more than the entertainment of choice for males 18-34.”

Now, with the rise of social and casual gaming, ads aimed at gamers can target women as well as young people of both sexes. Market researcher Gartner says that spending on games will exceed $74 billion this year, up 10.4 percent from 2010. By 2015, spending will reach $112 billion, with online gaming rising from $11.9 billion this year to $28.3 billion in 2015. Leveraging that growth, in-game advertising as an industry is positioning itself as a must-have for media buyers, in direct competition with ads on radio, print, or TV.

Double Fusion’s ad partners include McDonald’s, Twentieth Century Fox, Dr. Pepper, State Farm and Toyota.

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