Casual gaming is a big business. A video games analyst at IDC, Schelley Olhava, estimated 2.6 million casual games were purchased ($52.7 million) last year. But in game advertising firm NeoEdge says they can triple the revenue of these games by serving ads instead of charging. Their rich media ads are served as pre-roll, post-roll, or interstitial advertisements in games. Today they’ve taken the system, Neo ARM, out of private beta and opened it to all developers.
MochiAds is another casual gaming advertising system we’ve covered in the past. Unlike MochiAds, NeoEdge doesn’t rely on developers to insert ads through a self-serve toolkit, but instead adds the advertising code to a developer’s game themselves (a potential bottleneck). Revenue from the ads are split about 50-50. NeoEdge says they can integrate with more formats than just flash games (i.e. download games), although flash appears to be format affecting most developers. Their system delivers the ads dynamically from their servers over the internet, making it possible to target ads based on demographic info provided by publishers.
But 100% free doesn’t seem to be the whole story. Long before social networks casual gaming sites discovered the value of micro-transactions. King.com collected $27 million from gaming micro-transactions last year. Nexon made $250 million in revenue in 2005, mostly through micro-transaction game upgrades. Kongregate is launching their own micro transaction system for game developers as well. A blended monetization model between ads and micro-transactions seems the best strategy for getting the most money out of visitors.