Are Casual Games the New Soap Operas?

RealNetworks hope to snag the housewives with free downloadable gamescomplete with "commercial breaks"

In September 2006, GameDaily BIZ examined RealNetwork's use of the Eyeblaster technology in some of their casual titles. The technology inserted ads into casual titles, adding "commercial breaks" to free trials of certain games. Given the potential benefits to publishers, advertisers and yes, even players (ads come with extended trial periods), it seems like a winning formula.

Now, nearly a half year later, RealNetworks has sent out a release declaring the success of the program, and casual games companies would appear to be quite pleased. "From the developer perspective, we have been quite impressed by the results after integrating this in-game advertising model into our games such as Cake Mania," remarked Daniel Bernstein, CEO of Sandlot Games. "We are seeing increases in download volume, user play time, and overall game revenues. RealNetworks has pioneered a new business model for the casual games industry and we are proud to be an early adopter."

We talked with Julie Pitt, RealNetworks' GM Worldwide of Marketing for Games, about why Eyeblaster just keeps blowing the eyeballs up (in a good way).

All a competition for eyeballs...

Among the statistics thrown about for Eyeblaster enabled ads was a 10% click-through rate, as well as a 74% full video completion rate. In total there have been 40 million video ad impressions for several notable advertisers. These numbers are generally much higher than the accepted rate for web ads and mark healthy growth.

"[Eyeblaster] is the underlying technology, but that's just one of many factors. This is a new demographic we're dealing with, but we worked hard with our ad sales team to make sure the ads appeal to the right audience," said Pitt. "You also have, and this has been talked about a lot about across the board, the fact that these are active, participating consumers compared to something like TV. [Casual games] are not passive, so players are very much engaged and aware in the game. That carries over to the ads, where you see the casual gamers really engaged in the advertising."

"Unlike certain other in-game ads, we've found natural ways to integrate it into the games. Casual titles have these natural breaks, and that's where we've integrated these ads. It's like network TV, where natural breaks occur in the programming. We've settled with 20 minutes between the ads and it just feels extremely natural. So I don't think it's one thing; it's a combination."

300%.. that's, like, three times a hundred percent!

RealNetworks has also boasted that they've seen a 300% increase in profits for games using Eyeblaster ads. This seemed like a remarkable number, and when we asked about it, Pitt laid out, "We have something in the casual games space called the '98%;' the 'try before you buy' model. This is where people come in, download and try the game, but only about 2% actually pay for the game. How do you account for that other 98%? And, what the metrics always look at, what's the worth of a download if only 2% buy it? Now, by putting in advertisements, it's generating additional revenue which you can share with the developer."

"Some will buy the game, but you still have a lot of customers that won't buy. People wanted to play the free version, and now they can. So we think this is a win for the customer, because they're getting value out of it. Even if the game is distributed for free, and players see the ads at natural breaks, it will still triple the revenue. [Customers are] not limited to an hour and we continue to get revenue from the ads."

Pitt also pointed out how this ad scenario lends itself well to 30+ year old women, (Real's "coveted demographic"). "I think a lot of it is that it's difficult to reach this demographic; women, everyone is really busy! With so many women raising children, having a job, controlling a household... they may not have that much free time," she explained. "

You used to see demographically appropriate ads during soap operas, but that may not be what they're watching anymore, so trying to reach those women for advertisers is difficult. With so many women picking up casual gamers for short bursts, we find that advertisers are really interested in reaching them."

"I think the click through rate and the completion rate show that the customer is responding well to these advertisements," she added. "We are very, very mindful of the customer experience; that's why we're not bombarding them with advertisements and we're trying to keep those ads relevant to the customer base."

Let a player play

GameDaily BIZ and Pitt both agreed that in-game ads in the casual games space is a much easier fit than in the console sector. In this case, it's immediately appreciable to the customer how the ads benefit them (in this case, with longer free trials). There's also an option of turning the ads off by purchasing the full game. This compares rather poorly to the console experience, where the games have been paid for already, there's no way to turn the ads off and there's no direct benefit that the customer can see... at least not yet. And of course, this is in addition to the different demographics of casual and console gamers and the attitudes they have towards diversionary and immersive entertainment. While the argument for console in-game ads can certainly still be made with skyrocketing development costs, non-casual in-game advertisers will probably face resistance from players for years to come.

"We have close to 20 games with Eyeblaster. It's not close to the whole catalog and it probably won't ever be 100%. We're working with our sales team to make sure the ads are right for the particular gamers. We don't want to ad enable all the games and have a bunch of low level ads floating around," explained Pitt. "We started off slow, with our own titles. But now we're working with a number of game developers so they can share in the revenue as well."

"We're being careful with what titles we ad enable. Like I said, we won't put this into every single game. The length of the game is more important; with linear games, which you can play through once and may not be interested in again. Then there's puzzle titles, which you can play for years. So some games just fit the Eyeblaster model better than others."

"[In the coming year], we'll be focusing on, first and foremost, the customer experience. I think more of what you'll see is more of our games with ads and moving over to our European branch, seeing how they react to it. Our assumption is it'll be the same in the U.S. but we still want to check it out country by country. We'll be adding more games with ads and expanding it regionally."

Before it's here, it's on the Bloomberg Terminal.