Microsoft Offers Game Developers a Cut of Ad Revs

Casual game developers often have their games published on sites such as MSN Games and RealArcade for a standard fee. A new model includes a share of ad revenues, potentially opening a new revenue stream — with a few tweaks to the game code.

Microsoft announced yesterday the start of an ad share program on MSN Games. Participating developers will get 10 to 20 percent of ad revenues on existing and future games, depending on the level of modification each title undergoes. Level I allows for a 10 percent share of the ads, with few changes to allow ads in the game. For 20 percent of ad revenues, Level II requires modifications such as localization, ratings by the Entertainment Software Rating Board, and inclusion of a “deluxe” game experience with at least 10 hours of Web-based play. Engaging gameplay of that length was previously reserved for purchased games. Developers would also create a more abbreviated version for gamers to try before buying.

“We’ll start to see more in-depth games where they’re trying to engage the player for a longer time, rather than have them buy a game,” said Chris Early, studio manager for Microsoft’s casual games division. “This is opening another revenue stream for the developers.”

Early expects to see more games on the MSN Games site, but also a “different mix of games. I think we will see some more creativity in the types of games.”

Ads will be sold by Microsoft’s global ad sales team. Features like localization allow ads to be served to users in specific countries.

While Microsoft first announced its plans to share ad revenues with game developers back in August, it hosted a day with game developers in Amsterdam this week, just prior to Casuality, a developer conference focused on casual games.

Casual games developer PopCap Games didn’t share the enthusiasm Microsoft expected from the announcement. “Microsoft’s proposal is a good theoretical concept, but isn’t feasible in the real world,” said James Gwertzman, director of business development at PopCap Games. “It feels like this proposal was put together by someone with a spreadsheet operating in a vacuum; it simply doesn’t take the market realities into account.”

Microsoft’s Early expects to see experimentation and a mix of existing publishing models with some titles allowing for the new model. “It ends up being a really good mix for the developer for an additional revenue stream,” he said.

The revenue-sharing model has already been proven on RealNetworks’ RealArcade. It was made possible by joining Eyeblaster’s network.

The model Eyeblaster put together for RealArcade associates an impression with a particular game to calculate publisher shares.

“At the beginning, it was not easy to convince them advertising was the right way to go,” said Ran Cohen, director of emerging media at Eyeblaster. “The results were phenomenal. Right now game developers are standing in line to develop using this technology.”

Eyeblaster launched a 2.0 version of its offering at Casuality this week. Enhancements allow deeper integration of ads into games.

Eyeblaster’s new offering expands the existing streaming video unit to permit user-initiated full-screen video. Ads also get a leave-behind logo that remains after the ad is played. Advertisers can also set an adjustable skip length, which allows users to skip the advertisement after a set period of time. Product integration is another new feature of 2.0. A sponsor can place an ad on the backs of cards in a game, or place a message on other surfaces.

“We enable it in a dynamic way, so the game can be distributed without an component,” said Cohen. Advertisers can then buy the space on the back of a deck for a period of time. An example of a media buy might be a movie release promotion.

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