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MGF 2008: The lowdown on ad-funded mobile gaming

Is it really the next big thing?

MGF 2008: The lowdown on ad-funded mobile gaming
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At the Mobile Games Forum, the next session is another panel talk, this time on the controversial subject of ad-funded mobile games.

It's mainly made up of companies who run ad-funded services such as Greystripe, innerActive, and Mobile Advertising Solution. However, HandyGames boss Christopher Kassulke is on hand, representing games publishers, and Xavier Louis from 3 is giving the operator's view.

HandyGames was one of the first publishers to launch ad-funded games, which Kassulke says is a "nice revenue stream which will soon be equal to what we make from the operators".

Meanwhile, Louis says 3 isn't doing anything ad-funded yet in the UK. It ran one of the first trials 18 months ago and decided not to continue with it - so he should have an interesting perspective.

"We do not think it's what's going to drive penetration, although we do think it's going to generate additional revenue," he says. "It won't be the key element to drive additional usage, or have more gamers."
Russ Huddlestone from Greystripe is next up - it runs the GameJump portal, as well as other ad-funded portals for brands.
"A year ago we had fewer than a million downloads a month, but by December we had eight million downloads a month," he reveals. The majority of those weren't from GameJump though, they were from its white-label portals for customers.
Forget downloads though - how often are people playing these games? Huddlestone says Greystripe does track this. But he doesn't give any numbers.

Also on the panel is Ziv Elul from innerActive, another advertising technology firm touting its services to the mobile industry.

So, first question: who'll be driving ad-funded mobile games portals? Will the mobile operators get involved, or will it stay being web portals as it is now?

MAS' Markus Ramark says operators can be a good partner for the ad-funded firms, while Huddlestone agrees that the operators are in a good position of power to accelerate the growth of ad-funded gaming.

"I expect operators will be encouraging off-portal usage for this kind of content," says 3's Louis, although the implication is that they might not offer ad-funded games themselves.

What about game quality though? Aren't a lot of ad-funded games a bit rubbish at the moment? Or, to put it more politely, how big an issue is game quality in the ad-funded portals, and could it damage the industry?

"It could damage the industry," says Elul. "If you take shit content, and give it to the end user, they won't play, and will think that games that include ads aren't high-quality games. You have to keep the quality high."
Huddlestone says it's about letting gamers decide. If people are playing a game lots, then Greystripe will put it at the top of the portal. It seems a sensible policy.

However, Louis chimes in pointing out that while there are some good games on portals like GameJump - he cites Tower Bloxx - most of the big players in the industry are not on these portals. In other words, the likes of EA Mobile, Gameloft and Glu. It's too risky for them.

Moderator Kristian Segerstrale has his roving eye again, picking Eidos' Simon Protheroe out of the audience to ask his opinion.

"As an overall model, we're supportive of it. I share the concern of creating an expectation among consumers that games are free, and the impact that might have on development going forward. But the more alternative business models and routes to market we have, the better," Protheroe says.
Now Gameloft's Alex Tan is asked for his opinion.
"What I want to understand, if I'm an Fast Moving Consumer Goods brand who wants to advertise in a mobile game, I want to make sure I get as many clicks as possible from my ad. But when you look at the number of downloads you can make on a premium game sold on a portal, it's in the five digits per month, when you're lucky - that will give you number one in the ELSPA chart. But as an advertiser, I'd be thinking is there a critical mass of downloads to make it worth my while advertising in a mobile game," he comments.
He also points out that advertisers will want to advertise in the most popular and best mobile games, many of which are branded. And there's a problem here, since the revenue has to be shared out.
"Licensors tend to take a hefty chunk of the revenue in terms of royalties, so can we really make serious money out of it? That's our concern, and the reason we haven't gone down that route. I'm not disregarding it, but..." he ponders.
So yes. If you're a big mobile publisher with branded games, it's hard to make money from offering those games for free funded by ads, as you'll have to give up a share to the original brand. This is why you don't see the Big Three doing ad-funded games, in other words.

Elul talks about a campaign that innerActive ran with Calvin Klein, which put an advert inside mobile games offering free samples if players clicked through to the company's promotional WAP site. Apparently 44 per cent of players did, which is an impressive stat.

Greystripe says its clickthrough rates are more like 10-15 percent - which might sound a bit low, but to anyone in the advertising industry, is mightily impressive compared to, say, the sub-one per cent rate for online banner ads.

So how does the business model of ad-funded games break down? Segerstrale encourages the panel to explain who gets what, but there isn't a clear answer from any panellist, even when he breaks it down to "If an advertiser spends a dollar, how is that shared out?"

Kassulke does say that HandyGames has some advertisers who pay 1 Euro for every player that clicks through to their WAP site.

Orange's Neil Holroyd chips in from the audience, saying that ads offer a way to grow the market for mobile gaming, but he's worried by comments from the panel that seem to disregard quality.

"If we're going to venture in to in-game advertising, as an operator, can I trust you guys to make the right decision on quality, or do we still have to act as gatekeeper?" he queries.
Ramark says quality IS important to MAS, which he says is restricting the number of games it offers through its service, to focus on the best ones.

What about ethics?

Kassulke says there are certain kinds of brands that the publisher doesn't want appearing as ads in its games, and HandyGames has approval of the advertisers that appear in its games. Ramark says that MAS has a strict policy of not accepting alcohol and adult ads. "It's more of a Disney approach," he says.