Duo of companies receives investment money
In separate deals, myriad venture-capital firms invest in advertiser Oberon Media, IGA Worldwide.
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Two companies in the business of pushing two tangentially related yet emerging forces in the game industry--casual gaming and in-game advertising--are counting millions of more dollars in their coffers thanks to investments. In-game-advertising company IGA Worldwide has received $17 million, while casual-games distributor Oberon Media did not announce its investment numbers.
Though often ignored at big-name gaming events like the Electronic Entertainment Expo, casual games are coming into their own, with some analysts expecting the sector to rake in $281 million in sales in 2006. Oberon will use its investment money to work toward "future growth and acquisitions," said the company, which distributes browser-based puzzle, card, trivia, and other so-called casual games to MSN Games, Playboy, Pogo, and other Web sites.
"Oberon Media's strong market position and strategic partnerships made it a very compelling investment for Morgan Stanley. We're pleased to be aligned with the leading company in this burgeoning market," said David Smoot, managing director at Morgan Stanley, one of three firms that invested an undisclosed amount of money in Oberon. The other firms are Goldman Sachs and Oak Investment Partners.
Many advertisers and publishers, faced with increasing costs to develop games, are turning toward in-game advertisements for extra cash. The ads are chiefly targeted toward the always-important but elusive demographic of 18- to 34-year-old men. Parks Associates analyst Michael Cai predicted last month at the Game Advertising Summit that in three years, finding a game without in-game advertising will be a difficult task.
IGA Worldwide negotiates with game publishers to insert advertisements and other product placements in the publishers' games. Test Drive Unlimited is a racing game set for a September 2006 release that will feature in-game-advertising technology developed by IGA. The racing game's billboard ads will be culled from an online database of images; as time passes, old ads can be replaced by new ads without requiring official updates from Test Drive's developer.
Intel Capital, Easton Capital, Morgenthaler Ventures, and DN Capital are the four firms that invested about $17 million in the in-game-advertising company. "The explosive growth of digital gaming is attracting millions of new users," explained Intel Capital's Damien Callaghan, "and is a key element of Intel's vision for the Digital Home."
IGA said it will use its newfound funds to build relationships with publishers and extend its operations in North America, Asia, and Europe.