Is Casual Game Space Recession-Proof?

Videogames are known for elaborate fantasy worlds, like the lawless New York of Grand Theft Auto IV and the whimsical galaxies of Super Mario Brothers. To hear some tell it, the casual games space may exist in a fantasy world as well—one in which there is no recession.

While many Web publishers fret over a soft display ad market, casual game companies report business is booming. WildTangent, which distributes Web-based games on all PCs shipped in the U.S. by Dell, HP, Toshiba, Gateway and others, claims that ad revenue in first-quarter 2009 will surge by 56 percent, following three straight quarters of growth in the 60 percent range. Sources said the company, which also sells ads on a network of partner gaming sites that reach up to 75 million unique users, will bring in as much as $60 million in revenue this year.

According to Bill Clifford, WildTangent’s vp, global ad sales, the company has recently signed a string of seven-figure ad deals that entail six- to 12-month commitments, despite the economy. “We keep asking, ‘When are we going to feel this tough economy?’” said Dave Madden, executive vp of WildTangent.

Ironically, the economy may be helping matters. According to comScore, the number of Americans visiting online gaming sites jumped from 67 million in December 2007 to 86 million last December—when time spent also skyrocketed by 42 percent. Many theorize that the recession is causing people to seek out low-cost, or free, escapist entertainment that casual games offer.

Madden buys that to a degree, but believes the key to the company’s revenue growth has been its advertising approach. Two years ago, WildTangent—which had primarily focused on selling downloadable games—began offering users the ability to play games for free in exchange for viewing ads. It also added an online token system, which advertisers could subsidize. “I’m convinced that the reason we’re seeing this growth is that we’ve created a platform that has a value exchange. Users are given a choice … and they are given something of real value for watching ads.” WildTangent’s advertisers are a who’s who of traditional brands that aren’t typically heavy online spenders, including Procter & Gamble, General Mills, Kraft and Unilever—many of whom are going after casual games’ sizable female/mom audience.

Edward Hunter, gaming analyst at comScore, believes more than just the economy is driving the trend. “Technology [for Web-based games] has advanced at an astonishing rate,” he said, citing the recent version of the PC game Quake that is now available online for free. He anticipates a future where more games publishers issue their best titles directly to Web and support them by advertising.

WildTangent is not the only casual games vendor claiming to thrive despite a shaky economy., which targets males 12-24, is now MTV Networks’ largest online property with over 11 million monthly uniques. Nelson Boyce, senior vp of digital ad sales at Nickelodeon Kids and Family Group, said that advertiser demand remained strong through first quarter, particularly as entertainment brands like movie studios and game publishers seek higher impact ad placements, which he says casual games can offer better than most content sites.

Matt Story, leader of the gaming expertise at Publicis’ Denuo, doesn’t doubt that the audience for casual games is booming. Yet he’s skeptical of these sites’ advertising claims.
“From a consumer standpoint, I can see that as wallets tighten, more people will turn to games, particularly free ones,” he said. “Advertisers are looking at this category more closely, and they are going to go to where the mass audiences are. But I can’t say that I’ve seen a huge shift in spending yet.”