Online games by the hundreds, with tie-ins

By entering online-game sector, media companies attract advertising, including from food companies limiting TV ads aimed at children.(From The New York Times)
Written by Natalie Gagliordi, Contributor
For some children, watching Dora the Explorer on television is becoming passe. Now they want to be Dora.

Tapping into this desire, media companies are increasingly entering the marketplace for online games--called casual games--and treating them as new programming, not just online add-ons to their television properties.

In addition to building brands, one of the big lures in casual games is the opportunity to attract advertising, including from food companies that have gradually agreed to limit the nature and volume of television advertisements aimed at children. But those agreements have not always extended to the Internet.

Viacom, the parent company of Nickelodeon and MTV, may be moving the most aggressively. On Tuesday, Nickelodeon is expected to announce the first of 600 original and exclusive games for its network of Web sites, as part of a $100 million investment in game development.

"We don't believe they have enough homework," joked Cyma Zarghami, the president of MTV Networks' Nickelodeon Kids and Family group.

The term "casual," used to contrast with the action-packed console games popularized by Sony and Microsoft, belies the fact that users devote hours to the games.

Studies show that a third of Internet users play online games at least once a week. Millions of children and teenagers play games on sites like AddictingGames.com, Miniclip, and Disney.com, and social-networking sites such as MySpace.com and Facebook are also becoming popular platforms for gaming.

A recent study by Grunwald Associates found that multitasking young people are often driven to online games by television shows, and they frequently interact with both media at the same time.

"Sitting and watching Dora DVDs is quite different from playing Dora in a game," said Michael Cai, the director for broadband and gaming at Parks Associates, whose 3-year-old daughter is a fan of the preschool brand. "It's definitely more engaging--and the brand affiliation is stronger--in an interactive setting."

Just how important are games to Nickelodeon's future? Standing on stage at the Hammerstein Ballroom in Manhattan at an annual event for advertisers last Wednesday, Zarghami began her presentation by gesturing to a giant overhead monitor tinted in the channel's signature shade of orange. A message promoted the company's gaming audience: "Over 25 million unique visitors last month."

"What video is to TV, games are to the Web," Steve Youngwood, the executive vice president for digital media at Nickelodeon, said in an interview. "For us to be relevant to our audience, that is where we need to put our investment."

With a series of customized sites for different age groups (preschoolers, tweens, teenage boys, moms), Nickelodeon calls itself the "biggest gaming network in the country."

Movie studios, video game publishers, and toy makers are among the top marketers on the sites. In the online-game market, its stiffest competition comes from Yahoo Games, which had 15.5 million unique visitors in February, according to the measurement firm ComScore.

With more than 12 million visitors each, Electronic Arts and Disney.com are also leaders in the arena. (By comparison, Microsoft's online-game network, Xbox Live, has about 10 million members.)

The N, Nickelodeon's teenage network, has dozens of games for children ages 12 to 17. Slightly younger players are directed to Nick.com, which drew an average of 7.9 million visitors in February and is expected to add 185 games this year. The youngest players of all are welcome on the sites of Nick Jr. and Noggin, where games are meant to be played by children "on the laps of their moms," Zarghami said.

The company also owns Neopets, a virtual-pet Web site. The investment will add scores of new games to each site in the coming year.

Judy McGrath, the chief executive of MTV Networks, said many of the company's assets are ripe for game development. Fresh off an impromptu Rock Band jam session in her Times Square office, McGrath made a reference to "Frog Baseball," a 16-year-old pilot episode of the cartoon "Beavis and Butt-head." In the episode, the two characters play the game described in the title.

"That would be a brilliant game," McGrath said with a grin.

But the revenue streams for casual games are still experimental. Companies are exploring try-before-you-buy models, integrated advertising, and micro-transactions, where players can purchase items and levels within games. Advertisers have shown interest in inserting their products into game play.

Last year on Shockwave, a game site acquired by MTV Networks in 2006, players struggling with the jigsaw puzzle game could press the "easy button" sponsored by Staples to see a solution hint. Last year on Nick.com Arcade, the game site for Nickelodeon viewers, a custom game promoted Bee Movie for Paramount Pictures. Games are repeatable, customizable, and measurable, adding up to "great engagement for the advertiser," Youngwood said.

Across the company's game sites, sponsored and pay-to-play games are always labeled as advertisements. Still, some parents and watchdog groups worry that children are already smothered by branding messages.

For instance, the television version of the preschool brand Noggin is mostly commercial-free, but the channel's Web site displays advertising. These ads--for Target, Circuit City, Six Flags and Orlando vacations on a recent day--are aimed at parents, but the young faces and bright colors probably appeal to children as well.

Some advertisers have devised their own games to pull in children from media sites. An advertisement for Cinnamon Toast Crunch that ran at the top of Nick.com one afternoon last week linked to the Millsberry Arcade, a site operated by General Mills where visitors can play games like Reese's Puffs Cereal Snowboard Slalom.

Margo G. Wootan, director for nutrition policy for the Center for Science in the Public Interest, said the games produced by food companies are of more concern than those run by media outlets. "On food Web sites, lots and lots of junk food is built into online gaming," Wootan said.

Her organization threatened to sue Viacom in 2006 over its television advertising to children.

Some analysts, however, said media companies and game publishers have generally behaved responsibly in their advertising.

"Since its inception, the online-games business for kids has been far more sensitive than the TV industry was," said Evan Wilson, a senior research analyst for Pacific Crest Securities.

MTV Networks acquired three sites to strengthen its game brand in 2005 and 2006. Of the three, Addicting Games is by far the most popular, averaging 9.4 million unique visitors in February, a 50 percent increase over the same month last year, according to ComScore.

The site houses hundreds of simple games with names like Max Dirt Bike and Don't Shoot the Puppy. In the latter, users see how long they can wait before firing a giant cannon at an animated dog. It's no surprise, then, that Addicting Games' intended audience is teenage boys.

Cradling a laptop in his lap, Youngwood demonstrated Pencil Racer, a simple-seeming but oddly compelling challenge on Addicting Games that lets users create, share, and rate racetracks. It has registered 1.5 million plays.

"Do I want to be a truck, a car, or a warthog?" he asked before choosing the animal. "Everyone loves the warthog."

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