April 27, 2007

Zodiac, Skyworks Hook Up for Advergames

By Mike Robuck

Gamers are a dedicated bunch who used to be looked at as bandwidth hogs, but there are financial windfalls to be had with gamers now that the models are beings refined.

Zodiac Interactive paired up with Skyworks Technologies last week for a partnership designed to tap into the Advergame market. Advergames feature games with a single sponsor, and the game is designed around that sponsor's product.

One example that Zodiac's Rick Howe, executive vice president of sales and marketing, used is of a driving game sponsored by Toyota that features Toyota vehicles in the game. The games are delivered to subscribers' digital set-top boxes. Skyworks was one of the early pioneers of Advergames in 1996. The two companies will work together to develop, deliver and sell ads on the free games, which can also be distributed over the Internet.

"The reason we did the partnership with Skyworks is because they're deeply embedded in that business," Howe said. "In fact, they're the leaders in the Advergame business, so what we're literally doing is working with them and their sponsors to take those same games and bring them over to television."

Products can be integrated into a story line or during natural pauses in game play. Zodiac can also load pre-roll advertisements in the games "like a TV show with advertising around it," Howe explained. A player's actions within a game can trigger more ad-related activities, such as a call from a pizza chain or a coupon via email.

"You want to do that at the end of the game because you don't want them to leave the middle of the game to go find out about pizzas," Howe said. "At CES, we introduced a function called TV Call Me. It's a way for a TV viewer in an application or game to click on a button, and then the next thing that happens is you get a call from a retailer, a pizza parlor or the local Chrysler dealership.

"We're interested in doing more than passive ads that just look nice. We believe we can more effectively monetize these products by starting a transaction between the customer and retailer."

Zodiac's sales team will go to existing Skyworks customers to see if they're interested in taking their sponsored games over to TV sets.

"From a marketing standpoint, one of the interesting things about the Advergames is that the sponsors are brand names," Howe said. "Those brand names will help bring more people to the portal or game environment of the cable, satellite or telco provider. Our games are really terrific, but you don't know about them until you play them. When the brand name games come, they'll add a little bit of sex appeal."

Deployments close to critical mass

The joint Zodiac/Skyworks Advergame solution will debut to more than 13 million set-top boxes this year with an unnamed cable operator, which Zodiac said will be the largest ad supported iTV game network in the world. Zodiac currently has its own games deployed with 2 million Cablevision digital customers.

"We are engaged with virtually every cable operator, but we're not in a position to launch or announce them yet," Howe said. "I can tell you that there isn't a cable, telco or satellite provider in the country who has said no to Zodiac's gaming proposition. That's because our model is very, very attractive and simple. We bring the games in, we host them, we sell advertising on them, and we do a revenue share back to the distributor. It's pretty straightforward."

Howe said Zodiac's highest hurdle has been working with the various flavors of service providers' platforms. The games can be multi-player in a digital two-way cable plant or telco environment, but DBS providers need a hybrid approach, such as the partnership between EchoStar and AT&T for the latter's Homezone service, for the upstream.

The games use a virtual channel via a portal in the cable environment, and since the games are downloaded into a set-top box, there are no latency issues for the players.

"We have a sense that as we explore and further deploy the ad-supported game environment that we'll be looking at 8 to 10 percent of the digital subs using our games on a monthly basis," Howe said. "We expect that to grow as the ad support games become more popular and people learn where they are."

- Mike Robuck