The great game of profitability for online gaming sites is being played out in dramatic style - as the Sandbox Entertainment Network starts to build castles while Riddler faces down a financial question mark. Sandbox Entertainment Network, owner of the CNNfn Final Bell and CNN/SI Sports Sim, seems to have hit on the right advertising model, helping the company to file to go public last week. Meanwhile, things look a lot less sanguine for Riddler, operated by Interactive Imaginations, which has suffered major staff reductions and a dead end in what looked like a sweet deal to be acquired by CUC International.
Both sites, dependent on advertising dollars and whatever wacky "promotional" strategies they can dream up, are under the industrywide pressure to "move beyond the banner" and offer advertisers better ways to build their brands, says analyst Seema Chowdhury at Forrester Research. Sandbox and Interactive provide almost counterpoint approaches to courting advertisers.
Sandbox is going for full-blown integration, seamlessly weaving sponsorships into its games. For example, Sandbox designed the Final Bell investment banking game for CNNfn and has players run the same software used by customers of eSchwab to build and track fictitious stock portfolios.
That kind of integration makes it easier to court advertisers, like Schwab, who can see the advantage of a sponsorship that introduces potential customers not just to their brand name, but teaches them how to use and become comfortable with the product.
But Riddler has yet to catch on to such tricks. The site serves full-page ads and makes players scroll through the text to get to the game. "It's an antiquated model," says Chowdhury. "It works if you really want the game, but it's not as strong a play for advertisers."
Such thoughts may have occurred to the big direct marketer CUC, which reportedly considered adding Riddler to its bevy of gaming sites, like Berkeley Systems and Sierra On-line. CUC's offer fell through last week, forcing the struggling game site to find last-minute private financing from an undisclosed source, said Michael Paolucci, CEO of Interactive Imaginations.
At the same time, layoffs in its technology department and a voluntary exodus have shrunk the 70-person staff to 24. Paolucci said new hires will be made in advertising as Riddler, with its 50,000 visitors a day, moves toward "ad-branded games." Looking at how such fare is treating Sandbox, it seems the folks at Interactive Imaginations may be on to something.
From the Wired News New York Bureau at FEED magazine.
