Nolan Bushnell: What The Game Industry Misses

Though he's still most famous for (more or less) creating the arcade and console industries with Atari, a company he co-founded in 1972 before creating Pong and the Atari 2600, Nolan Bushnell still has new ideas to contribute to the gaming business more than thirty years later.

Though he left Atari all the way back in 1978, Bushnell went on to run Chuck E. Cheese's Pizza Time Theatre, as well as 1980s game company Sente. More recently, a new venture is delivering games in a whole new context with his chain of uWink gaming restaurants, which feature digital tabletop games in a fun, family-friendly environment. 

As chairman of the board of casual-specific in-game advertising firm NeoEdge, Bushnell pays close attention to the casual games revolution - here discussing his views in how companies are missing the boat on audience targeting, as well as looking at how games might become the most successful medium for ad delivery.

Here, Bushnell and NeoEdge marketing VP Ty Levine answer Gamasutra's questions about the state of the casual games market and - of course - a few about Atari, past and present.

First of all, why target casual?

Nolan Bushnell: I've always been a contrarian. When people are talking about the size of the video game market, they're talking really about the habits and money based around 15 million people in the United States. That's basically five percent of the regular console game market.

If you look at the numbers, casual gamers right now are 40, and they actually probably should be closer to 100 million. And I'm trying to get back to the number of game players that existed basically in the '70s. In '79, 40 percent of the population of 250 million self-identified as a game player, meaning that they've played a video game within the last week.

When you look at that, you say, "What happened?" And I say that games got violent and lost the women, and got complex and lost the casual gamer. So now we're starting to see those coming back, and I actually believe that that market size will actually get bigger. The old story says that if you want to lead a mob, figure out where it's going and get out in front and say "Follow me!" (laughter)

So why go for the in-game advertising, versus say, starting a casual portal or something like that?

NB: I believe that the problem of growth for the casual game market is really about monetization structures. There are still a lot of people who will not put credit cards on the internet. There's even a larger number - i.e., kids and teenagers - that don't have credit cards. As a result, there's a real barrier to growth because of monetization issues. Advertising just gets rid of that.

What do you think about that versus the "free-to-play, pay for items" model, like Nexon's Nexon Cash cards?

NB: It's still... any time you pay, you're going to have to have some kind of a credit card or some kind of a sponsor putting things up or scratch-off cards, like you have in China and Korea. All of those have an issue with them that is obviated by advertising.

What do you think are the biggest issues with cash cards? Because you can go into Target and buy those and that sort of thing?

NB: I think that those will work to some level. It's just that most people don't know about it right now.

A lot of companies are getting into the in-game advertising space. How does one differentiate?

NB: Primarily through technology. If you really want to do something exciting, you have to wrap games seamlessly, you have to give advertisers feedback, you have to easily convert. And not necessarily a priori - that is, think about advertising as you are building the game, but being able to go in and monetize your game after the fact with a really good game-serving engine. NeoEdge does that and provides all of the accounting data backup stream. It just does it the right way.

Ty Levine: It's a seamless experience. They've literally taken something that's already been created - the game itself. We're able to go in and take the game apart and put these ad insertion units in there without disrupting or modifying the experience that people are going to have while playing the game. That's really the key.

How would that be possible? From a design standpoint, how is it possible to do without interrupting the flow?

NB: Most games have some kind of a natural break point, particularly in the casual games space where there's "Round 1, Round 2." You know, that sort of thing. That gets pretty easy. Getting to a point in Halo is a little more difficult, except for when you get killed. (laughter) That sort of thing.

Or loading screens.

NB: But also, a lot of the other advertising in games... I call it the metaphorical equivalent of banner ads. With us, we have 30 second spots, which is the stock in trade. So an advertiser can click "network, cable, game," and it becomes part of an integrated and clever advertising strategy.

And then the other part about it, and why I'm really hot on this, is that if you look at actual remembering of the ad, we are so much better than either cable or network television, in terms of remembering the ads, and what have you. So over time, we should end up with a higher CPM than television. And television has done pretty well on their current CPMs.

TL: The brand recall is often in the 40 percentile, which you just don't see in any other medium. We just recently did a major CPG brand. It's a shampoo. I actually use it. I can't use the brand name, but that's beside the point. 66 percent of the people watch the entire ads that they saw. 87 percent watched at least half of the ad. You don't get that in any other medium, especially when you look at TV, and 93 percent of the people that own a DVR are skipping ads.