June 19, 2008

Mochi Media raises $10 million for Flash-based game ad and analytics platform

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Mochi Media is making a name for itself, and it’s not just because of the Puzzle Farter game alone. That’s a cute game that appears in a lot of places on the web and Mochi Media makes sure that the game’s creators get paid when it gets played.

Mochi Media has created a lucrative ad and analytics platform for Adobe Flash-based online games. The San Francisco company now runs a network of online games that draws more than 60 million unique visitors a month. And that explains why it has raised a $10 million second round of funding.

Shasta Ventures led the round and previous investor Accel also participated. The company will use the money to expand its platform of tools and services for makers of casual online video games, such as Pet Tomato, which made Puzzle Farter. (Here’s a link to a video montage of Mochi games).

A lot of web sites are discovering that games are sticky, keeping users coming back and sticking around on a site longer than they otherwise might. Mochi Media is kind of an arms dealer, providing white-labeled games to any site that decides it wants them. And those games are free to play because Mochi Media puts video ads into convenient loading scenes or between levels of the games.

Jameson Hsu, chief executive of Mochi Media, said that the funding shows that the interest in social gaming and simple web games is heating up. He pointed to last Friday’s Social Gaming Summit, which Hsu participated in and which drew almost 400 attendees. Hsu will use the money to further the company’s goals of monetizing, distributing and providing analytics for web-based games.

Mochi Media got started in 2005 and launched MochiAds, its flagship game distribution and ad network, in October, 2007. The company inserts small video ads into the Flash games that can run on any web browser. It tracks exactly how many times the games get played and on which web sites. It can thus collect ad revenue and pay the developers their share. That has helped a vibrant community of Flash game developers who have enough revenues to develop more online games.

Since it can track games wherever they are played, Mochi Media has help developers monetize games that were previously being pirated. Web portals such as MSN Games can improve their audience engagement by putting widgets on their sites where visitors can play the white labeled games from Mochi’s network of thousands of game developers.

The business model is similar to the one used by NeoEdge Networks, which has an ad platform for more complex downloadable games. But Hsu said Adobe’s improvements to Flash have made higher-quality games possible on any web browser, since Flash’s penetration of the web browser market is near universal.

Hsu has also been filling out the management team. He recently hired former Yahoo executive Eric Boyd (who appeared in the book “Bringing Down the House” about a ring of MIT card counters who in turn were the inspiration for the film “21″) and former MySpace vice president of sales Carol Werner. Mochi Media previously raised $4 million from Accel.

Jameson said that he knows why he needs to keep running hard and filling his war chest. Google is expected to enter the market at some point. A year ago, Google bought in-game advertising firm Adscape for $23 million, just after Microsoft bought the in-game ad firm Massive for $200 million to $400 million. Google has yet to make a splash with that technology, which was aimed at the console space. But since Google is present in almost every other ad market, Hsu expects competition from the giant soon.

Mochi Media has a small staff of 22 employees. That’s why the company would be easy to squash. And it’s why Hsu has to think like a mammal among the dinosaurs.

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