Mochi Media, the fast growing Flash game advertising network and payments platform that we covered last week, is in the midst of an internal battle over the fate of the company.
The company is mulling over an acquisition offer that would give investors Accel Partners and Shasta Ventures their original investments of around $14 million back, but not much more. Founders and other employees wouldn’t make much from the sale.
Normally this is an easy offer to turn down. The company is doing well and has “plenty” of money left in the bank, sources say. The founders obviously would want to continue to grow the business and hope for a good outcome.
But for some reason at least one investor, Ping Li from Accel, wants to close the deal and take his original investments off the table. He has been pressuring the founders and management team to accept the terms offered, multiple sources say.
That’s left the founders frustrated, who apparently turned down an offer from Time Warner to acquire the company for $65 million or so a year ago. Li convinced the founders not to take that deal, sources say, and instead raise more money to go for a “home run.” Now, a year later, Li wants to sell the company for a small fraction of that $65 million.
Mochi Media continues to quietly build out monetization and reporting tools for Flash game developers. In May we reported on the big growth in their ad network – over 100 million people a month now play games that include their ads. You can find their games on big sites like Hi5, RockYou and Meebo. We’ve heard that games that include Mochi Media stats or advertising products are played over 1.5 billion times a month.
These games are embedded on publisher sites and are very often “borrowed” by other sites who just lift the Flash files. So it’s important that the game files generate revenue directly. Ads served by the publisher around the game aren’t reliable. Mochi Media puts the ads directly into the games, so even if they are ripped off, the ads still show and create revenue.
The problem is these ads don’t make a whole lot of money – the industry average is around $0.50 per 1,000 game plays.
To fuel revenue growth to developers (and therefore Mochi Media), the company has launched a payments platform called MochiCoins with a handful of game developers. MochiCoins lets developers charge for game upgrades – users can pay for coins via credit card, PayPal or SuperRewards, and the coins that then be used to purchase upgrades in games.
The early results, we’ve heard from someone close to a game developer on the platform, are stunning.
Mochi Media, a company that helps developers monetize their Flash games, has closed a $10 million Series B funding round. The round was led by Shasta Ventures with additional funding from Accel Partners, a previous investor.
Mochi Media’s flagship product is MochiAds, an advertising platform that allows Flash developers to embed ads into their games. Instead of placing ads on their webpages, developers can embed them within the Flash files themselves, which means they still get paid when they game goes viral and is placed on other sites.
Mochi Media closed its Series A Round of $4 million last March. The company has been able to establish itself in the gaming space, but faces a constant threat from advertisers in the Flash movie space, who could easily shift their focus to gaming.
MochiMedia, makers of a popular Flash stats tracking service called MochiBot, are now working on an ad network for Flash games. It’s hard work reviewing anything that has to do with Flash games, but after some time I have concluded that the new project looks like a very good idea. The ad network, called MochiAds, is currently in private Beta but you can go to the demo page to see how the ads work and get terribly distracted by some games.
As has been well demonstrated with online video sharing, Flash files can spread fast. Flash games are a huge online trend right now but most advertising goes on via ads around destination pages that have games embedded in them. If those games leave those destination sites, then it’s easy for the game creator to lose control over ad revenues.
MochiAds are both preroll and mid-game visual ads. It’s a great place to advertise – users fully expect some load time in most Flash games and ads between plays aren’t terribly offensive either. Imagine preroll ads that viewers don’t hate! This may be less true once game designers more widely deploy ways to avoid the extended load times for these games, but for now it looks like compelling ad space. MochiMedia founder Jameson Hsu told me that Flash game players are watching “the game space” closely already and even if they don’t click through ads it’s a great brand advertising opportunity. Ad space is sold on a CPM basis and ads are served by game category. Viewers are invited to rate ads as they display. I think that all sounds quite valid.
I asked Hsu what would prevent any of the ad networks emerging for video to enter into the Flash games arena. He said (charmingly) “nothing.” The primary advantage that MochiAds has is that its analytics software, Mochibot, is already well known amongst developers. Developers receive 50% of ad revenue. The company has a financial foundation from licensing its analytics software to corporate customers seeking to track Flash video campaign success.
The company has already sold ad space to a handful of companies, including BitTorrent, Guba, Slide and HotorNot. I expect we’ll be seeing preroll and midgame ads placed by MochiAds in independent Flash games around the web in almost no time at all.
See previous TechCrunch coverage on this space in reviews of Bunchball blog embedded games and Kongregate, a destination site for user generated games with revenue sharing.
