Nickelodeon’s AddictingGames launches virtual goods platform

Nickelodeon is launching a virtual goods platform today for its AddictingGames casual games web site.

AddictingGames has the biggest audience for casual games on a web site, with 34 million monthly active users. More than 1,000 game developers contribute games to the site and monetize them through advertising. Those developers are essentially getting an App Store, with virtual currency called AddictingGames Bucks that can be used to buy virtual goods in any participating games on the site.

But free-to-play games have exploded on sites such as Facebook. So AddictingGames is adapting by launching its own platform that lets developers convert ad-based games into virtual goods games. In those games, players can play for free, but they pay real money for the virtual goods.

Dave Williams, senior vice president and general manager at Nickelodeon Kids and Family Group in New York, said in an interview that he sees virtual goods as a huge opportunity to expand the business. By launching its own platform, AddictingGames offloads the work of creating a virtual goods platform from developers who don’t have the resources to set up the back-end process for it on their own.

The company began work on the internally-produced platform six months ago. It chose to build it’s own solution rather than use a virtual goods platform vendor such as PlaySpan, because it wanted to control its own destiny and customize its platform.

Williams said the move was not driven by weakness in the ad market brought on by the recession. “AddictingGames had its best year ever in advertising in 2009,” he said. “This is not as much a reflection of weakness in the ad market as it is a big new opportunity. Virtual goods changes the financial equation for developers. It’s clear that consumers have a big appetite for virtual goods”

Virtual goods revenues are expected to grow from $1 – 1.6 billion in 2010, according to Inside Network. Williams said that the new virtual goods system could increase engagement on the site, keeping gamers involved for longer periods of time.

At the outset, consumers will pay for the virtual goods with credit cards. But over time, Williams said AddictingGames will add PayPal and other payment methods. AddictingGames will share revenue from virtual goods sales with its developers, who create games using Adobe’s Flash platform.

AddictingGames’ rivals include Miniclip, Big Fish Games and Yahoo Games, not to mention newfound rivals such as Zynga, Crowdstar and Playfish on Facebook. The company said six titles will use the platform at the outset, including Red Storm, DragonSlayer, Stylish Girl and Swordless Ninja.

AddictingGames is part of the Nickelodeon Kids and Family Group portfolio of digital sites, which serves kids, tweens and teens, and parents. The portfolio of sites draws 115 million total visits; 1.3 billion page views; and 54.4 minutes for average time spent per visitor, according to March’s comScore Media Metrix.