There's an interesting article over on Kotaku discussing the use of in-game advertising as a means of making revenue for indie developers.

An interview with John Warner, who recently had a hand in the creation of Raycatcher, he talks about his disappointment concerning the level of piracy his game encountered and how a new project he is working on (under the name Greener Grass Games) will be 'a free, browser-based and ad-supported game'.

John and his developer partner Mitch Lagran explain:

"I don't want to do anything The Man-ish... but in order to make games consistently, we need to make money. Otherwise, we can't pay the rent. And if people pirate a lot, advertisements make sense."

But Jeremy Liew, managing director of Lightspeed Venture Partners, brings the other side of the spectrum describing in-game advertising as "a little bit of a disappointment".

"It's not lived up to expectations as a major driver of revenue. That was true even when the ad market was strong, and obviously there's an advertising recession going on right now."

It's a good read and may provide indie developers with something to think about. Read the whole article at Kotaku.

[EDITOR'S NOTE: Just had to chime in here, since I agree with Jeremy's comments and I'm worried this piece is a little misleading. Unfortunately, from what I know of the in-game ad market, it's not generally that lucrative at current CPM rates -- unless you're talking about actual advergames.

So I think the 'free+ads' angle, which is promoted by a Vancouver-based, VC-funded portal here (sigh), is a little bogus. But here's some real stats from a successful set of browser games to get a good idea of the fact that, even for the Hunted Forever creator, ads are a small part of the equation. But you can certainly make money with web games, this article just seems... unbalanced.

-Simon C.]