• by Laurie Sullivan  @lauriesullivan, January 4, 2012

Video game developer Arkadium and Microsoft Studios have signed a three-year development contract to design and distribute casual and social games on multiple platforms such as smartphones, tablets, desktop and Xbox, as well as other devices running Windows software.

The two companies have been working together for several years.

Microsoft realizes that its core competency resides in building operating systems, and would prefer to leave the game-building to developers like Arkadium, said Kenny Rosenblatt, the company's co-founder and CEO. The partnership includes numerous game titles, although it's not clear when the first product will ship.

Typically, Arkadium develops between five and seven games yearly, but continually updates each with content and add-ons. Each game received between 10 and 12 updates -- some provided free by the publisher, while others are micro-transaction based content that requires a purchase.

Rosenblatt said it runs between $300,000 and $500,000 for each social game and updates. Those social games can run on sites like Facebook and Google+, which added games in August 2011, about two months after launching the platform.

The cost-effective push to develop games and the ability for gamers to take them along on a smartphone has put preasure on handheld devices from companies like Nintendo and Sony.

Integrating advertising into games, Microsoft acquired Massive, a company that developed in-game advertising, but shut it down. The technology lives on, however. Microsoft built it into the Microsoft Studios business group -- so if any of the games developed by Microsoft and Arkadium support advertising, the technology from Massive will serve the content, Rosenblatt said.

While Arkadium will develop games for non-Microsoft platforms, Rosenblatt plans to allocate about 50% of the company's 120-person workforce to develop games for Windows. There is also a commitment to focus on building the ability to collect and analyze data into games' back end to assist publishers and brands so they may capitalize on in-game advertising and promotions.  

Publishers make changes to the games while in play, based on the data collected on the back end. "The metrics behind games have been fascinating to watch," Rosenblatt said. 'You used to develop a game, put it in a box, ship it to retail, and hope people bought it. Today, companies put the game online and collecting data about the game, making changes based on the data, optimizing how the game is played. It has changed the way game developers work."