To get an insider’s view of the exploding mobile gaming market and the role advertising is playing in it, Launchers Alex Slotkin and Kevin Byrd attended the Dallas Ad League’s September luncheon featuring Paul Bettner. As co-founder of McKinney-based mobile game studio New Toy, he’s responsible for the incredibly addictive iPhone app Words With Friends.

Paul and his brother started New Toy a couple years ago after building their design and development experience at big firms like Microsoft-owned Ensemble Studios where they worked on the $50 million launch of Halo Wars. Their “aha” moment came after watching a young girl play Nintendogs on a Nintendo DS. There was huge potential to tap this market of non-traditional players with casual games that didn’t require monster budgets or long development cycles. Games that relied on social aspects to hook players and get them evangelizing to friends and family. The iPhone provided a killer platform to make it happen.

By following this “blue ocean strategy” of game niches that aren’t crowded with competitors, New Toy has made a name for itself. Words With Friends has a user retention rate twenty times that of the App Store average. Player engagement is thirty times longer. Their free, ad-supported version of the game pulls in one billion ad impressions per month. As Bettner emphasized, consolidation in the mobile advertising market (such as Google AdMob and Apple iAds) is leading to higher quality, more engaging ads that bring better results. Moving forward, New Toy is looking for innovative ways to integrate advertising into games, such as partnering with Skittles to turn all the game’s tiles into colored candies for a month.

According to Bettner, we can look forward to a new Farmville-like game from New Toy later this  year, and another “____ with Friends” game he wouldn’t reveal, but it will no doubt be on everyone’s mind before too long. We at Launch can’t wait.