RESEARCH TRIANGLE PARK — Is there still magic left in the old Interactive Magic?

The latest deals struck by iEntertainment Network, with its variety of pay-to-play and free games from bingo to fighter combat, seem to indicate there is.

“Wild Bill Stealey”, the former fighter pilot who launched Interactive Magic in 1994, took it public then lost control before buying back majority interest a few months back, announced a contract today with Internet Broadcasting Systems that will make iEntertainment games available on some 53 stations across the United States.

And it won’t be long before Simon & Schuster rolls out “Fighter Pilot Academy: Warbirds III,” a CD-rom package for retail outlets. Just in time to catch the Christmas rush. It’s a spin-off of iEntertainment’s popular Warbirds, an online-for-pay multiplayer flight simulator.

Soon to follow the retail rout are some other titles, including a World War I air combat game and another offering up tank battle scenarios.

Earlier this year, Stealey also raised capital for the company by selling a 17 percent stake to Morris Multimedia out of Savannah, GA. Like the IBS transaction, iEntertainment gained access to the audience of the 90 media outlets owned by Morris.

Plenty of ‘reach’

Bruce Kennedy, a three-year veteran at iEntertainment and head of interactive marketing who has seen his share of struggles at the company, says the IBS deal offers special promise.

“We’ve already seen 3,000 to 5,000 game signups, with 25,000 to 30,000 unique visitors,” Kennedy explains. Although the deal wasn’t formally announced until today, Kennedy says the game links were “pushed out” to the IBS stations for testing in August and the “full roll” started Aug. 9.

The deal certainly provides potential “reach” for Stealey and company.

Two Triangle stations are part of the IBS network — Capitol Broadcasting’s WRAL and NBC owned WNCN. NBC, Capitol, Post-Newsweek, McGraw-Hill and Hearst-Argyle Television are among IBS investors. IBS operates Web sites for 53 stations across 50 US cities, including 20 of the top 25 markets. (IBS also works with WXII in Greensboro and WYFF in Greenville, SC).

Many players are testing the free games now, especially bingo and others that offer prizes. But iEntertainment wants many of the players to sign on for premium pay games — especially with the poor online advertising market which at one time generated substantial revenue for the company. (Stealey complained to LTW earlier this year that rates had plunged to 20 cents for each 1,000 ad impressions vs. as much as $20 in the Net’s heyday.)

“Obviously, we expect people to go more for the cash games initially,” Kennedy says. iEntertainment is shooting for a conversion rate of 3-5 percent to paid games, or as Kennedy says, “for the full boat.”

A return to co-branding

The strategy Stealey is following isn’t new, though. iEntertainment once had a wide variety of big-name partners for its game site, but Kennedy says declining revenues and increasing demands from partners lead to a strategic withdrawal. (The old Interactive Magic also had to retreat from the retail CD market after battering heads and losing a lot of blood with the giants, such as Ubi Soft which bought out IM’s old rival Red Storm in Morrisville.)

“Clearly, this is our foray back into the dedicated co-branded efforts,” Kennedy explains, referring to IBS. “It’s real important to us. The most cost-effective way for us to promote what we do is co-branding.”

Kennedy says iEntertainment also will closely monitor regional statistics to see what games are popular where and then react.

IBS once offered games “but they were not a huge draw,” Kennedy says. “It just so happened they were looking for a new partner and we were looking to co-brand again when we hooked up with each other.”

Stealey’s string of deals haven’t driven up IENT’s stock (Nasdaq over-the-counter: IENT), which was selling today for 6 cents. But better news could be coming.

iEntertainment: www.ient.com

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