PlayJam raises $5M to bring casual games to your TV

TV gaming startup PlayJam announced Tuesday that it has raised a $5 million Series A funding round from GameStop Digital Ventures, (s GME) Adobe Ventures, (s ADBE) Endeavour Ventures, London Venture Partners and others. The financing comes as PlayJam sees a massive opportunity to bring new games to connected TV platforms.

PlayJam got its start by providing casual games to pay TV operators as a value-added, interactive TV experience for their customers. Over the past several years, it has seen more than 6 billion game downloads on those platforms. But with the growth of new connected TV platforms from major consumer electronics manufacturers, as well as the massive increase in broadband connectivity, PlayJam no longer needs to strike deals with operators for distribution.

Instead, PlayJam can distribute games on connected TVs and reach consumers directly instead. So far, it has games on TV app stores from major manufacturers like Samsung, LG, Panasonic and Sony. (s SNE) Together, those TV makers account for more than half of all connected TVs sold. And the market is growing: IHS iSupply, for instance, estimates the number of connected TVs, game consoles and Blu-ray players will top 500 million units in 2013, outpacing PC shipments in that year.

That’s a huge potential market for PlayJam, which typically distributes free-to-play games with virtual goods or paid upgrades available in-game. The microtransaction model seems to be working, as PlayJam CEO Jasper Smith told me in an earlier interview that it sees conversion rates above 40 percent, with average transaction of about $1.50 each. And unlike pay TV customers, of which only about 5 percent find or play games through their cable system’s set-top box, Smith said about 40 percent of connected TV owners download games.

As more people buy connected TVs, and actually hook them up, there’s a big opportunity for companies like PlayJam to introduce new experiences on those devices. While it’s not the only company going after this opportunity, there’s surely plenty of money to go around.