The gaming industry is excited about the prospects of in-game advertising, a revenue stream widely untapped. A spokesman for Electronic Arts, the world's largest game publisher, explains that Need for Speed: Carbon will bring in close to $5 million in advertising revenue just for the last three months of 2006.
A little more than 50% of the ad revenue will come from traditional static ads (billboards, etc. you see inside the game while driving), which can't change after a game is published. But the remaining ad revenue, nearly half, will come from dynamic ads previously not used by EA. For anyone playing the game online (via a computer or Xbox 360), new types of ads are added and updated seamlessly into the gameplay.
Advertisers seem very interested, as study after study indicate that 18- to 34-year-old men are spending more of their time playing games at the expense of missing what's on TV. Some advertisers are making parallels between this new form of advertising and the huge growth of web advertising. Mostly it seems that advertisers are dying for new channels to reach audiences more effectively.
Electronic Arts expects to sell about 30% of what is being referred to as its "advertising inventory" (positions available and suitable for advertising) in the new Need for Speed game. That leaves room for even further growth just from this one game. Still, others are skeptical about how exactly this can work in the longterm. The factor not studied very well is the level of advertising gamers will tolerate after paying $50-$60 for the game in the first place. And some games, such as fantasy or role playing games, might not work well with advertising; ads in such games would seem a little weird and out of place.
Personally, I'd like to see some market research on in-game ad tolerance levels, but my gut feeling is that this isn't a bad way to go for advertisers and probably won't bother gamers much, if it's not "abused" (well, at least it won't bother this gamer, but the problem is "abused" is going to mean different things to different gamers).
By Bob Caswell