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Fri, 29 Apr 2005

Advertising in Games

Advertisers have traditionally viewed interactive entertainment with a
certain degree of trepidation. Videogames are unquestionably having a
major impact on the amount of time that people spend watching
television, listening to radio or reading magazines - all traditional
vectors for the advertising industry - and unlike those mediums,
videogames don't lend themselves to being interrupted by short bursts of
advertising creative.

The trepidation is, therefore, understandable. Games reinvent the rules
of media and leisure time, forcing advertisers to find new ways to
convey their message to a generation that's increasingly savvy - and
cynical - about marketing. To top it all off, the last time a new medium
emerged, advertisers got it wrong - and the online advertising boom and
bust has only in the last couple of years cycled back to more
sustainable, albeit still impressive, growth.

However, the planets appear to be aligning for advertising in games,
thanks to a number of key factors. The growing popularity of videogames,
and the slew of consumer research showing how much time young males
spend in front of their consoles, is kicking advertisers into action;
and the looming hardware transition, with all its attendant R&D costs
and margin pressures, is making game creators and publishers more
interested than ever in supplementary sources of income from their
products.

Product placement in games is nothing new, of course, but we can expect
to see it grow significantly in the coming years as more and more
mass-market advertisers jump at the chance to see game characters
quaffing their soft drinks, using their deodorants or dealing with
unsightly skin blemishes with their skincare creams. More innovative,
arguably, is the appearance of advertising hoardings for real-life
products in Funcom's massively multiplayer game, Anarchy Online. With
the next-gen consoles all set to go online, don't be surprised if
downloading new advertising hoardings automatically from the publisher
becomes a standard feature of sports and racing games, at the very
least. And it's not exactly in-game advertising, but Gizmondo's move to
subsidise the cost of its console hardware by pushing video ads over the
mobile network to its users is certainly a clever move, and one we
expect to see replicated on more connected devices.

Gamers expecting to see the price of videogames in general fall as the
medium starts to be funded by advertising will be disappointed, however.
In certain cases companies may try to use advertising to subsidise the
price of their products - Anarchy Online and Gizmondo are two good
examples, in fact - but in general publishers are talking about
advertising as a supplement to existing income. This shouldn't come as a
surprise to anyone, though; Hollywood has been courting product
placement in its movies for years, but the fact that the heroes of the
piece use Apple Powerbooks or Alienware PCs for their world-saving
exploits, possibly while sipping a Diet Coke, has never had any impact
on the ticket price at the box office.

However, both advertisers and publishers need to be careful about how
they approach this brave new world. Incremental revenues of several
dollars per unit are a hugely attractive prospect for publishers, just
as the ability to address the videogame-playing demographic - young,
tech-savvy and stuffed with disposable income - is for advertisers. It's
important for both parties to ensure that they aren't blinded by these
prospects, and end up killing the goose that promises to lay the golden
eggs by stuffing games with inappropriate or intrusive advertising.

It's a combination of that form of overkill and other factors such as
the lack of sensible metrics to measure response that burst the online
advertising bubble in the nineties, and while all sides seem determined
to get the metrics right this time, some of the rhetoric emerging about
in-game advertising creatives are more worrying. Gamers enjoy watching
advertisements, we're told. Product placement makes the game world seem
more real. Advertising deals enhance the game experience.

None of these things are necessarily untrue, but they all need to be
very heavily qualified. Advertising hoardings on a racetrack are one
thing; the sudden appearance of a present-day soft drink in a science
fiction universe is another thing entirely. One of the stars of a sports
game downing a Coke isn't the same as Solid Snake self-consciously
slapping on the latest Calvin Klein aftershave before a mission; and the
subtle, humorous or creative use of a product in a game isn't the same
as an extreme close-up on it to drive home the point, which will just
end up provoking derisory snorts from the audience you're so desperately
trying to look cool to.

Finding new forms of revenue will hopefully allow the games industry to
spread its wings creatively and reduce the risk of trying out new
things; it will help to smooth out the impact of the transition period
and keep smaller businesses profitable. Engaging with the advertising
industry is an obvious and arguably essential move - but publishers
shouldn't forget that the advertisers need videogames more than
videogames need advertisers on board. Games are putting the squeeze on
traditional advertising mediums, and have lasted for over two decades
without advertising dollars to prop the industry up. Both creatively and
commercially, this is an alliance that can happen on the games
industry's terms. Publishers just need to be sure that they don't hand
away the crown jewels in return for short-term profit.

Gamesindustry.biz has excellent daily news of what's happening in
the business part of the games world.

Mstation's view on this is that underhand advertising is just
that -- underhand. Programming kids in this way is especially
underhand. As for the money, let's face it, it's another chapter of
greed. 

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