Topic: In-Game Advertising Predictions

[TheYoungerPlumber]

Ad agencies, publishers and developers predict product placement will be huge by the end of the decade.

250 LEADING ADVERTISING AGENCY, GAME DEVELOPER AND PUBLISHER EXECUTIVES ATTEND ADVERTISING IN GAMES FORUM

Forecasts Call for $800 million Advertising in Games Market in 2009, $1 Billion in US by 2010

AUSTIN, Texas - April 18, 2005 - The Game Initiative announced today that 250 executives from advertising agencies, game developers and publishers participated in the first annual Advertising in Games Forum on April 14, 2005 in New York City. The audience consisted primarily of advertising agency executives seeking to understand the market opportunities and expectations. Earlier in the week Massive Incorporated announced its game advertising network and IGN Entertainment signaled its entry into the advertising in games business.

A number of key facts, figures and estimates were provided to the audience by leading industry experts at the Advertising In Games Forum.  Highlights include:

* The Yankee Group forecasted advertising in games is expected to rise to $800 million in 2009 from nearly $120 million in 2004.  

*  $266 Million, or more than one-third of advertising in games in 2009, will come from "advergaming," when advertisers create a game around a product rather than place their brands within a well-known title, according to Yankee Group senior analyst Mike Goodman at the Advertising In Games Forum.

*  Mitch Davis, chief executive of video game ad network Massive Inc., told the audience video game advertising would top $1 billion in the United States by 2010, and approach $2.5 billion worldwide.

*  There are 100 million game capable cell phones are currently in the marketplace. 65% of the population owns a cell phone.  And the turn over or replacement rate of cell phones is every 16 months, reported Anita Frazier, Entertainment Industry Analyst, NPD Group, at the Advertising In Games Forum. Every cell phone being sold on the market today is game capable. So within 16 months all cell phones in the marketplace should be game capable.  

*  The top selling 2004 game titles according to the NPD Group:   1.  Grand Theft Auto San Andreas – 5.5 million sold since launch 2.  Halo 2 on X box – 4.5 million units sold since launch 3.  Madden NFL 2004 on PS 2 – 3.5 million units sold since launch 4.  ESPN NFL 2K5 –1.6 million units sold since launch 5.  Need for Speed Underground 2 –1.7 million units since launch

*  Top selling PC title of 2004:  Sims 2 with 750,000 units sold., reported NPD Group at the Advertising In Games Forum

*  Best selling game title of all time:  Grand Theft Auto Vice City with 6.5 million units, followed very closely by Super Mario 64 on the N64 which is about 6.0 milllion units, according to Anita Frazier, Entertainment Industry Analyst, NPD Group, at the Advertising In Games Forum.

Advertising in Games Forum was the first conference where advertisers, publishers and game makers will come together to outline the opportunities and challenges of ads in games, and explore together the most effective way to take advantage of games as a platform while benefiting the consumer.

The Advertising In Games Forum East was sponsored by Massive, Inc., Alias Systems, Microsoft Game Studios, WildTangent, Mary-Margaret.com, GameSpot, GameDev.net, Moby Games, The Bohle Company, XFIRE, Inc., and Business Wire.

About The Game Initiative  

The Game Initiative is a leading producer of conferences and events for professionals in the computer and video game industry. The Initiative is chartered with the growth of the industry through events, public awareness, information and supporting programs and serves the needs of companies and people involved in producing interactive entertainment software and hardware for video game consoles, handheld devices, personal computers and the Internet. Game Initiative events include the Austin Game Conference, the Women's Game Conference, The Advertising In Games Forum, The Casual Games Conference, Game Technology Association Meetings and the How to Break into the Game Industry national conference series. More information about the Game Initiative can be found at http://www.GameConferences.com  

[Ian Sane]

"$266 Million, or more than one-third of advertising in games in 2009, will come from 'advergaming,' when advertisers create a game around a product rather than place their brands within a well-known title, according to Yankee Group senior analyst Mike Goodman at the Advertising In Games Forum."

And who the HELL is going to buy this?  Seriously.  The general public can be morons at the best of times but there's a limit to how far you can fool them.  McDonalds Man isn't going to sell millions of copies.

That's what really bugs me about these predictions.  They are predicting that we're all f*cking idiots like we're not going to notice when our games become riddled with ads.  You can fool us for a little while but once you start releasing games that are advertisements people are going to start wising up.  This is going to turn away people and not attract anyone so it's an idea that will eventually fail.  People only tolerate ads when they either don't have to pay for what they're seeing (TV) or they have no choice because there aren't ad-free options (magazines).  And unlike magazines, games don't make money based almost entirely on advertising revenue.  With a magazine you have to have ads to make a profit.  With games you don't so there will always be publishers (like Nintendo) that will offer ad-free games.  No one will be forced to deal with ads so they won't.  This would only work if they sold games at such a low price that ads were the sole source of profit and people were willing to deal with the ads for super-cheap videogames.

The way things are becoming so commercial and how publishers are getting so greedy I'm beginning to think that the idea of another crash isn't too farfetched.  The longterm gaming fans are essentially being squeezed out in North America and the casuals don't have enough interest to keep the current industry as it is afloat.  The current industry requires the business of both the casuals and the hardcore but the casuals can be easily distracted by the next big thing (ie: cellphone gaming could steal away the console casual market).  The hardcore market will stick around the longest but the industry is largely targeting the mainstream which could jump ship at any moment.  There are too many companies relying on the gaming "fad" to last longer than a fad should.

[Bill Aurion]

"$266 Million, or more than one-third of advertising in games in 2009, will come from 'advergaming,' when advertisers create a game around a product rather than place their brands within a well-known title, according to Yankee Group senior analyst Mike Goodman at the Advertising In Games Forum."

And who the HELL is going to buy this? Seriously. The general public can be morons at the best of times but there's a limit to how far you can fool them. McDonalds Man isn't going to sell millions of copies.

I'd like to know if this includes movie licenses...

[vudu]

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McDonalds Man isn't going to sell millions of copies.

Who's to say Mc Donald's is going to sell them?  Perhaps they'll start giving away free cell phone games with happy meals.  You'll soon be able to play Bejeweled with french fries and quarter pounders.

[UncleBob]

$266 Million, or more than one-third of advertising in games in 2009, will come from "advergaming," when advertisers create a game around a product rather than place their brands within a well-known title, according to Yankee Group senior analyst Mike Goodman at the Advertising In Games Forum.

err...

You know, I (and most every "gamer" and "casual gamer") detest the large majority of lisenced games...  But at least, generally, there's occasionally a decent-good lisenced game released...

This scares the *crap* out of me...  "The Adventures of Smokin' Joe Camel!  You'll traverse the Egyptian Landscape to collect all ten packs of Joe's secret stash of full-flavored, ultra smooth Camel Cigarettes.  You'll face all kinds of evil enemies like Soccor Moms, School Heath Department and Physical Education Teachers and Politicans all on your way to do battle the evil Surgeon General and discover the true, cool flavor of Camel Cigarettes!  This game is MSRP $49.99 and is rated M for Mature!"

[joshnickerson]

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Originally posted by: Ian Sane


The way things are becoming so commercial and how publishers are getting so greedy I'm beginning to think that the idea of another crash isn't too farfetched.

You're not the only one. Me and some friends have been prediciting this for the past couple of years. By our estimates, this next generation (Revolution, X360, PS3) is going to be the one that crashes.

[UncleBob]

This would only work if they sold games at such a low price that ads were the sole source of profit and people were willing to deal with the ads for super-cheap videogames.

This could be interesting... Would you pay $5 for a new Mario game where instead of Mushrooms and Feathers, Mario grabs Nestle's Crunch and Resee's Peanut Butter Cups - and the "unedited" version (with Mushrooms and Feathers) was sitting beside it for $45 more?

[Grant10k]

Well, that's it for the "It's only to make games more realistic" attitude.

[Rize]

You wouldn't see "McDonald's Man", you'd see a McDonald's on every corner in GTA and True Crime.  And McDonald's bill boards in racing games.  McDonald's hamburgers on people's desks.  That sort of thing.

And here's my comment from the article:

What worries me is that if the revenue from product placement in games becomes high enough, it may cause many publishers to think twice about putting their money behind a game with a setting that won't accommodate product placement (remember folks, Link uses only the finest Port Orford Pre-Finished Cedar Arrows).

The other extreme would be that games might have products advertised during loading screens if they won't fit into the game itself.  Obviously, that would be a travesty, but perhaps not enough of one to prevent it from happening.  However, backlash from gamers and especially reviewers should help to keep anything like that from happening, but that will just exacerbate the problem of publishers shunning games that don't lend themselves to product placement.

[Ian Sane]

"Would you pay $5 for a new Mario game where instead of Mushrooms and Feathers, Mario grabs Nestle's Crunch and Resee's Peanut Butter Cups"

Crunch and Reese are made by two different companies.  Twice the revenue for Nintendo!

"I'd like to know if this includes movie licenses"

So would I.  Usually a game has a movie licence to draw attention to the game but with the huge merchandising you see for films these days advertisers might view the licenced products as a way to draw attention to the movie.  Or perhaps they're both seen as advertisments that draw attention to each other in a twisted circle of capitalism manipulation.

The way it's worded though it sounds like they meet in a board room as say "let's make a videogame to promote Pepsi" as opposed to "let's make a videogame to cash-in on the popularity of this licence."

[couchmonkey]

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Originally posted by: UncleBob
This would only work if they sold games at such a low price that ads were the sole source of profit and people were willing to deal with the ads for super-cheap videogames.

This could be interesting... Would you pay $5 for a new Mario game where instead of Mushrooms and Feathers, Mario grabs Nestle's Crunch and Resee's Peanut Butter Cups - and the "unedited" version (with Mushrooms and Feathers) was sitting beside it for $45 more?

Pretending that that would actually happen, it's a really tough question.  You've created a pretty unbalanced example...I'd still be tempted to buy the unedited version, but yes, I'd probably go for the cheap one.

However I don't think that's where the marketing people think this is going.  Movies aren't any cheaper to see thanks to product placement.  On average I don't think companies will front the tens or hundreds of millions of dollars needed to make up the difference on a game that sells for five dollars, even if their products are featured heavily in the games.  EA's games aren't getting any cheaper, and EA is probably progressing most rapidly on product placement deals out of all the publishers.  I think a more likely scenario would be $10-$20 off of the "unedited" price, and at that point, the decision is easy for me to make.

As for advertiser-sponsored games, those already exist...just check out the huge number of Flash ad-games on the internet.  But I don't think we'll ever see lots big-budget games in that vein coming out because it's a big risk to reach a fairly small audience.  Say you sell 250,000 copies of your ad-game...that's a decent number for an unheard-of game, yet it's still a fraction of the circulation of a newspaper in a medium-sized city.  The game costs millions to make, but you could probably buy a decent ad in the newspaper for $10,000.

Edit: I guess the long-winded point I'm getting at in that last paragraph is that, if it's all cheap cel phone and internet gaming, the $266 million spent on creating games around brands will never ever reach me.  It could have an impact on hardcore gaming, though, if it causes casual gamers to quit spending money on consoles and the games that come with them.  Market crash?  I don't think so, but maybe....

[UncleBob]

Now folks, don't discount Ian's "McDonald Man" prophecy outright...  Who remembers This AWESOME hit from 1992?

[couchmonkey]

Hee hee!  *raises hand*.

[ShyGuy]

Well, There was the Noid game for the NES too

and what was that Skittles game that came out this generation? Darkened Skyes? I always wanted to try it..

[Hostile Creation]

I was thinking the same.  That and Cool Spot.

God, I freakin' hate this.  So very retarded.  I'm glad to be riding with Nintendo, anyway.  Of all the companies, they're least likely to give into this sort of thing.

[NotRimmer]

Hey guys, remember when Pikmin 2 had tons of advertising?  Good times

[Ian Sane]

Did Nintendo actually get paid for Pikmin 2 product placement or did they put those products in themselves and then asked for permission to use the trademarks?  There isn't anything wrong with having a real product in a game it just depends on the motive behind it.  Putting it in to add realism is acceptable.  Putting it in to act as an advertisement is bad.  With Pikmin 2 I felt that the game benefitted from the real world products.  It made it more interesting to see what Olimar thought of items we see in real life.  The instant recognition by the player of the "treasures" was important for the feel of the game ie: Duracell batteries are very distinct looking and just using a generic battery probably wouldn't allow for an instant recognition.

If it was blatant advertising the game would specifically be about Olimar collecting Coke product related bottlecaps or something else as painfully obvious and insulting.

[davidlow122]

GTA: Vice city the best selling game fo all time at 6.5 million copies? (over Mario 64 at 6 million)?

1) North America only figures (Mario 64 killed VC worldwide - Japan people)

2) What the F*$&! Super Mario Bros 1 Sold 60 million copies worldwide (although half were packaged in the system) and Mario 3 sold 40 million! Are you telling me they sold less then 10% of their sales in the USA?

3) It's prob some marketing Bull%&$ to pretend gaming started with the PS2, because that's the most likley console to have ads in the games.

[Renny]

Thanks for pointing that out, David. Is NPD given license to revise history simply because they're the only ones with hard and fast numbers for North America? Of course SMB isn't an advertisement-friendly game, so I wouldn't expect any less from someone in the Advertising in Games Forum....

[Djunknown]

Somebody gag me. I've gone on record saying if this gets out of hand, I'll do retro gaming and never touch a 'current' gen console again.  I was pretty angry, but not that I've simmered down, I'll wait until the industry crashes [again]. When the proverbial smoke clears, I'll come out of the proverbial woodwork and start consuming 'current' games again. I wonder how many hardcore gamers will do the same thing? Any takers?

Yeah, NPD numbers are basically from the USA. I'm curious if they include Canada too? I've always wondered that.... Otherwise, if they did add up worldwide sales numbers, Nintendo would have a lot titles up there. But that would assume the press would start giving Nintendo respect .

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So within 16 months all cell phones in the marketplace should be game capable.

Will advertisers concentrate on the mobile market? Its a good idea, since as they cited, a lot of people have cell phones. If they want to flood the celluar airwaves, go right ahead. I use my phone to... make calls! That's it! Maybe they're will be some backlash as with Spam...

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Advertising in Games Forum was the first conference where advertisers, publishers and game makers will come together to outline the opportunities and challenges of ads in games, and explore together the most effective way to take advantage of games as a platform while benefiting the consumer.

Here's a solution: Make it cheap. If Madden 2010 is riddled with ads down to the type of bleachers used, it be better be 20, no more than 30 U.S dollars. If a generic action hero uses Smith & Wesson revolvers as his weapons, 10 dollars should be shaved off. You get the picture.

[TheYoungerPlumber]

I don't think ads in games will reduce the cost to the end user at all.  Everyone is talking about how much more money it will cost to make a next-gen game.  Having product placements can help absorb some of the dev costs, making a game cheaper for producers--not consumers.  That's still OK to a degree if the alternative is $60 games.

[RABicle]

Acutally David Mario 64 only sold 1 million in Japan. But it's total worldwide sales were over 11million thanks to the PAL market.

I think Super Mario Bros. 1 actual figures were closer to 15million according to Guiness World Records, but true accurate figures will probably never be available.

[Hostile Creation]

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Hey guys, remember when Pikmin 2 had tons of advertising? Good times

Ah yes, see what Ian said because I basically agree.

Besides, it was hardly tons of advertising.  They had all of about ten recognizable products in the game, and many of them were very small scale.  I mean, can't you just imagine kids running out to buy Dannon yogurt and Duracell batteries after playing some Pikmin?

[BlackNMild2k1]

Mc_kids, Skittles, Noid, Cool Spot......

Didn't Pepsi Man have some moderately successful games released in Japan?

[Plugabugz]

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Originally posted by: Hostile Creation

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Hey guys, remember when Pikmin 2 had tons of advertising? Good times

I mean, can't you just imagine kids running out to buy Dannon yogurt and Duracell batteries after playing some Pikmin?

Mmm DANONE! That woman in the advert must be filthy rich by now.