Video games – with their captive, observant and engaged audiences – would seem to be a natural venue for advertising. But other than a historic buy in "Burnout Paradise" by Barack Obama's presidential campaign, ads haven't made much progress in the gaming sector.
Video game advertising is simply not growing at a pace that would seem commensurate with the opportunity. Gaming's popularity is on the rise – perhaps even boosted by the recession, when people gravitate to cheaper thrills – and the demographic is surprisingly diverse.
The creative challenge is somewhat daunting: There is no way you can ask a gamer to endure a pause in the action "for a word from our sponsor," and even clever product placements have to blend into the look and feel of the game so as to not interfere with play or antagonize the audience.
"Just because you you can put an ad somewhere, it doesn't mean you should," says Jon Epstein Chief Executive Officer of Double Fusion.
"But when it's not at the expense of the experience, there is less user resistance."
Still, there is gold (the real kind) in them thar hills.
On Monday, the Pew Internet and American Life Project reported that 53 percent of American adults play video games of some kind, and NPD
Group, a leading retail analyst firm, says that the last thing consumers plan to cut back on in the next few months will be video games.
As other retail sectors deal with declining sales numbers, video game sales rates are positively cheery — up 18 percent for the month of
October, to $1.31 billion from $1.12 billion a year earlier.
But even with games like the Wii and Xbox 360 growing their sales numbers by six figures this fall, console games are feeling the squeeze that has hit the advertising industry at large. Reuters reports that video game advertising is unlikely to "make more than a blip on the $150 billion U.S. advertising industry in 2009," with estimated earnings of about $100 million this year. But analysts project that it may grow to $1billion by 2011.
Strauss Zelnick, executive chairman of Take-Two Interactive Inc, the maker of "Grand Theft Auto," tells
Reuters:
Gamers are also less open to advertising in products they have purchased as opposed to free games, but Epstein says that gamers are opening up to the notion of advertising in the products they've paid for, as long as it's well done:
At that really depends on what happens with the economy at large.
"In general, the advertising agencies have much better knowledge and expertise in other types of media," says Yuanzhe Cai,
Director of Digital Media and Gaming at Parks Associates. "It's a nascent industry, and all the players are still trying to partner with each other to figure out their collaboration strategy."
Luckily, for console games, they are not dependent on advertising as their sole means of revenue. While the sector's ad inventory may not be jumping off its virtual shelves right now, platforms like the Wii and PS3 have some time to figure it out, because they don't have to rely on advertising alone to survive.
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