Lauren Stanat March 21, 2008 In the Perfect World

Within the gaming world, there is a disparity in the attitudes towards in-game advertising between the gamers, publishers and developers, and the advertisers. While advertisers are served with measurable impressions and publishers and developers earn substantial revenue, some consumers feel that advertising does not belong in games; one gamer stated that in the perfect world, advertising does not belong in games. She continues to say that the more advertising that is put into the game, the more the developer comes off to [her] as a copout.10 These statements sum up the apparent problem that advertising does not have a place within games and the concern that the publishers and advertisers are the only entities reaping the benefits. However, a better assertion is that advertising does not belong in all games, and that the consumer benefits do outweigh those of the advertisers and publishers in the quality of the final product. The video game industry has experienced huge growth within the past few years including online, console, and PC software and hardware. Revenue sales for video game software and hardware in the United States in 2007 totaled $15.8 billion15 while software sales alone represented $11.5 billion, up from $8.1 billion in 2003.12 Furthermore, the number of North American gamers has increased from 41.2 million in 2002 to 86.8 billion 2007.12 An estimate forecasted that console penetration in the United States would increase to 57% by the year 2011, which would be up from 51% in 2006.15 Although there has been a steady decrease in the sales of first generation consoles from 2002 to today, second generation console sales have

increased from 8 million units in 2005 to 13.6 million units in 2007.12. These second-generation consoles include Microsofts Xbox 360, Sonys Playstation 3, and Nintendos Wii. To date, the Xbox 360 has sold the most units at 9,418,900, followed by the Wii and then the Playstation 3; however, the Wii sold the most units in the 2007 calendar year.15 The various genres of titles within the industry can be grouped into seven general categories: adventure and puzzle, fighting, simulation, first person shooters (FPS) and action, role playing games (RPG) and massive multiplayer online role playing games (MMORPG), sports, and strategy games. Adventure and puzzle games include titles like Myst, a popular PC game in the 1990s, and Tetris, perhaps one of the most-recognized puzzles. An example of a fighting game is the Mortal Kombat series. The Sims and Microsofts Flight Simulator are wellknown examples of simulation games. Some popular FPS and action games include the Halo series and Ninja Gaiden, respectively, while the World of Warcraft is a perfect example of a MMORPG. Todays sports titles range from college basketball (NBA 2k7) to professional football (Madden 08), and some popular strategy titles include the Tycoon and Age of Empires series. Although these titles cover a broad range of characteristics, the main distinction between all of them is the grouping between hardcore and casual. While some disregarded the division between hardcore and casual, some research shows distinctions between the two categories. For example, casual gamers are skewed to a female demographic and prefer puzzles via the web,3 while the slightly younger and more male core group focuses on playing simulation or strategy games. Hardcore gamers are generally represented by men under the age of 35, engaged in action or strategy titles.2 Jay Sampson, Vice President of Sales of Massive Incorporated, says, gamers are gamers11, but IGA Worldwides CEO Justin Townsend acknowledges the separation: Casual

versus core is a real division, both in audience and game production costs. Ad types for core games are like those in the real world: billboards, radio spots and more. Casual game ads are normally two-dimensional. These are often banner ads as opposed to an ad in the game as part of the environment.8 Along with the growth in the industry as a whole, video game advertising spending is on the rise. In 2007, video game advertising spending totaled $502 million, and eMarketer predicts a jump to $403 million in 2008.15 Some of the companies working to place advertisements in games include Microsofts Massive Incorporated, Double Fusion, IGA Worldwide, and recently, Googles AdScape, among others. The scope of these companies work includes 2- and 3-D advertising or product placement, interactive ads, and video ads. Different types of video game advertising include in-game advertising and advergaming. While advergames are typically more casual, consumers begin to take offense with in-game advertising. In-game advertising, which accounted for $295 million in advertising spending in 2007, can be defined as advertising within and around the game space on PC, console, and webbased games. This can include static ads, dynamic ads, product placements, game portal display ads, and sponsored sessions. 15 But Massive Incorporated CEO, Cory Van Arsdale wants to see a designation between different media. People will call it in-game when its not in-game, its around-game or a website. He also goes on to say that, I think you will see a blurring of the lines between dynamic and static static ads that are in the game stay, they are shipped with the title, they never change, and you cant measure exposure.6 Static ads are created and coded during the development process of the game; they cannot be changed once the game is released, but dynamic ads can be embedded into a game and then accessed online once the game has been published.

Although advertising is becoming more prevalent in gaming, there is generally a strong anti-marketer vibe that runs through a lot of online gaming communities.15 However and perhaps related to the types of games that they play, casual gamers are more likely to be receptive towards advertising. In a survey conducted by RealNetworks with casual gamers, 90% of the respondents confirmed that they would be willing to watch video ads in exchange for free game play.4 Michael Cai of Park Associates noted in his research that casual gamers were more likely to agree to seeing ads in games as long as it enhanced the game play.1 Though casual gamers may be more accepting of advertising, core games offer more lucrative value for advertisers, according to IGAs Townsend. 6 Substantiating the push in in-game advertising spending is extensive research on its effectiveness. Nielsen has worked with both Massive Incorporated and Activision to reveal positive results. In their efforts with Massive Incorporated they found that: average brand familiarity increased by 64%, average brand rating increased by 37%, average purchase consideration increased by 41%, and average ad recall increased by 41%.9 Through their research with Activision, they concluded that in-game advertising favorably affects brand awareness, recall, interest and other key metrics.7 Despite these findings, consumers on online forums had different ideas. One user stated that any time [he] purchase[s] anything [he] expect[s] not to be advertised to; another absolutely hate[s] advertising.10 Yet others concluded that in-game advertising is unacceptable unless you are paying significantly less for an ad supported [game] and that active media forms like gaming never should have advertisements within the game.5 Furthermore, some highly doubt the end consumer (gamers) will reap any benefits of in game ads.13

The major concern on the consumer end lies within whether they will receive any of the benefits from in-game advertising. The advertisers have the benefit of being supplied with measurable impressions, and through the agencies like Massive and Double Fusion among others, pass the resources onto the game developers and publishers. Consumers suspect that the money will be pocketed by the companies and expect to see direct benefits in the form of lower game costs. However, more resources within the industry will inherently lead to technology advancements, or at least the production of more games, with lower development costs. With the dollars from advertising, consumers will receive the direct benefit through the end product, better quality games that are the same price as what they currently pay. As the editor in chief of Team Xbox states, hopefully, well have many more years of $60 games, even when its costing developers tens of millions of dollars to create even an average game.14 Offset production costs also allow developers to make free downloadable content available to gamers. However, in-game advertising is not appropriate for all types of games; the worry is publishers not keeping the integrity of the game by putting in ads that dont fit the content for instance, if Im playing Halo 3 and I happen to walk by a billboard for McGriddles, I might have a seizure.14 Many gamers agree that sportsA and racing gamesB are suitable genres for ingame advertising because of the relevance; stadium signage in a sports game is a perfect example of how to advertise on a video game10 because a person would expect to see advertising in a real football stadium. The brand and advertising content should be relevant to the game. Also, some complaints against in-game advertising suggest that it should not distract you from the game, but rather enhance the experience. In conclusion, though some do not recognize or accept the benefits of in-game advertising, in the perfect world it is advantageous for not only the advertisers and game

producers, but also the gamers. More money for the developers in turn generates more and better games. However, the developers and publishers must be cautious in their choices, so as not to distract the gamer from the game with obtrusive commercial messaging.

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Bibliography: 1. Carless, S. (2006, June 9). Analysts on Acceptance. Retrieved March 10, 2008, from http://www.gamasutra.com/php-bin/news_index.php?story=9673 2. Casual, Core and Hardcore PC Gamer Characteristics. (2008, February). Retrieved March 4, 2008, from eMarketer database: http://www.emarketer.com 3. Casual Gamers Get Serious. (2008, February). Retrieved March 4, 2008, from eMarketer database: http://www.emarketer.com 4. Casual Gamers Like Ads. (2008, February). Retrieved March 4, 2008, from eMarketer database: http://www.emarketer.com 5. Cole, V. (2006, May 5). How do ads in games benefit gamers? Retrieved March 21, 2008, from Joystiq Web site: http://www.joystiq.com/2006/05/05/how-do-ads-in-gamesbenefit-gamers/ 6. Enid, B. (2007, December 28). In-Game Advertising Built Momentum in 07. Retrieved March 8, 2008, from http://www.clickz.com/showPage.html?page=3627965 7. Harilela, D. (2005). Activision and Nielsen Entertainment Release Results of Pioneering Research on In-Game Advertising. Retrieved March 10, 2008, from Activistion Web site: http://investor.activision.com/ReleaseDetail.cfm?ReleaseID=181109 8. In-Game Advertising Targets All Gamers. (2008, February). Retrieved March 4, 2008, from eMarketer database: http://www.emarketer.com 9. Janzen, A. (2007, August 8). Massive Study Reveals In-Game Advertising Increases Average Brand Familiarity by Up to 64 Percent . Retrieved March 2, 2008, from Massive Incorporated Web site: http://www.massiveincorporated.com/site_network/pr/ 08.08.07.htm#

10. kapannier. (2008, March 8). Video Game Advertising, Help for a Research Paper. Message posted to http://forums.xbox.com/18937013/showpost.aspx 11. Microsofts Massive In-Game Reach. (2008, February). Retrieved March 4, 2008, from eMarketer database: http://www.emarketer.com 12. Sampson, J., & Van Arsdale, C. (2008, January). Dynamic In Game Advertising with Massive. Discussion presented at the University of Texas, CMA Interactive Media Lab. 13. Stern, Z. (2006, December 14). Blizzard interview: Microtransactions, ads bad for fantasy MMOs. Retrieved March 8, 2008, from Joystiq Web site: http://www.joystiq.com/2006/ 12/14/blizzard-interview-microtransactions-ads-bad-for-fantasy-mmos/ 14. Tuttle, W., Ahearn, N., Berardini, C. E., Soboleski, B., Eddy, A., & Nardozzi, D. (2007, January 22). In-Game Advertising Roundtable. Retrieved March 10, 2008, from Team XBox Web site: http://editorials.teamxbox.com/xbox/1855/InGame-AdvertisingRoundtable/p1/ 15. Verna, P. (2008, February). Video Game Advertising Report. Retrieved March 4, 2008, from eMarketer database: http://www.emarketer.com