BRIGHTON, UK--The Develop Conference & Expo in Brighton is a chance for the development community to not only reflect on past achievements, but to look forward to the future. The recurring themes of this conference include user-generated content, persistent online worlds, and in-game advertising, all of which are expected to have a significant impact on the gaming landscape in the coming years. While in-game advertising may not be quite as welcome as the other two in the gaming community, there's no doubt that its financial rewards are of great interest to publishers facing spiralling development costs.
One of the biggest firms in this area is IGA, which has worked with publishers including EA to create billboard ads in games such as Battlefield 2142. The firm's participation in that particular title wasn't without issues, mainly due to the way it collected and transmitted user data, but it was a reasonably successful venture that piqued the interest of many other publishers. GameSpot spoke to Ed Bartlett, IGA's cofounder and European vice president of publisher relations, to find out more about the current state of in-game advertising, as well as where we can expect it to go in future.
GameSpot UK: Let's start with a bit of an update. Tell us about the current landscape of in-game advertising, and how IGA fits into the equation.
Ed Bartlett: Yeah, sure. IGA is the leading independent [company] in this area. Obviously Microsoft recently bought Massive and incorporated it into the MSN group, and Google bought another smaller company for what looks like its technology. From what we can tell, though, they're going for the casual end of the market, and there's another independent called [Double] Fusion who's been around a similar length of time to us. In terms of a dynamic ad network, though, we're certainly the leading company in this area.
GSUK: So when you say Google's focussed on the casual end of the market, does that mean that you're focussed on the hardcore?
EB: Well I wouldn't say hardcore, I'd say mainstream. Our focus is on the big EA games, the big retail games, the massively multiplayer stuff, anything with a significant reach and contextual relevance for advertisers. We're not out there looking for a new fantasy game, for example--we specifically search down sports, racing, and realistic city-based games.
GSUK: And is that focus going to carry on down the line? Will we ever see in-game advertising in World of Warcraft, do you think?
EB: Well, there are ways and means of doing these things. One example of a company we've been working with is Acclaim, which is bringing in fully featured massively multiplayer online games from Korea. We're effectively subsidising the cost of the game by players watching the advertisements. That's slightly different, as the core of our business is placing adverts contextually within the gameworld, but the difference with the MMO games is that we use preroll videos and prestitials (ads that are served before content is shown). In Nine Dragons, if you actually watch the advertisements [your character] levels up quicker, so it's giving the player a reward for watching. They're basically getting premium content for free. In that model, you usually have the option to turn it off if you want to.
GSUK: The majority of in-game advertising has so far tended to be quite static. It seems to be lagging behind in a world of Web 2.0 interactivity and user-generated content.
EB: Absolutely, and I think it's all about scalability. When we started out with Team 17 on Worms, all we had was a Red Bull power-up. Those things are fantastic and offer great value, and they continue to happen, but we're now working on a portfolio of 30-plus games with a reach of over 10 million unique users and we're able to update that on an hourly basis and based on city. When you're buying into a game you're buying into that game itself, in the same way that an advert shown during Friends on TV becomes associated with that show.
GSUK: The last time GameSpot spoke to IGA it was about Battlefield 2142 and how it fed data back about advertisement consumption. Is that where the real value of in-game advertising lies, in giving you feedback about what's being consumed?
EB: Exactly. Five years ago we were limited by static advertisements and we couldn't really tell who was seeing the media. You could see how many copies were being sold in different territories, as well as the approximate demographics. But with dynamic technology, we can measure the time and the size of an advert onscreen, so from an advertiser's perspective there's no wastage. They also have the advantage of knowing that it's an interactive media, whereas a TV viewer could be making a cup of tea or talking to friends. Same with magazines--you can skip through the first 10 pages of adverts and get straight to the content. With games, the adverts are part of the content. And independent research has shown that gamers like to see the ads there, as long as they're contextual.
GSUK: So specifically, what do gamers actually say to you about in-game advertising?
EB: We're actually conducting probably the largest study of this that's ever been done along with Nielsen Interactive, EA, and Activision specifically to look at this issue. There have been other studies done in the industry and there's been no real negativity as long as it's been done contextually. At the end of the day, you play games to be entertained and taken to another world, and in racing games, for example, you want your teams to have the real player names. You want to see Nike and Adidas on a [football] pitch, and if it doesn't have those things it's just not as realistic as it is in real life.
GSUK: Publishers are beginning to experiment with sponsored downloadable content. Is that something that interests IGA?
EB: Yeah, we have a couple of announcements that we're making soon that we've had incredible feedback about. At the end of the day, DLC is bringing new content to gamers that's subsidised by the advertiser, so it's extending the life of that game. That particular brand is also demonstrating to gamers that it's supporting their passion, and gamers are very good at creating positive chatter around that.
GSUK: Do you feel that there are many more publishers to sign up to in-game advertising now, or are we reaching saturation point?
EB: We're working with new people all the time, but most of the major publishers have listed in-game advertising as one of their top three long-term strategic activities. When you look at the analyst conferences, particularly in America, every CEO talks at length about in-game advertising. However, gamers don't really understand the dynamic of retail or producing these games nowadays, and they think it's all about greed. It's actually about sustaining a creative industry. Publishers and producers don't want to keep making the same games every year, but the financial risks involved at retail as well as the fragmentation caused by four different platforms means that it's a tricky business. Go back a few years and over 50 developers and publishers went out of business in the UK alone in one year, so it's all about making the sector sustainable while keeping the creativity.
GSUK: Do you see your role as a facilitator between media buyers and content creators, or are you involved with implementing the adverts as well?
EB: We do both. If you look at a company like Viacom, they go out and deal with the [London] Underground as well as with key real estate owners. They aggregate all that together and are then able to go and sell that to agencies and do long-term deals, and effectively we do that for games. We also have an in-house production team who are all seasoned games producers who understand the dynamic of gameplay and what gamers want, but they're also commercially savvy when it comes to advertising. They work with the content providers to make sure that the placement of the adverts is appropriate. It's all about having the ads in-game but making sure you impress the players or else it's useless. It's about making the adverts standardised too, so that the advertisers don't have to continually change their artwork. They can come in and buy an advert in a game much like they would in a magazine. It's about taking that level of confusion and smoking mirrors away from gaming and giving the publishers and developers one point of contact.
GSUK: "New media" spending is on the rise--is there any indication that the same is true for in-game advertising spend?
EB: I think the Yankee group has said there will be a $1 billion annual spend in this industry by the end of the decade, with other reports saying $1.8 billion to $2 billion by 2012. We're around the $100 million-dollar mark this year.
GSUK: Ed, thanks for your time.