Report: In-game-ads omnipresent by 2008

Wall Street periodical predicts "advergaming" revenue to reach $4 billion over next three years, thanks to rising development costs.

It's no secret that next-generation consoles will allow for games with far superior graphics and much more complex gameplay and stories. It's also no secret that it will take a lot more manpower to program and write said games--meaning a lot bigger development costs for publishers.

Gamers have already seen one way publishers are defraying the high price of next-gen development. In fact, they see it every time they shell out $59.99 for an Xbox 360 game. Now, a financial analyst is predicting that over the next three years, publishers will start relying more and more on another revenue-driver--in-game advertising.

"Due to the soaring costs of developing video games, the tremendous reach of video games ... and integration with online commerce, advergaming will be a common fixture in video games," said David Wanetick, managing director of The Wall Street Transcript. "Advergaming is clearly on a rapid growth trajectory, as it is projected to generate $4 billion in revenues by the end of 2008."

A periodical targeted at investors, the Transcript not-so-coincidentally is hosting a conference called "Profiting in the Video Game Economy" in New York City on February 16. According to a conveniently timed statement from the publication, the conference will cover topics such as "Considerations for Investing in the Video Game Economy," "The Impact of Hollywood on Video Games," "Wireless Gaming and Multimedia; Casual Games," "The Convergence of Video Games and Comic Books," and "Legal Issues Impacting Video Games."

There is evidence that Wanetick's lofty predictions about "advergaming" are coming true. Many games, such as SWAT 4, already sport dynamic in-game advertising, dubbed the Worst New Trend of 2005. A semirecent study by media-research firm Nielsen Interactive Entertainment found that in-game ads do indeed work, prompting growing interest in the practice. Earlier this month, the latest game-centric advertising agency, Engage, hung up its shingle alongside competitors Massive Incorporated and In-Game Advertising Partners.

66 Comments

  • paulyfknt

    Posted Apr 22, 2006 11:41 pm PT

    so what exactly is advergaming.. i put in a game in any one of my systems and advertismeants for new games pop up??

    if thats the case i guess im for it, i mean having game advertismeants pop up wile im waiting for the game to load is somtin to pass time, plis some good game i didknt know of might be advertised

  • Noijo

    Posted Jan 28, 2006 10:58 pm PT

    While not a new idea, there have been ads in previous games, mostly to promote other games the company has built, there have been some commercial ads in games even way back in the middle 90's (PC titles). I wonder who Nike will sign first Mario or Madden?

  • davidstebbins

    Posted Jan 28, 2006 6:46 am PT

    uh, PEOPLE, you're forgetting one thing: It begins with an N and rhymes with pizza dough. Give up? It's NINTENDO! Nintendo is keeping development costs low. If we buy a Revolution, by by advergaming! *gasp* It's MAGIC!

  • XeroTheory142

    Posted Jan 27, 2006 10:11 pm PT

    wow, what i find amazing is the fact that many people who comment on this site are so close-minded about putting limits on video game violence, and yet, so accepting of advertising within the games we play.

    but, i say, if it fits, let be there. but if i see mario pondering an ad for olive garden, or sonic checking out nike's new shoes, i may have to throw up.

    i still dont like it though. videogames were some of the last ad-free things in the world. but, these things arent cheap...

  • Kinggi

    Posted Jan 26, 2006 9:05 pm PT

    Advertising is everywhere. It is the new religion you guys realise, replacing religous symbols with ads to shape our culture.

  • cloudstrife75

    Posted Jan 26, 2006 9:03 am PT

    if u play fear u see tons of pop machines... yet none say "coke" or "pepsi" on it... same goes for anyother games... i think this could be a step up into realisim if done right...imagine playing the next GTA and running into a life-like wal-mart and beating up people and rude store clerks, and stealing a couple pots and pans for one of ur missions.... hehe! ah- ha now thats a reason to buy a GTA game! lol im up for as long as it is controlled and doesnt take over a game.

  • jakeboudville

    Posted Jan 26, 2006 12:25 am PT

    advertising thru gaming is not a wise idea

  • Angel_Belial

    Posted Jan 25, 2006 11:16 pm PT

    What's with people saying in-game advertising will make games more realistic? I suppose Master Chief regularly walks to McDonalds in his Nike shoes to buy a Happy Meal, eh. I hate the whole idea of this. As if we don't see ads everywhere constantly as it is. Driving and Sports games I can understand, because in real games players have logos of companies on their cars and shirts, etc. But personally, I draw the line at those games. Anything else should be a no-go for in-game ads.

  • rockstar_88

    Posted Jan 25, 2006 10:42 pm PT

    One day my children will see a Viagra ad while playing LEGO Star Wars 2...

  • IsmirZone

    Posted Jan 25, 2006 10:34 pm PT

    I want my games to be what the developer thinks\ it is worth $50 as they are. I don't want ADS. ADS are not for video games they over do it on TV we don't need it in our games. I don't mind if a racing games havs car ads or car related stuff. We don't want ADS in our games it is simple as that.

  • HeeroYuy0905

    Posted Jan 25, 2006 9:24 pm PT

    I really don't see what the problem is, as long as the ads keep the prices down and don't interfere with the game.

  • GyRo567

    Posted Jan 25, 2006 9:19 pm PT

    I will refuse to buy a game that uses advertisments in a setting more than a coke machine having a brand name or a billboard having a real advertisement. You stick an advertisement in my fantasy world and I'll pirate your game.

  • GreyFoxV1

    Posted Jan 25, 2006 9:18 pm PT

    All that advertising and yet it still costs $10 more an a 360 game? I think publishers and developers should really take a long hard look at themselves.

  • Themage

    Posted Jan 25, 2006 9:12 pm PT

    This is a huge turn off - i just got burnout 3 and WTF EA advertising all over the place. That along with not being able to change controls. Gamespot you might want to rethink your score.

  • samekila

    Posted Jan 25, 2006 8:14 pm PT

    as long as its dr pepper instead of kola or a wal mart in grand theft auto i dont mind haha

  • rusty_ghia

    Posted Jan 25, 2006 5:58 pm PT

    People are actually okay with this?! "It makes the game more realistic"?! "I don't mind as long as it doesn't get out of hand"?! Are you people nuts? Do you actually think that in-game advertising is going to save you a single red cent? Do you think that EA or the like will "pass the savings" on to you?
    Christ, I play games to escape. Mario, Metroid, Ico, Blood Omen, Freespace...all games where ads would just shock you back into reality and detract from the game. This is a trend with no benefits whatsoever for you, the consumer.
    You may want to play your ad filled crap games, but not me.

  • rusty_ghia

    Posted Jan 25, 2006 5:57 pm PT

    [This message was deleted at the request of the original poster]

  • joeamis

    Posted Jan 25, 2006 5:46 pm PT

    If they are gonna make $4 billion or even close to that, game prices should go back down to $50 or at least $55, otherwise they're gonna be milking us. And for god sakes keep ads where they should be in realistic games, and don't put them in fantasy games, etc. But I foresee bad use soon. Didn't TV once never have ads, now look at it... Then there's hollywood+ investors of companies who want in on videogames now that they make so much money, gee that will be great...

  • juanmarcop

    Posted Jan 25, 2006 5:14 pm PT

    I soooooo agree with LanceSummerhous on that !!!!

  • BobbyBobby85

    Posted Jan 25, 2006 4:26 pm PT

    Revolution won't have this problem as bad as Xbox and PS3....
    Lol.

  • sacul555

    Posted Jan 25, 2006 4:00 pm PT

    Im for this if it means a lower cost for video games and as long as they dont have a giant billboard in the middle of a game about the middle ages. In games where it can have relevance its fine you just have to blend it into the back ground.

  • Rugby4ever

    Posted Jan 25, 2006 2:59 pm PT

    I stopped playing SC: Chaos Theory because of the damn ads that got put in during what I thought was a software patch. The ads completely destroyed any sense of immersion I used to have because they were so blatant; and that was from Ubisoft a supposedly good and smartly run company.
    I could definitely see the industry take a nose dive because gamers get fed up with ads in their games and quit playing.

  • buzzguy

    Posted Jan 25, 2006 2:58 pm PT

    Oh my Gawd, capitalism is out of control. Bring back communism!

  • j2oss

    Posted Jan 25, 2006 2:50 pm PT

    What it all comes down to is whether or not the average gamer is at all concerned with the issue. As evidenced by many posts from people above, saying things like 'More advertisements just means more realism. I'm all for it.' and ' I don't mind it, as long as it's relevant', it would seem that there are a significant number of people who wouldn't at all be opposed to the idea.

    I, for one, however, am concerned. Basically, when I sit down to play a game, I don't want my attention to be distracted from the enjoyment the game is producing. One might argue that as long as the ads are well placed and appropriate, they won't disrupt the user experience at all. In my case, they would disrupt the experience. I sit down to have fun, to escape, to go someplace that exists only in the collective minds of the gamers and developers, and in little 1's and 0's on our hard drives of course. In essence, the real world is 'out there' and 'out there' I'm bombarded by advertising all the time, and arguably I shouldn't have to face this kind of invasion of my attention either, but that's slightly off topic. When I'm 'in here', I'm 'in here' because I don't want to be 'out there'. See what I mean?

    To conclude, since I think I could ramble on into an essay here, the issue of how far we are willing to allow advertisers to extend their presence in our everyday lives is a controversial one, at least the way I look at it.

  • Jab_Jackal

    Posted Jan 25, 2006 1:54 pm PT

    Oh yeah i cant wait to play max payne 3 and use neosporin to heal my wounds. That would take realism to a whole new level!

  • Kravyn81

    Posted Jan 25, 2006 1:50 pm PT

    Capitalism at its finest.

  • bfeinberg

    Posted Jan 25, 2006 1:39 pm PT

    Place the ads prior to the game starting on flash-up screens. I can handle that (as long as you can click past them), but when I start seeing my suspension of disbelief getting broken by coke machines in a fantasy game, well, that is the last fantasy game I buy from that developer.

  • coreyb42

    Posted Jan 25, 2006 1:37 pm PT

    One word...boycott. I will never buy Swat 4 (even though the original version apparently didn't have ads). We're part of probably the largest gamer community on the planet, so we should organize and send them a message. Seamless ads that make sense are fine, but go play NFS:Underground 2 and look at the Cingular ad that is ALWAYS in the corner of your screen, or the weird fact that EVERY billboard in town is Best Buy. That really made me mad. Ohhh, poor EA, they are really a struggling publisher that needs to make more money. C'est la vie I guess, though, it is capitalism, so it might be too bad for us, if we don't do anything about it. Oh, and I'll pay $100 if it means no-ads. AND I would rather have no game and $50 than a game with ads, to answer an earlier poster.

  • peter685

    Posted Jan 25, 2006 1:29 pm PT

    I have found over the past years I have bought less and less games, not because of the price but lack of quality and focus on adhering to tried and tested fomulae. For me I will be buying games that attempt to break new ground (and I am not talking graphics but gameplay). They can put as many ads in the games as they like because the fact of the matter is that by doing this games become more about what will sell a particular product than what is enjoyable for the gamer. My message for developers: Please use in game ads, I wont buy the crummy risk averse games anyway and you will need the advertising subsidy to cover the leakage from sales(including me). If they break new gound, show some creativity, and ditch the ads. I know of at least 1 gamer who would be willing to shell out $100+ for such a game.

  • LordOfMidnight

    Posted Jan 25, 2006 1:00 pm PT

    I've said it before and I'll say it again... as long as the ads are seamless and not distracting to the gameplay I'm fine with it.

  • LanceSummerhous

    Posted Jan 25, 2006 12:59 pm PT

    Game-o_O: "Every game you've played has adds in it :/. [sept for really REALLY old ones] "

    Maybe every game YOU'VE played. None of my games have ads in them.

  • XlpranksterlX

    Posted Jan 25, 2006 12:58 pm PT

    Hey if its inevitable, than lets at least have non invasive ones.

  • DoomsdayForte

    Posted Jan 25, 2006 12:53 pm PT

    Did some people not see that one Minority Report movie? It had the scariest advertisement system I've ever encountered, in either real-life or science-fiction. Ads that, after a forced retinal scan, they suddenly (literally) speak out to you by name, and worse yet, they follow you around on the walls (or maybe it's some brain hacking or the like, I forget). And even worse yet, you can't avoid it at all. Well, unless you spoon out your eyes and tear your ears out or something.

    And to the one person who said something about an EA game chock full of ads: Hey, what happened to Need for Speed Underground 2? =P And in-game ads work, huh? Funny, the ones I encountered were ones I already knew about, not new products, etc. I mean, seriously. Most of us don't see our game systems as a place where we could be advertised at. We're not that easily brainwashed, are we? I can understand if it fits the scenery (racing in some big city or the like), but it doesn't need to be everywhere. I mean, if companies wanna start hawking us their products, they should start making games themselves, you know? It worked for McDonalds on the Sega Genesis.

    And, I can safely predict the day the world ends is the day that, while you're waiting for a game to finish loading, you're given a commercial for some random product while you wait.

  • Shaigus

    Posted Jan 25, 2006 12:40 pm PT

    As long as they aren't completely out of place (billboards in WoW, etc). But otherwise, i don't care

  • Game-o_O

    Posted Jan 25, 2006 12:37 pm PT

    Every game you've played has adds in it :/. [sept for really REALLY old ones] GTA:SA omg, the whole line of sports, the cars, the resturants. Those don't really distract me, but if I see a damn popup. NO. lol - Next thing you know Jack Thompson is flaming games for having porn ads.

  • reallaughingman

    Posted Jan 25, 2006 12:32 pm PT

    well i watch tv and thats free so mabey ads would make games free too?...i can dream.

  • ghostadv

    Posted Jan 25, 2006 12:30 pm PT

    If it's relevent and not overly done like Swat 4, I'm okay with it.

  • MysticGenie

    Posted Jan 25, 2006 12:30 pm PT

    Ads in games as a usual mode of business will give an inherent conflict. Ads are designed to be noticed.

    But when I play a game, the background scenery is just (often pretty) noise. I do not want to be jarred out of my game experience to notice the f**king ads.

    If ads become prevalant and I cannot hack things to disable them, then I will simply avoid the games that have them.

    I already cut down TV watching to almost nothing simply because commericals drive me crazy.

  • Gewbur

    Posted Jan 25, 2006 12:28 pm PT

    They better be written-in in an interesting way. If they just throw them on any flat surface I'll get annoyed. It could start out okay but eventually they will cross the line. I used to watch TV guide channel for the guide. And I still do. I don't watch the infomercials and I don't buy things from them. I want a guide. They keep trying to do the full screen commercials and shows with the tiny, near transparent list of what's on and what will come on next. If they ever do switch to that format I will acutally use the tv guide in the newspaper. The station will be completely useless.

  • -Christhebull-

    Posted Jan 25, 2006 12:27 pm PT

    In-game advertising only really works if we don't notice it (too busy playing game).

  • h3ll10n

    Posted Jan 25, 2006 12:21 pm PT

    Report: I won't be buying any games containing in-game ads now, in 2008, or ever.

  • i_love_my_ds

    Posted Jan 25, 2006 12:21 pm PT

    if it keeps prices low and they arent out of place, then im all for it.

  • weeman_64

    Posted Jan 25, 2006 12:15 pm PT

    I say make the advertising relavent and I am all for it. As for the mention of EA and in game ads. Maybe you don't pay attention enough. All of their sports games and racing games have in game ads. You can say it is to add to the realism but those are real ads that companies have paid for. Also look at games by UbiSoft. Your Splinter Cell and Ghost Recon are full of ads. They include things from outfits to devices you use. For games like Elder Scrolls it is very easy to sneak in advertising. There is Bow and Sword stores mainly catalogs though. They could have an in game advertisement for one of their most popular swords, and the sword could also be buyable in game. You also see in alot of games by companies where they self-advertise their own games and so on, like in Burnout 3 and Burnout Revenge.

  • jnealg

    Posted Jan 25, 2006 12:13 pm PT

    well for those that fear the overall game quality loss, I dont think you are going to see any change. If a game sux because it has too many adds it will just be another poor game that folks wont buy. Developers will see this and look for ways to include the adds that is less intrusive. I dont mind in game adds. In fact a Munches Odessy game where you drink Mountain Dew to gain speed I would find quite funny. Just dont try to placate the masses by saying it will save gamers money. It wont.

  • BxMxS2004

    Posted Jan 25, 2006 12:09 pm PT

    Typical BS..........how am I going to be able to enjoy a game like Halflife 3 or FEAR 2 with billboards and posters for Verizon Wireless and McDonalds all over the place- it would be disgusting. Product placement has already robbed much of the movie industry of it's artistic value & dignity, so I guess games are next.

  • BoyarPunk

    Posted Jan 25, 2006 12:06 pm PT

    Nice!!!! Can't wait to see a toothpaste ad poster on the side of a German bunker while I'm playing Call of Duty IV.
    (rolls eyes)

  • LanceSummerhous

    Posted Jan 25, 2006 12:04 pm PT

    Screw in-game ads. I see enough ads when I watch TV, drive down the street, go to the movies, and use the Internet. I don't need ads in my games, too.

  • doobist

    Posted Jan 25, 2006 12:03 pm PT

    "I don't want to pay to be advertised to."
    - sfenty

    So I guess you don't watch TV, movies, read magazines, ride the bus, surf the internet, ect ect..

    Everything you pay for nowadays has advertising revenue attached to it. Sad, but true

  • Cz-100

    Posted Jan 25, 2006 12:03 pm PT

    When something is cool, people try to profit from it. This is just another case of video games mimicking the movie industry, and it will have the same results: Less quality (and I don 't mean graphics, I mean actual quality), more money grubbing, people like Uwe Boll, etc. etc.

  • SnowFarmer

    Posted Jan 25, 2006 12:02 pm PT

    As long as the ads are annoying and fit with the theme of the game, I won't mind it too much. I don't like the idea, but I'll live with it if it isn't offensive. But if I have to look at some companies logo on the HUD the whole game, I'm not going to buy it. Developers and publishers need to be careful with in game advertising. Lots of people will be put off by the inclusion of ads, since they feel they have already bought the game, it is like the idea of putting commercials in a DVD movie. Start doing stuff like that, don't be surprised when people stop buying your games.

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