Wednesday, February 1, 2006

Report: In-Game Advertising Revenues Five Years Away

Game industry market research firm DFC Intelligence issued a report estimating the opportunities of games to capture a share of overall online advertising (see DFC's brief, Game Daily's commentary, Gamasutra's piece). Major points:

  • Online games are attracting an increasing amount of consumer time, but they attract a comparatively low rate of advertising spending.

  • Product placement in video games has been hyped for years, but the biggest growth in advertising has been with online games, and most specifically casual online games.

  • Search ads are not germane to games, so that source of growth has passed games by.

  • Games are uniquely unsuited for contextual ads as well. Text can be parsed by computers far easier than game content. At best the targeting is of a certain demographic, such as fans of football games. However, game content is attracting an increasingly diverse audience and therefore game advertising revenue is highly dependent on the growth in display ads.

  • It is important to remember that most game consumers still play games offline.

  • With a constantly connected system, this audience can be finally be reached by dynamic advertising that reaches the entire connected installed base. This is entirely different from the past where in-game advertising was limited to pre-launch product placement in individual game titles.

  • Truly significant revenue from in-game advertising is likely to be five years or more away, just because it will probably take that long to build the installed base and test business models.

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