Video Game Advertising Speculation

Posted: May 10, 2006

I recently setup my xBox 360 to connect to the live service so I can see how Microsoft is using the xBox to combine users to MSN Spaces and bring the community together via both the living room (via xBox) and online (via computer) and how it will develop and act based upon services, advertising, and the total gaming experience.

I must admit, I was amazed at how easy the connection service was. I used wireless hardware to connect the xBox to my internet connection and it was a very smooth process. (After going through half a dozen routers, changing the WEP services, etc to connect TiVo via wireless, I was expecting a fight - but I didn’t get one). Immediately, it wanted to connect via a passport, which I supplied an extra one I have for certain purposes, and the connection process was amazing smooth. It pulled in my Microsoft Passport data and there was very little for me todo. Within 5 minutes I had connected a wireless router, connected to the web, connected to my Passport, and could access xBox extras and services. (Why isn’t the web this smooth?).

As I’m seeing how easy it is to download new content, upgrade games, receive automatic downloads, the advertising aspect of this really hit me. It’s very feasible to code objects, billboards, etc in to games and leave them as ‘generic’ or ‘default’ messages for those not connected to the web.

For those connected, it then becomes possible to skin these objects based upon the current advertiser base. Take for instance a bottle (Splinter Cell comes to mind as a Coke can was an integral part of the game for causing distractions). The bottle could be ‘bought’ by an ad company as the game’s generic fallback icon. However, when one is connected to the web, it’s suddenly very feasible that the bottle could be ’skinned’ based upon the current advertiser landscape, one’s demographic (MS has your passport data), one’s geography (Based upon IP address), and possibly search history or other web based components.

The same goes for in-game billboards. Imagine launching a new product and instead of buying 10k banner ads, one buys 10k ‘in-game’ billboards. The purpose of these is branding, association with a product, name recognition, etc - not direct ROI measurable sales. This opens up many possibilities to subsidize game manufacturers, change console interactions, give away certain games purely for the ad distribution, etc.

It is worth nothing that Microsoft announced at SAS they are acquiring Massive. Massive is one of the leaders in putting ads in video games and has several well established relationships with game publishers already. It will be interesting to see how they incorporate Massive in the the xBox live environment, their own published titles, and if they give their video game makers any special bonuses for incorporating Massive into video games.

Personalization is coming in search, with web based consoles, user subscriptions, billing information, gender information, location information, gaming preference, etc - serving ads based on some very interesting demographic and geographic targeting becomes quite viable, and even connected so a message can be delivered via the web and gaming console in a complimentary way.

This really hasn’t been talked about mainstream, it’s considered niche advertising, but when one compares the amount of time the average person spends on the web (not including playing games) vs how much time they spend looking at games (consoles, computer, and web), there is a huge opportunity that’s not being fully exploited, and it’s coming.

The question is, will you notice it?

Good advertising is part of the landscape, it blends in, it delivers a message, the user isn’t distracted.

Bad advertising can ruin a consoles reputation.

I would guess that in-game ads start off very conservative and very blended into the game to preserve the game’s integrity (remember, someone did shell out $49 for that video game), however, the branding and deliverability options through gaming integration will become quite amazing.

Something to keep an eye on, do you notice the video game ads?

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