In-Game Advertising

People have ceased to talk about the advertising model as some sort of replacement for the paid-purchase model. This, far from being a sign of failure for in-game advertising, is a sign of growing maturity and good sense.

If you are ever cornered by a representative from a game advertising agency, you’re likely to be told two things. Firstly, the effectiveness of this medium, and secondly, the importance of recognizing when advertising is right for a game, and when it is not.

On the whole (though there are exceptions) publishers have been reasonably careful about plastering their game-worlds with ads. But the jarring effect of in-game ads has been exacerbated by the small number of clients currently willing to get involved. It’s like going to a small city and seeing the same ad over and over again.

Even so, more advertisers are switching onto games as advertising vehicles, and not just in the terribly obvious business of in-game billboards.

Publishers must be willing to listen to smart ideas about in-game product placement, while keeping their monetary expectations in check and always, always, being able to say no to the money, even when it falls straight to the bottom line. Gamers are tolerant, but only up to a point. After that, they are unforgiving

Micro-payments

Selling a basic game cheap – or free – and making money from extra sales is a very new model. Although it has worked successfully in Asia, it has yet to prove so righteous in the West, and publishers are rightly cautious.

There is no doubt that videogames lend themselves well to this way of doing business. Charging a customer according to his or her attachment to a game makes sense. If a player wants to play new tracks, or buy a special outfit, this ought to be made available commercially.

There are significant challenges. The first is to create a balance between what is subsidized in the initial offering and what is offered as a paid extra. Clearly, selling a game for $60 and then expecting significant additional revenues is a flawed strategy. Likewise releasing a free game with so little content that it fails to stick. Also, gamers are extremely wary of in-game sales that alter the balance of the game itself. It’s all very well selling a cool cape, but a cool cape that can make a character fly? Not so cool.

Micro-payments will increase their relevance in the P&L over the next five years, making it all the more essential or publishers to manage that process responsibly. The consumer will not tolerate a nickel and dime approach; only one that offers real value.

Multiple-Pricing Structures

Serial games, mini-games, casual games; whatever you want to call them; they all offer a variety of pricing challenges.

In the past, games have aspired to full pricing, and then been discounted as their popularity waned. Or they have been created purposely at a lower quality threshold in order to appeal to a certain lowbrow market of wannabe huntsmen or cardsharps.

Now, the opportunity exists to create artful, great games that are deliberately priced at what used to be dismissed as a ‘value’ or ‘budget’ level.

Smaller games allow developers to explore new gameplay ideas, new talent or new IP without massive risk. It allows them to create games that, perhaps, don’t quite have enough content to justify full-price.

Short games can represent great value especially when distributed as part of a bigger package, such as Orange Box, or distributed online.

Unfortunately, the marketing and distribution channels necessary to support great short-games are only just emerging. But the signs are good. Console manufacturers are easing their restrictions on downloadable game sizes. Online distributors of PC games are becoming more popular.

This allows for experimentation and, with any luck, lots of ideas coming to market at a variety of price-points. It points towards a business model that allows for multiple-failure, but rewards success grandly.