Ads: Paving the way for Nextgen Game Development Cost Increases?

[TheChefO]

In trying to think of a way to offset rising dev costs which are going to be under further pressure by nextgen demands, I thought of in-game advertising.

Before anyone points it out, yes there was a thread on the subject years ago, but times change, opinions change, and costs change.

Most opinions in the thread were that load-screen ads would be annoying and would make load times even worse.

But here we are on the advent of nextgen, and the prospects of slower load times already exist with BRD speeds being what they are and trying to fill a large pool of ram at such a speed will take time.

We've also seen the rise of "free to play" games with alternative means to fund the game either with in game ads at certain points, or with microtransactions.

The full list of option to increase funding as an alternate to increasing retail game costs as far as I can think of would be:

• ads during load
• ads during online matchup
• microtransactions
• “brought to you by”
• “season pass”
• Unlimited access monthly bill (cableTV model)

_______________________________

Online Prematch Ads

One especially effective method I can see from the list would be ads/commercials on online match load screens. Publishers have been mulling over ways to monetize the hours spent in online gaming. Most have resorted to map packs at a regular interval which bring the community onto an exclusive platform that original buyers can no longer partake in without buying said map packs.

For relatively successful franchises, such a method works like a charm.

Others, this method just cuts down on the number of users which go online as fewer matches can be found as the base of gamers with x game is divided among those with or without the map packs.

*I'm not implying map packs are a bad thing, just that as a means to monetize the online experience, it can have a negative effect by pushing the price of these map packs beyond a reasonable level of worth for the content provided.*

Alternatively, Publishers could sell ad space to the platform holder with specific info (game type, intended audience) and the platform holder would then sell this ad space to ad agencies or ad buyers directly with demographic info on top of the info provided by the publisher (general location, time slot, intended audience, game type, and general age).

All of the above significantly outclasses TV advertising deals and is much more enticing.

How?

No DVR.

Gamers in online matches can't skip past commercials, they are glued to the tv as they don't want to miss the start of the match (much like old tv shows used to be in prime time... and a few current ones (superbowl))

Advertisers would have a much better idea about who the ads are reaching and (surprise) the advertisers are reaching with a medium that has the ability to interact (ie: buy) immediately.

The audience of online players is also increasing rapidly.

Last numbers I saw were roughly half of all xb360's were online, or roughly 35million.

http://www.joystiq.com/2011/08/18/xbox-live-now-topping-35-million-users/

That's a decent cable channel.

2 NBC Sunday Night Football 9,426,000
3 SUNDAY NIGHT NFL PRE-KICK 6,976,000
4 VICTORIA'S SECRET FASHION(S) 5,911,000
5 FOOTBALL NT AMERICA PT 3 5,252,000
6 RUDOLPH RED-NOSE REINDEER(S) 5,164,000
7 Simpsons 5,121,000
8 X-FACTOR-WED 4,719,000
9 New Girl 4,611,000
10 Family Guy 4,592,000

Sony/MS should be pitching this and we as gamers should be getting something in return.

Free map packs
Free online play (no more gold costs)
In fact, we may even see free to play online portions of games due to the expected ad revenue (how long does a typical online match last? 15m right? How long does a typical online gaming session last? ... couple hours? Comparable to an NFL game ... NFL makes roughly 3billion in ad revenue per year ... and this is only from September - January)

Best thing is, the "show" in this case doesn't have a limited few month season with a limited number of episodes.

And the "TV network" ... is all encompassing. Especially now that PSN and XBL will be dipping into casual markets with attractive pricepoints.


What do you all think?

 

[ERP]

I think the cable model is a clear winner FWIW in terms of revenue.
But it's a drastic transition for the industry with a lot of moving parts.
If you look at attach rates over the lifetime of a platform and look at what people would pay monthly to be able to play any game of the system anytime, I think the revenue difference is potentially extreme.

Free to play games are pretty much the last thing smart game players want, they lead to design optimized to increase revenue, and only a part of that equation is player retention. It's currently a profitable model, but usually because of the relatively low initial investments.

Micro-transactions are here and very few of them are actually profitable.

I think advertising is inevitable. But I don't think it will be a major revenue driver for some time.

 

[TheChefO]

I think advertising is inevitable. But I don't think it will be a major revenue driver for some time.

Thanks for your input ERP.

On the above, why do you think it would take a long time to see revenue from ads?

The advertising could be much more effective than passive TV adverts and is reaching a Large audience which from there can be broken down to fairly sharp demographics based on the interactive media.

Note the audience also has no DVR to skip commercials.

Nevermind factoring in potential interaction and/or viewing response of the adverts via Kinect.

If it isn't a large revenue driver, this is clearly on MS/Sony not selling this advertising space effectively.

 

[dragonelite]

Ads during loading is something i'm willing. Maybe on ingame billboards if it isn't to much in your face.

 

[Prophecy2k]

I'm actually very happy with product placement in the actual gameworlds, e.g. ipod in MGS4 and billboard ads in a game like GTA.

I think stuff like that improves the believability of games that have a realistic setting.

I just wouldn't like to see Characters like lighting in FFXIII pulling out her orange mobile phone to call her mum before fighting a boss in a cutscene. Stuff like that would actually make me eject the game and sell it.

 

[Shifty Geezer]

Well, there hasn't been much progress made in this department this gen despite all the talk about it some years ago. MS have even sold their advertising arm. Adverts seem constrained to dashboards and stores. No-one appears to be feeding dynamic, adaptive product-placement or ads into games on a mammoth scale.

Answering why they aren't doing that massively now will be important in determining why things may change next gen.

 

[TheChefO]

adaptive product-placement or ads into games on a mammoth scale...

This would require games being made with such an arrangement in mind.

Adaptive/dynamic product placement ads would be interesting as this is the only medium which would allow such a thing, but it would require work on devs part and load times at some point when the dynamic/adaptive ads would be streamed in.

Preparing nextgen games for ads would be a smart move, but it would have to be a platform standard for such practices to be worthwhile, I'd think.

 

[Shifty Geezer]

This would require games being made with such an arrangement in mind.

Yeah, and yet they didn't bother to create such games over the past five years, which is odd. Wikipedia has an entry on in-game advertising that says some ads were used for Obama's campaign, so it's clearly been tried. EA said revenue from in-game ads wasn't good. MS could have set up loading ads and the like from the beginning of 360 given their previous network service they were building on and a seemingly obvious intention given their acquisition of aQuantative in 2007. It's a good idea on paper but everyone shying away from it.

Basically, what's changed between now and the last thread? We have concrete numbers for how many people go online, but I doubt anyone would have expected online consoles to be such a small portion as to be irrelevant. I don't understand why IGA hasn't been steadily growing the past five years.

 

[TheChefO]

Basically, what's changed between now and the last thread?

2006

Xbox Live has surpassed 4 million members worldwide

http://www.gamespot.com/news/6160081.html

2011

35 million Xbox Live users worldwide

http://www.newjerseynewsroom.com/sc...e-moves-closer-to-bill-gates-vision-for-tv-pc

PSN: Over 50 million users signed-up since 2006

http://www.vg247.com/2010/06/15/psn-over-50-million-users-signed-up-since-2006/

The surge of users online is a lot more impressions to sell advertising to.

More impressions = more potential money

More potential money = more incentive to move to action

The other thing that has changed is that free-gaming has been proven as a commercially viable alternative. This is either ad supported, or DLC/microtransaction supported.

 

[TheChefO]

Yeah, and yet they didn't bother to create such games over the past five years, which is odd...

In order for this to make financial sense for devs/pubs, the platform (Sony/MS) would have to support it. Otherwise it's a one to one relationship with the game and advertisers.

It would have to be a REALLY popular game to be worth it (COD would be a candidate).

Or just have it as part of the standard for the platform (xb720/ps4) then sell the ad space to the platform holder (Sony/MS) and they can then sell it directly to the ad buyers.

 

[Shifty Geezer]

But why not incorporate it into the platform in PSN or Live! a year or two ago? Why wait until next-gen? There's nothing that can be done next-gen that couldn't have been done this, or even introduced now. Even in 2006, 4 million XB gamers was a nice, easily targetable niche for MS to provide a direct advertising option - it's better than a lot of radio stations for example. Why didn't MS provide a hook for adverts during online game loads for Gears and Halo and FIFA? There's nothing in the infrastructure or technology now that means all our prior discussion had to wait until next-gen. As such I'm confused as to why we haven't seen developments in advertising over these years.

 

[TheChefO]

As such I'm confused as to why we haven't seen developments in advertising over these years.

It's a good question.

But necessity is the mother of invention.

With increased costs associated with nextgen (there are ways around increases, but it would take a concerted effort to come to fruition) there will have to be ways to offset these costs.

Ads, in one form or another, can provide an option to offset these costs without attempting to raise the costs at retail.

Either product placement (as in your example), at load screens, at online matchup screens, or in other ways I haven't thought of. A scroll across the bottom/top or pop-in would seem to be too disruptive so I wouldn't expect this. Not sure of any other way which could be integrated aside from the main/lead character turning toward the camera and giving you a sales pitch.


The most logical ad placement IMO would seem to be between online matchups as the break in action is natural, and the audience is still captive waiting for the next round.

 

[Acert93]

I think the cable model is a clear winner FWIW in terms of revenue.

So we may end up with an Activision or EA "service account" where we pay, say $20/mo and get access to the entire Activision Library ... of course $30/mo gets you all micrortansaction products too

 

[TheChefO]

So we may end up with an Activision or EA "service account" where we pay, say $20/mo and get access to the entire Activision Library ... of course $30/mo gets you all micrortansaction products too

Revenue split for the Cable model would be difficult.

I don't anticipate a per publisher model ... that seems destined for failure and it would further deter users from trying anything other than COD/Madden.

It would have to be a flat PSN/XBL monthly fee which is divided up among pubs/devs, but again, this division would be rather tricky.

Based on time? RPG's like Oblivion and multiplayers like COD would collect all the revenue while rich singleplayer experiences with weak multiplayer would get strangled for funding.

Based on users-in-game/timeslot may be more equitable as it gauges interest in a given game around launch, but still difficult.

Maybe break each game up into tenths and charge the same amount per game tenth.

If users only play the first level and never go further, dev/pub only gets 1/10th the potential revenue they would get otherwise. If users complete the game (regardless how long it takes or how many "levels") then the pub/dev gets the full commission.

Likely outcome would be easier/shorter games though.

I dunno.

I think Advert. supported would be easier.

BTW, BBuster unlimited rentals for $8/mo is awesome and would likely prevent me from paying MS anywhere near a cable bill for such a plan .

 

[snarfbot]

i personally wouldnt pay money for a game with ads in it.

maybe if the game was free with ads, or you could pay to make the ads go away then i might consider it, if the game was actually fun.

but in my experience, games that arent good enough to sell on their own are the ones that are released free to play + microtransactions anyway, in which case theyre simply not worth wasting time on.

kinda like cable tv, you pay good money to get the service, but then its full of ads, f-that noise. i cancelled my tv about 6 months ago, never looked back.

 

[Shifty Geezer]

i personally wouldnt pay money for a game with ads in it.

There are lots of types of ads. There are the billboards in FIFA or Madden, which replicate real life so don't look out of place. There's product placement, like the Lucozade health-potions of Super Frog. There can be ads while loading which don't affect the game at all - COD would still be COD even with a variety of ads appearing on the loading screens between rounds.

A subscription model isn't advertising revenue, so it's that a topic of conversation then the title needs to be changed. We already have OnLive doing that. That's something that was only possible with better internet infrastructure, so I can understand subscription models being a new option. In game ads have been possible for two decades. I don't agree with ThechefO that necessity of next-gen will force the issue. Enough developers have gone under this gen to show that more revenue was already needed, but they still didn't turn to advertising. Perhaps the fear is that forced ads like loading-screens are too obtrusive and will be a big detractor. If one console has forced ads and the other doesn't, that'll be one reason to buy the ad-free console and not get pestered. It's worth noting people complain of the ads in the dashboard and XMB's news feed.

 

[Prophecy2k]

Perhaps the fear is that forced ads like loading-screens are too obtrusive and will be a big detractor. If one console has forced ads and the other doesn't, that'll be one reason to buy the ad-free console and not get pestered. It's worth noting people complain of the ads in the dashboard and XMB's news feed.

I think that the best (and only way that makes sense) to implement ads in videogames is to do it via billboards etc and product placement. I'd argue that it shouldn't even be done on a platform level at all, rather publishers should be the ones striking deals with advertising companies to get their products into their games.

A tacky Motorolla ad flashing up every time you're waiting for a new match in COD online would put many players off, however a coke machine present in the background of an office building during a cutscene in the maingame, wouldn't look out of place at all and would enhance the believeability of the game. A flashing bilboard with the logos of real companies in Crysis 2 would also look realistic and make sense within the game world.

Companies pay big bucks to get their products in movies so that big name actors can be seen using their products. I see no reason why games don't do the same. Especially big selling games like COD.

That way, however many consoles that are online would be irrelevant, as ad companies would be able to take full advantage of the entire breadth of consumers that actually buy the games. So 20+ million COD players will see a coke machine in the campaign or MP maps, over the maybe 8-10 milllion that would be frustrated seeing ad screens flashing between their online matches.

 

[snarfbot]

i dunno i can see the billboards argument for a sports game that would be sensible, but if i have to watch a shampoo commercial or something while the game is supposedly loading i will literally give up playing new games.

it pulls you out of the experience, and it just gives publishers an excuse to make loading screens more frequent and longer. things that i was hoping would go away in the future, with streaming assets and such.

there are probably slick ways to insert advertising into games, but that might actually be worse. imagine buying the next gen bethsoft rpg, and all the merchants sold nabisco brand products? maybe the new beyonce songs would be playing in the tavern or something. hyperbole of course, but you get the idea.

i just think games and really all media in general should be about its own content, not just serving as another vehicle to deliver advertising to people, especially considering that you already purchased it, with money. imagine buying a dvd, that had commercials in it, or a hardcover book full of car ads, and axe body spray ads. its the same principle and it would be horrible.

 

[Shifty Geezer]

I think that the best (and only way that makes sense) to implement ads in videogames is to do it via billboards etc and product placement. I'd argue that it shouldn't even be done on a platform level at all, rather publishers should be the ones striking deals with advertising companies to get their products into their games.

That only works in games that can fit in product placement. It wouldn't work for most games, like Skyrim, dark souls...anything sci-fi or fantasy or otherworld.

Well, all this was discussed before. Hence my reaction to this thread - there's no point IMO in discussing what people would or would not like to see, or what can and can't be done, regards advertising as that discussion has been had. IMO the debate shifts to what'll change for next-gen and why when in-game ads aren't being supported in a big way this gen despite the fact it'd be a great revenue stream and is technically possible. These last two posts are my current guess - people don't want ads in the games they've already paid for, just as we all hate adverts on the DVDs/BRDs we've bought, and we all skip past the TV ads on our digiboxes, and the publishers and platform holders are sensitive to that. Games are currently 'clean' and changing that may be something companies don't want to do just for fear of reaction. If COD doesn't have a "Mountain Dew" backdrop in its loading screens when it can get away with it more than any other game, I can't see anyone else giving it a go.

 

[Shifty Geezer]

New Xbox 360 dashboard "an advertiser's dream"

http://www.eurogamer.net/articles/2011-12-09-new-xbox-360-dashboard-an-advertisers-dream

"'Videos' is now before 'games'. For better or worse, the new Metro layout is an advertiser's dream. Every single page main page now has an advertisement on it (you can't scroll away any more), there are dozens of secret little places to feature things, and it's easy to get lost. "

MS are certainly wanting to generate ad revenue even if that doesn't support the publishers.