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The business potential of in-game brand placement: the info and the economics.

Video games today have reached a critical threshold of resolution, interaction, and content, signaling the medium’s transition into maturity. The next terrain in game development lies at the nexus of entertainment and utility, as gaming becomes an international forum for advertising, education, technical training, communication, and, of course, continued play.

Nascent technologies and the media they enable are always used as entertainment first, then evolve over time for their potential as information appliances. Despite the economic success enjoyed by the gaming industry in the past few years, it is just now at the delicate point of asking: How can games be used to shape players’ worldviews and businesses’ bottom lines? What kinds of mental, emotional, social, or cultural shifts do games enable, or require? The mechanics of digital gaming – from overarching narrative to technical execution – are about managing player point-of-view within the environment of the game. But as video games map ever more closely to the built world, this point-of-view needs to be managed externally, as well. We must examine how gaming can be used to impact the world beyond the screen, both economically and intellectually.

A wide audience has emerged for today’s multimedia experience. Video game sales are now outstripping the box office by $13-15 billion in annual revenue, and novel interaction-paradigms like the Nintendo Wii and Second Life have expanded gaming beyond its traditional demographic, diverting eyeballs – and investors – from traditional media advertising. While today’s scattered attention spans have left users largely unfocused during television commercials, attention levels are high during video game play, and studies of in-game advertising indicate significantly greater player recall over both the short and long-term. This, combined with the continued loyalty of the big-spending “Magic Demographic” – males 18-34 – makes the gaming environment taste of ambrosia to advertisers and developers alike. This intense focus on in-game advertising is also quite pragmatic: producing video games is expensive, with development costs for a single game rising upwards of $10 million. While game publishers are wary of inundating their audience with ad-filled games – especially when users are paying $50 per title – six-figure relationships with advertisers can significantly defray back-end costs. Companies like EA, Activision, Ubisoft, and Vivendi Universal Games are striking co-promotional deals with advertisers that place logos, soft drinks, fast food, laptops, and even deodorant within a wide variety of games, not simply as background but as an integral part of play. In-game advertising is decidedly not about single or even multiple sequential brand impressions. Rather, it is about a continuum of exposure through high-fidelity interaction, which grows only more convincing with each improvement of the PC and console platform technology.

This integration of product narrative and media is an advertising practice long established in the cinematic milieux. Consumers’ brand perceptions have always been shaped by the emotional and narrative context in which they encounter a product, whether real or on screen. But in traditional media advertising, this encounter was one-directional only. Video games provide an opportunity for a pre-purchase, interactive product experience, giving users the chance to form behavioral associations with a specific product and company, before spending a dime. The networked nature of today’s games even enables in-game word-of-mouth marketing, driving promotions and product impressions further into a player’s consciousness.

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