Dynamic Video Game Ads Gain Support

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September 05, 2006 (7:38 PM EDT)

By Laurie Sullivan , TechWeb Technology News

Video games are about to become more interactive. In-game advertiser Double Fusion disclosed Tuesday it has signed a deal to integrate its technology into a video game development tool suite from Emergent Game Technologies.

Emergent's Gamebryo Element game engine and toolkit will now have drop-down menus that incorporate interactive in-game ad placements similar to the way developers might add color or texture to objects in games.

Integrating tools into menus in the Gamebryo Element game-engine lets developers easily make in-game ads clickable and interactive, said Jonathan Epstein, president and CEO of Double Fusion, San Francisco.

"Technologies on the market have in the past required developers to define events," Epstein said. "If the online video game requires a player to click on a billboard sending them outside the video game to gain a hint that advances them to the next level, in the past the developer would have needed to go back inside their tools and create a path in the game."

The easier the process to integrate ads, the more likely name brands like General Motors and Procter & Gamble will want to reach consumers through cars rushing down the highway, or rotating stadium advertisements and flashy billboards positioned next to highways, experts said.

"The impact of one game that can reach mass markets in an online environment where people worldwide can communicate and play together is significant because it will create new production and business models, and in-game advertising will play into that," said Geoffrey Selzer, CEO of Emergent, Calabasas, Calif.

BMO Capital Markets video game analyst Edward Williams said the technology shows promise and will likely gain traction when Microsoft, Sony and Nintendo have delivered "meaningful quantities" of their Internet-connected game consoles in late 2007.

"The investment of actually putting an ad into the game is insignificant, so the return on investment could be enormous for advertisers," Williams said. "The question really becomes is the enormous return a meaningful number and can it get into the billions as you pull ad dollars away from TV ads? My knee-jerk reaction is yes, but it will take time."

The move toward Internet-connected game consoles from Nintendo's Wii, Microsoft's Xbox 360, and Sony's PlayStation 3 also has given the advertising medium a boost. In-game ad revenue could reach $732.5 million by 2010, up from $56.5 million in 2005, according to Yankee Group.

Epstein said companies in the United States don't want to place ads in sorcery games, or those with high-levels of violence, drugs and cop-killing. Most look to advertise in games depicting real-world environments.

"In the U.S. market, the users wouldn't like it, the advertisers wouldn't want it, and the game companies wouldn't do it," he said. "But there's tremendous opportunity for games that involve roaming around New York City, driving a car on a race track, or playing a sport in a stadium, there are tremendous opportunities."

The two companies also said they would provide publishers and developers financial incentives to support and sell their in-game advertising space.