Electronic Arts' (ERTS) slogan "It's in the game" has a whole new meaning. For the first time, the world's No. 1 independent game maker is bringing "dynamic" advertising—vs. the static billboards that currently appear—to a Web-connected console near you.
Hoping to boost revenues at a time when it faces a difficult transition to next-generation consoles such as Nintendo's Wii, the Xbox 360, and PlayStation 3, EA on Aug. 31 announced two separate deals to put ads in marquee titles like Need for Speed Carbon and Battlefield 2142.
RINGSIDE COMMERCE.The deals with Microsoft (MSFT) subsidiary Massive Inc. and IGA Worldwide, which both use the Web to place ads in games, could bring in millions of advertising dollars from food and beverage companies, carmakers, and other marketers eager to reach the coveted 18-to-34 male demographic. These guys typically spend more time online and playing games than watching TV or reading newspapers.
Game publishers have sold advertising and featured product placement in their games for years, of course (see BusinessWeek.com, 1/25/06, "Is That a Video Game—or an Ad?"). And EA has been at the forefront of this trend. In 2002, for example, the Redwood City (Calif.) company signed deals with McDonald's (MCD) and Intel (INTC) to place its products in The Sims Online. And prominent in EA's recent Fight Night 2 game is a static logo for Under Armour (UARM) clothing in the fight ring.
Now game companies are turning to outside companies to deliver in-game versions of the richer ads you see in the real world—such as the rotating advertising at a stadium or on billboards as you whip down the highway. More to the point, perhaps, the tieup with Massive and IGA also allows EA to continually refresh ads, crucial for new product launches.
REVENUE RISING.Will gamers take this lying down? That's a crucial question. EA execs have been slow to broaden in-game advertising in case customers feel bombarded with marketing messages. Apparently now the execs have gotten over those qualms. Chip Lange, EA's vice-president for online commerce, says the company will rapidly expand such advertising. "It's an essential component to create the fiction of being there," Lange said in a statement.
It's also a numbers game. Researcher DFC Intelligence figures in-game advertising revenue will grow to $400 million by 2009, from $80 million last year.
So, hey gamers, after blowing away that baddie or getting the checkered flag, you may find yourself stopping for a burger and a Coke.