Consumers are increasingly savvy in their media habits. Today, they are much more empowered to make decisions about how they are going to spend their time, instead of just sitting there, forced to watch a 30-second commercial. So the efficacy of traditional advertising is dwindling, and advertisers have to figure out how to communicate and build relationships with their customers in environments where the customers want to be. Gaming is booming among many important demographics that advertisers are trying to reach. If you look at how young men, teenagers, and middle-aged women are spending their time, it's in-creasingly with games and less so with television. In fact, the Neilson ratings in the fall of 2003 showed a steep decline in males aged 18 to 34 watching prime-time TV, and the number one culprit, ahead of DVR and DVD playing, was video games.
It's understood among marketers that games and the Web are taking up an increasingly large portion of consumers' media and entertainment habits. Yet, it's not the easiest medium through which to reach people. A typical retail video game can take years to make, and early in the development cycle, it becomes fairly rigid in terms of what can be done for an advertiser.
Companies like Nike, Pepsi, Toyota, Chrysler, and Coca-Cola have taken advantage of this ability to access tough-to-reach demographics in ways that don't just get them for 30 seconds of viewing, but can actually get them involved with the brand and immerse them for hours per execution.
These games enable marketers to build a community and experience around their products or brands without making people feel marketed to. You can create a game that's incredibly enjoyable and not just a show for branding. If the production is done right on any kind of media, the advertising can be really entertaining and engaging. Video games happen to be an ideal platform for that.
If you can custom-publish a game that can be produced relatively quickly to meet up with an advertiser's product cycles, then you can tie into much bigger campaign themes, events, and promotions, and then deliver them on-line. With a high-quality gaming experience that has the right gameplay and viral aspects to it, you can reach a huge audience immediately.
The games are typically designed for on-line delivery, but they can be put on a CD-ROM and distributed physically. That way, an advertiser can hand out disks by the millions at sporting events. The game is on the disk, but then it actually hooks in right to the Web site where all the on-line char-acteristics are as well. Many of the games can be played on-line or downloaded to the user's machine.
The entire process typically takes anywhere from four to six months to produce and release a game tied to a larger advertising campaign. It's best to work in tandem with the agency responsible for the TV creative and the print creative, to ensure that they all sync up nicely and are tied to events and bigger themes. Then it's a matter of going into a typical video game cycle, but compressed.
Advertising in the US is a $260 billion industry overall on an annual basis. The Internet is expected to receive about $6.5 billion of that in 2004. That's a lot of money essentially going to banners, buttons, and Macromedia Flash content. The video game market in the US is roughly $7 billion. Custom-published games are at the intersection of Internet and gaming. Time spent on video games is huge, and dollars of advertising against that time span is miniscule. So it only has one direction to go: dramatically up.
Broadband adoption is leading to a whole new set of economics for media distribution. Games are the one media type that people have not been able to figure out how to distribute beyond going retail and buying a box. Now it's possible to have a retail-quality content experience delivered efficiently over narrowband and fantastically over broadband.
I don't think there are any official projections on custom-published games; it's not something being tracked closely. My guess is that because of how consumers spend their time, you're going to see a lot more product placement in retail games, which is starting to occur. From a retail and advertising perspective, it's going to be huge. You're going to see a big explosion of custom-published games. Games are not a lion's share of any company's advertising budgetUnot yet anyway. Ultimately they will be, but that's a few years out.