In-game advertising grows, social gaming soars

In-game advertising grows, social gaming soars

A third of UK developers are now incorporating advertising into their video games, with the social gaming market alone expected to grow to $826 million in value this year.

According to a report by Tiga, a trade association for games developers, although advertising in video games has not proved popular with users in the past, it is on the up as organisations look for new ways to boost revenues. As a result, almost half of those producers that do not currently support in-game advertising plan to do so in future.

Phil Elliott, publisher of GamesIndustry.biz, recently suggested that advertising through videogames is a good way of reaching a tricky demographic, though he wanred that the only way in which marketing of this type will work is for it to make sense within the content of the game.

While the replication of real-world environments such as billboard hoardings around football pitches do not cause antagonism, dynamic adverts that monitor players’ habits before generating targeted adverts are widely disliked.

Piers Harding-Rolls, an analyst with Screen Digest, told the BBC: "Adverts are a bonus for the games industry, but are very much a secondary business model. It’s nicely incremental and we expect it to grow, but it’s not that significant at present."

The researcher pointed out that social gaming, on the other hand, had experienced steep revenue growth over the last few years. Although the sector was worth only $76 million worldwide in 2008, it jumped in value to $639 million last year and is predicted to climb a further 29% to $826 million this year.

Although growth rates will slow to about 24% during 2011, they are expected to remain in the double digit range until 2014 as the market continues to mature. Revenues are generated by both micro-transactions made by consumers as well as advertising and special offers, although a key driver behind continued growth will be in converting free casual gamers into paying customers. A sizeable minority also purchase virtual goods and other in-game content.

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