MATT HARTLEY
From Tuesday's Globe and Mail Last updated on Monday, Mar. 30, 2009 03:16PM EDT
Comfort and stability are the hallmarks of long-term, committed relationships, even in the video game world.
That wisdom is not lost on Massive Inc., the leading broker in the burgeoning industry of dynamic in-game advertising.
Tuesday, the Microsoft Corp. subsidiary will announce it has brokered a landmark multiyear deal with Electronics Arts Inc., the world's largest video game producer, to sell rotating ad space in EA's online games. The move not only provides Massive's network with long-term stability, but legitimizes the in-game advertising industry in the eyes of the marketing world.
“This is a great deal for us and a great deal for the industry,” said Massive chief executive officer Cory Van Arsdale.
“It gives advertisers a lot of comfort that the size, scope and importance of the Massive network will be there over the next couple of years, and that they can count on the EA content being on the network.”
Massive's technology allows marketers to stream current and constantly updated ads directly into video games played online, either on the Xbox 360 console or a PC. That means that while playing a hockey game online, the banners on the boards around the rink could display a Ford Motor Co. ad in the first period and a Rogers Communications Inc. graphic in the second period.
Game developers effectively build blank spots into their titles so that Massive can stream ads into those spaces over the Internet. The company also works with marketers to design ads that resonate with gamers inside the virtual worlds of video games.
While the market for in-game console advertising was estimated to be worth only about $12-million (U.S.) in North America in 2007, within three years that number is expected to reach nearly $650-million as more gamers go online, said IDC video game market analyst Billy Pidgeon.
“You're going to see a huge growth rate in console advertising because it's growing from nothing,” he said. “It's more nascent, but it will be important.”
The new deal extends the existing agreement between the two companies until June, 2010, and expands the number of EA's games that are live on the Massive servers. EA produces some of the world's most popular video game franchises, including Madden NFL Football, the Need for Speed racing series and NHL hockey.
Knowing that titles like Madden, a new version of which is produced every year, will be available for years to come allows marketers to include in-game advertising while mapping out their annual budgets and helps to build the mainstream acceptance of the medium, Mr. Van Arsdale said.
“As an advertiser, you can't buy for the long term if you don't think the medium is going to be there,” he said.
Already more than 200 companies, including Ford and Rogers, advertise on Massive's network, which includes about 65 game titles.
For EA – which is embroiled in a hostile takeover bid for rival Take-Two Interactive Technologies Inc. – the deal is another step in the company's quest to diversify its revenue streams beyond game sales, said senior director for in-game advertising, Shelby Cox.
“We have been making some pretty heavy forecasts of where we think digital revenue will be for us in comparison to our overall businesses,” she said. “This is one piece of many initiatives that are happening inside the company, where we are looking to find new revenue streams.”
In addition to in-game advertising, EA also generates revenue from subscriptions for online games as well as static ads – which are built into the games and don't change even when the user is playing online – as well as other monetization models.
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