14 DAY TRIAL // Electronic Arts has announced a massive deal regarding in-game advertising. Signed with Massive Inc., which is owned by Microsoft, it targets PC and Xbox 360 games that are in EA's portfolio. Popular EA Sports franchises like Madden NFL, NBA Live, NASCAR or NHL, together with Need for Speed and Burnout Paradise are targeted.
The game industry used to have a real simple business model. Get a developer to make a game, usually for a fixed sum of money. Get a publisher to pay that sum, market the game and then distribute it to the gamers. Count the money from sales, deduct the costs mentioned above and see whether you have a profit or not.
If you were a publisher that didn't make profitable games, you would be out of business. If the cost of the game at the retailer is too high, people wouldn't buy it. It all played about as a class of Economy 101. Well, things are not that simple anymore. And the end users, the gamers themselves, are starting to feel the changes.
We now have publishers with in-house studios that create games for them and we have game studios that refuse to rely on publishers and instead reach for digital distribution channels to get games to the players. And while the industry grows more diverse, we see the production prices of games grow sky-high, with triple A titles going towards 100-million-dollar production costs. As game prices can't go up for fear that gamers wouldn't buy them, the industry has looked for new ways to make money out of games.
Enter in-game advertising, the practice of introducing commercials to real-world products in the games we play. Most hardcore gamers have seen it as a moneymaking move designed to offer publishers more revenue, while subjecting gamers to a constant stream of advertising which subtracts from the game experience and limits the amount of fun had in games.
Heads of both EA and Massive have expressed joy at the recent signing. "EA strongly believes that dynamic in-game advertising is an important growth area for our business," says Kathy Vrabeck, president of the Casual Entertainment Label at EA, while Cory Van Arsdale, the CEO of Massive, declared: "Our latest agreement with EA expands advertisers' unprecedented access to EA's world-class franchises to reach young male gamers around the world."
As a gamer, I can't really express the same amount of joy as the two business heads quoted above. It feels like an intrusion to have ads in each and every game we play. And it would all be acceptable if the prices of next-gen games went down in a significant manner. But they don't and there's a certain sense that big game companies (and yes, I'm mainly thinking EA) are just thinking of new ways to get more money out of the same games.
While such a business model is a good idea when it comes to on-line-only games and even casual games, where players are paying little or nothing at all to play, it seems that such a move will be hugely contested by players that give important sums for their gaming needs, both in the form of hardware purchases and in the form of games purchases. Electronic Arts has made its move... now let's all wait for the backlash.