At the Game Initiative's first annual Advertising in Games Forum, held April 14, 2005 in New York City, a number of key facts, figures and estimates were provided to the audience by leading industry experts at the Advertising In Games Forum. Highlights include:
- The Yankee Group forecasted advertising in games is expected to rise to $800 million in 2009 from nearly $120 million in 2004.
- $266 Million, or more than one-third of advertising in games in 2009, will come from "advergaming," when advertisers create a game around a product rather than place their brands within a well-known title, according to Yankee Group senior analyst Mike Goodman at the Advertising In Games Forum.
- Mitch Davis, chief executive of video game ad network Massive Inc., told the audience video game advertising would top $1 billion in the United States by 2010, and approach $2.5 billion worldwide.
- There are 100 million game capable cell phones are currently in the marketplace. 65% of the population owns a cell phone. And the turn over or replacement rate of cell phones is every 16 months, reported Anita Frazier, Entertainment Industry Analyst, NPD Group, at the Advertising In Games Forum. Every cell phone being sold on the market today is game capable. So within 16 months all cell phones in the marketplace should be game capable.
- The top selling 2004 game titles according to the NPD Group: 1 Grand Theft Auto San Andreas, 5.5 million sold since launch 2. Halo 2 on X box, 4.5 million units sold since launch 3. Madden NFL 2004 on PS 2, 3.5 million units sold since launch 4. ESPN NFL 2K5, 1.6 million units sold since launch 5. Need for Speed Underground 2, 1.7 million units since launch
- Top selling PC title of 2004: Sims 2 with 750,000 units sold., reported NPD Group at the Advertising In Games Forum
- Best selling game title of all time: Grand Theft Auto Vice City with 6.5 million units, followed very closely by Super Mario 64 on the N64 which is about 6.0 milllion units, according to Anita Frazier, Entertainment Industry Analyst, NPD Group, at the Advertising In Games Forum.
Ad Age reports chilling findings from consultancy firm Accenture which claims on demand and ad skipping will cost the television industry $27 billion over the next five years. Additionally, the company reports 70 percent of DVR users already skip ads and that DVR penetration will hit 40 percent by 2009. Combine this with Bob Garfield's recent manifesto on looming chaos in the advertising industry and the picture is far from rosy.
PVRblog via engadget reports TiVo is testing a program they eluded to earlier where banner-like ads appear on the screen as users fast forward through ads. Making matter worse, the banner ads are so big, the user can't really see when the ads have stopped and the programming has started again. Chock up another for corporate buffoonery here. engadget, being the geek blog it is, offers readers a link to the TiVo tweak that reprograms the buttons on the TiVo remote so the units jumps forward 30 seconds rather than fast forwarding, thereby avoiding both the ads and the new banner unit.
Nielsen is having a bit of a tiff lately with ad agencies over its provision of television ratings. While the majority of ad agency execs want commercials rated, not the shows they air within, Nielsen claims they have already offered those ratings to agencies. Agencies have countered saying those ratings, 60-second unit measurements, do not adequately serve what's really needed, the measurement of actual commercial ratings. The way the 60-second unit ratings are taken do not align exactly with when commercials actually air. That is the sticky point agencies have with this offer from Nielsen.
This new method of commercial measurement, if it sees the light of day, could foster some radically different methods of television commercialization. If it's commercials that are measured and not the containing programs, all of the promotion that goes into hyping a television show to viewers in order to achieve high ratings could now go towards hyping commercials to viewers instead. Imagine NBC, faced with radically lower ratings because of ad-skippage, bathroom breaks, etc. The network would have to insure a high level of commercial viewership to maintain its ad rates. Conceivably, NBC would have to do whatever it could to make viewers watch commercials.
In theory, NBC would have to offer incentives to viewers to watch commercials. These incentives could be monetary in nature or come in other forms. Aside from possible Nielsen ratings that would "count" commercial viewership, embedded within the commercials (or before or after a commercial break) would be some sort of code or proof mechanism for the viewer to redeem. This would be necessary, not to prove viewership (although it could serve as a form of comparison to Nielsen ratings) because Nielsen would provide that proof with its new commercial ratings. It would be needed simply to get viewers to watch so high commercial ratings would be achieved for the network, then reported back by Nielsen, then used by networks as a basis from which to set rates for advertisers.
This could dramatically alter the definition of a commercial. While consumers might be swayed financially into watching a commercial, after a time, if commercials remain as boring as they currently are, no amount of money will get consumers to watch when they can so easily skip commercials. Commercials will have to take on elements of what I think is one of the better forms of promotion, the movie/TV trailer. Trailers, whether for good programming or bad, always seem to create the sense that you absolutely positively have to watch the movie/show being promoted. Does any current commercial today come close to that? Yes, promoting content is very different than promoting and ad but we're talking theory here.
That's just one idea. There could be many additional means to make commercials a "must watch" activity. A series of commercials could take on the form of a soap opera or serial drama where viewers would have to watch from day to day/week to week to either follow the story line or to receive other "incentives" for financial redemption. In this sense, commercials become a form of the programming.
In essence, this new economic model would compel networks to pay (or compel in some other very powerful way) viewers to watch commercials so that they can continue to sustain their current ad supported business model. Extrapolating this further, the current model is flipped on its head. Advertisers become producers and the programming becomes the commercial.