Category Archives: In-Game Advertising

The Positives of Tough Times: Revenue Innovation at it's Finest

  • In good times, advertising dollars could be the primary revenue stream of many companies, especially in the digital media world.
  • In the tough times, advertising dollars are a revenue stream of many companies, but companies must diversify their revenues beyond ad dollars.

In these tough times, I’m excited about companies who can create new revenue streams or fine tune their existing streams.

In the video game world, game developers and publishers were selling their product on store shelves and their margins were falling fast.  One of the main reasons margins were falling is because game development costs were rising due to the next gen consoles (PS3, XBox 360, Wii).  We created IGA Worldwide to help game developers/publishers recognize new revenue sources (ad dollars).  Other people created virtual goods platforms and in-game messaging systems.  Entrepreneurship at it’s finest.

Like I said earlier, I’m excited about the new potential revenue sources that are/will be created for the digital media world.

Resume Genome Project

I was digging around Path101‘s website this evening to see what Charlie and the team were up to and dug deep into the Resume Genome Project.

What is this?

We’ve been crawling the web gathering up resumes and industry information. What you see here is our first take at analyzing and visualizing it.

We hope you’ll explore industries, learning what they are about, how to get into them, what a typical career is like, and what people go on to leaving them.

A lot more information about the Resume Genome Project.  The RGP is a big reason on why I chose to invest in Path101, it’s much needed in the industry and don’t know many other smart people conquering this area.  Aggregating data or content is one thing, but drawing parallels between them is another.

What do people actually wind up doing with my background?  Where do people like me work, and where can they work in the future?

Well, all that information is actually out there–its in our collective resumes.  The big job boards have it in their vast resume databases, but they were never parsed and structured in a way to be exposed, analyzed, and navigated in aggregate to yield insights.  They are just being sold to recruiters in a firehose.

As it turns out with most walled garden approaches, today’s web presents a viable, openly accessible alternative.  Millions of resumes are actually available in public out on the web in various different types of homepages and profiles.  It’s no surprise either.  More and more people are constructing web presences for themselves in an effort to get found, so its natural that they would include a resume.

We’re downloading, parsing, and doing a lot of structure and cleanup work to make this data not only presentable and navigable, but interactive.

IGA Worldwide Announcement: Sony PS3 & Electronic Arts

IGA WorldwideI may not be there day to day anymore, but I’m there in spirit. My friends and colleagues over at IGA Worldwide announced that they will be serving dynamic in-game ads into Sony PS3 titles.  And additionally, IGA has now signed exclusively with EA Sports franchises Madden NFL, NBA Live, NASCAR racing and NHL hockey. IGA will also have access to EA’s popular racing franchises Need for Speed and Burnout.

I’ve spoken quite a bit about how game publishers have to find alternative revenue sources and in-game ads is certainly a way to help generate additional revenue, make certain games more realistic, and overall increase the favorability of games.

I’m excited for what’s to come…

Expectation Economy

Reinier Evers, the guru over at TrendWatching.com is at it again.  Each month, his team releases a new trend report and this month it happens to be about the expectation economy.

 ”The EXPECTATION ECONOMY is an economy inhabited by experienced, well-informed consumers from Canada to South Korea who have a long list of high expectations that they apply to each and every good, service and experience on offer.

Their expectations are based on years of self-training in hyperconsumption, and on the biblical flood of new-style, readily available information sources, curators and BS filters. Which all help them track down and expect not just basic standards of quality, but the ‘best of the best’.”

 

Welcome to the future of consumption.  We are consuming at a rapid rate, and with that, we have formed many different opinions and set high expectations.  Reinier calls this, hyperconsumption.

 

Because a lot of our experiences are now charted digitally, we can blame the following databases of knowledge:

One last area that I’ll comment upon before you go check out the article is of competition.  This is something that I’ve been mentioning to companies I’m advising and to friends…. competition is everywhere.

Equals Graphic

When consumers are making a purchase decision, they are weighing not just the direct competitors to your product, but other areas that they could potentially go spend spend their money.  Do I go buy an iPhone or a pair of Onasuka Tigers?  Do I place advertising in an in-game advertisement or on Viddler?   We are competing with the world and it’s products/services since we’re now on a global platform.  Think long and hard about this.

 

I have an extra $100 – where do I go and spend it?  The world is my oyster…

 

With that, go and check out the latest Trendwatching briefing….

Changing Video Games Forever

My friend and colleague Morty sent me an email this morning with a link to a NY Times piece on video games.   The article talks about Electronic Arts (EA) and their IP around the Battlefield franchise.

“I’ve always envied the movie industry when they put a film out in the cinema, then they go to retail with a different business model and then to pay television and then free TV,” he said. “They have the same content reaching different audiences with different models, and we could never figure out a way to do that. Now with higher broadband penetration, we can use the technology to reach a broader audience.”

This is a step in the right direction for EA because they recognize they have to make a few moves to dethrone Activision, especially after they merged with Blizzard (World of Warcraft, etc).  I’ve spoken a lot about in-game ads, virtual item sales, subscriptions, and other incremental ways to generate revenue and the game publishers who are going to win in the future are the ones who are able to successfully transition their business model.

A few players who are going to help the game publishers benefit from this change in traditional business model are PlaySpan, LiveGamer, GameWager, and IGA Worldwide.  With broadband penetration, the world is the oyster for new opportunities to monetize games.

In Zurich: Recap of Speech and Pictures

Darren Herman SpeechI took an 8 hour flight from JFK to Zurich, Switzerland to participate in a conference at the GDI Institute on digital media and my portion:  the role of video games in culture and business.  While I have history in the in-game advertising industry, I didn’t focus the presentation on this.  I tried to talk about the macro-trends in the video game industry, some of which I posted in early October on this blog.

I spoke solely on in-game advertising at the GDI Institute in 2005 and the crowd really got into it.  Lots of great questions and insights that were shared amongst the few hundred in attendance.  As I noted above, maybe 10% of the presentation this time around talked about in-game advertising but the real time was spent with trends.  In-game advertising is part of a larger trend, which is finding ways to monetize games through the use of everpresent connectivity.  With broadband connectivity being harnessed by consoles, a new ecosystem of monetization opens up (skill based wagering, in-game advertising, virtual goods, subscriptions, RMT, etc).

One of the othe rmain topics I spoke about was about video game culture.  Look at what Guitar Hero and Rockstar are doing for fans.  The Nintendo Wii as well.  Toyota’s commercial utilizing World of Warcraft like content.  Games are finally being socially accepted which is opening up a whole creative market.

We had a fantastic discussion about this last night (as I was trying not to fall asleep due to timezone differences) and really enjoyed meeting a lot of new people.  Had lunch today with a gentleman I met last night and we discussed the presentation further.

For those of you who want to see some pictures of Zurich, I posted some in my Flickr gallery.

Top Web Celeb, Zurich, New Theme on Ramblings

Got an email tonight from a friend who noticed me on a list of Top Web Celebrities. I share some good company on the list, including Kevin Rose (Digg), Jason Calacanis (Serial Entrepreneur), Mark Zuckerberg (Facebook), and others. Not bad company to keep.

I’ll be speaking in Zurich on November 7. If anyone is going to be in Switzerland from the 7-9th, I’d love to get together with you. Feel free to reach out and we’ll coordinate.

I installed a new theme on my tumblr log this evening, Ramblings. Thoughts? Also, there are some great new pics and thoughts posted. You know it’s Fall when pumpkins are out.

An Insiders Look at the Video Game Industry

The video game industry is going through some monumental changes and I thought I’d shed some light on them from the inside. With that said, I decided to whip up a presentation that looks at many of the different areas of the industry including many of the trends that are occuring.

The presentation is geared towards the following:

  • If you work at a media co. looking to acquire in this sector
  • If you work at an ad agency or brand trying to make sense of the video game space
  • If you’re a game publisher and looking to expand your product line and features
  • If you’re a game publisher trying to make sense of the macro industry trends
  • If you’re an investor, trying to figure out which are of the industry is hot

Please note that I purposely left out IGA Worldwide, a company that I co-founded a few years back. The reason why I left the company out of the presentation is that some readers would think that I made the presentation solely to hype the company. I tried to be as company-agnostic as possible, to give readers a non-biased view on the games industry.

I welcome all commentary and criticism. Please leave a comment on the blog or shoot me an email. I promise to respond to each comment individually.

I think we’re in an extremely exciting time with Halo 3 bringing in $170M on the first day, Areae launching Metaplace, and Habbo & Tencent proving out the virtual goods model. Who said games aren’t fun? :)

The presentation is below, and hosted on slideshare (if you’d like to view it there):

 

 

IAC Moves into Video Games (Analysis)

I read a fascinating analysis of IAC (InterActiveCorp) this evening and wanted to share my view.  First, please read the article written by Sramana Mitra entitled Web 3.0 & IAC.

IAC holds more than 60 online properties and someone could easily mistake it for a VC with a well-diversified portfolio of Internet properties. When some of these properties start “exiting” the portfolio, they seem to be able to get much better visibility and valuation. We have already seen how Expedia has performed over the past one year after being spun off from IAC. The question is, should IAC club together more of its synergistic properties and take them public separately, while maintaining a holding company status? As it stands, IAC seems to be losing focus as well as operational efficiency, and in trying to do so many things at once, it is not doing any of them very well.

The profitability of the company is remarkably low, and that is reflected in its relatively low market cap of $8 Billion, against a 2006 revenue of $6.2 Billion.

One area where IAC can innovate within is the video game arena.  I believe that IAC can grab a leadership position by working independently of any one particular video game publisher but doing business with all of them.  There are different ways to play within the games industry including both long tail and hit-driven models, subscription, virtual goods, and retail sales models.  IAC certainly has the resource to get behind such an initiative and they are currently on their way into venturing into the market.

InstantAction was setup by IAC and has been underway/underwraps for months.  They are buying their way into the games market by acquiring Torque (GarageGames) recently and looks like they are enabling game developers to use their engine to monetize their games (give out the tools and monetization assets to anyone and let IAC monetize their games…. and take a % of the action).  Should be interesting to see what IAC does here… and if the above is correct, InstantAction will probably be a solid standalone company.

Just remember:  subscriptions, virtual goods, in-game advertising, are all emerging ways of monetizing games.  Some do much better than others depending on the type of game/environment/gamer, but if used correctly, could do extremely well for the game publisher/developer.  I am assuming IAC understands this and is building for the future.

Real-Time Weather… In Video Games

I’ve been talking about this for years.  My idea for a MMO (will post about that another day) incorporated this.  Someone is FINALLY doing it and I know a few others who are going to be rolling this out over the next 730 days.

EA Sports’ NCAA 08 Football, released July 17, is the first game to pipe in real-time weather conditions at the venue of a player’s choice, thanks to a collaboration with the Weather Channel. From a snowstorm in Boston to a heat wave in Arizona, the exact environment will not only affect the visuals but also alter game dynamics.

Not only is this amazing for the gamer, but it’s one of the best brand integrations IMHO.  It’s seamless.  The fact that Electronic Arts is taking weather beyond the visual and having it affect game dynamics is impressive.  If it’s raining, it’s harder to pass the ball, whereas if it’s extremely hot out, the players get tired.

I get extremely excited about these types of integrations.  Below, you can see the screenshot from Wired‘s article/coverage on this subject.