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November 29, 2007 3:53 PM
Posted by Benjamin J. Romano
I'm thinking Alex St. John over at Wild Tangent would agree wholeheartedly with John Riccitiello, CEO of Electronic Arts, the biggest video game publisher, who said today:
"You can't be as bullish as analysts are on in-game advertising and be sane," he said. "In-game ad expectations are wildly high."
One widely reported forecast by the Yankee Group has in-game ad revenue reaching $971 million by 2011 up from just $77.7 million last year.
Riccitiello's comments came in an interview with Dow Jones.
Microsoft, for one, has been particularly bullish on in-game advertising, acquiring the Massive Network for as much as $400 million, according to unconfirmed reports, last year. Here's an in-depth look at Massive's business from earlier this year.
That deal and others helped build hype around the nascent in-game ad business, Riccitiello told Dow Jones. EA, which controls several top titles in the sports category that advertising leaders say are a natural fit for in-game promotions, is cranking out about $30 million a year from in-game ads -- a small slice of total revenue.
I spoke with St. John earlier this month. He says in-game advertising is much less efficient than other options his company offers in the category of around-game advertising. Particularly for casual games, more flexible models are working better at Wild Tangent. Some examples include giving advertisers the opportunity to sponsor game play sessions; and giving players the choice of viewing a short pre-roll ad while a game is loading, or paying for the game session.
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Bill Gates, who last week ended his full-time involvement with Microsoft, was often right. He made a career, a company and an industry by looking over the horizon.