Where the Fantasy World and the Commercial World Collide

Posted on February 20, 2008
Filed Under China Business, China Internet, China Online Games |

Shanghai Daily reports:

The in-game advertising market in China is expected to double this year from last year’s level as advertisers are exploring marketing opportunities on the increasingly popular gaming platforms.

Revenues from the in-game advertising, or IGA, will reach 250 million yuan (US$35 million), comparing to last year’s 120 million yuan, Shanghai-based consultancy iResearch said yesterday in a report.

…Currently the IGA spending comes mostly from transport, daily necessities and fast consumer goods sectors.

The article notes that Tencent has made RMB120 million from in-game advertising in 2007.

Advertising within games is like advertising anywhere else, companies want potential buyers to develop an awareness of their products. Games present an excellent platform for advertising. In simulation games (such as poker, racing, etc.) advertising enhances the realism by placing ads just as they are placed in reality. In objective-driven games advertising can be placed in such a way that players must see it and perhaps even interact with it.

Advertising is an important trend in online gaming’s business model. The big, popular, online games work primarily on a subscription basis, although some offer limited free play. This has clearly worked (it’s a very successful business, particularly in Asia), but game production costs have gone up as competition and technology drive evermore complex games. Advertising can add another revenue stream to online gaming operators, helping to control subscription costs. It also presents different opportunities in sponsorship and co-branded marketing (for example, Coke and World of Warcraft in China) for gaming companies.

This will only grow in China. Shanghai Daily:

More than 120 million Web users in China have played at least one title in the past year, with an average of 7.3 hours spent on games every week. Twenty-one percent of them played more than 10 hours a week, according to figures from the China Internet Network Information Center.

China’s cities are absolutely saturated with advertising. China’s online worlds are next.

Further reading
The Interactive Advertising Bureau has an excellent taxonomy on in-game advertising.

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