NEW YORK (Reuters) - Advertising within video games, a hot new field for marketers, will likely surge eightfold to more than $1 billion in the next five years as companies court consumers who have cut back on television viewing, according to industry estimates released on Thursday.
Mitch Davis, chief executive of video game ad network Massive Inc., said video game advertising was expected to top $1 billion in the United States by 2010, and approach $2.5 billion worldwide.
His view was partly supported by a forecast from Yankee Group, which figures game advertising will rise to about $800 million in 2009 from nearly $120 million in 2004.
More than one-third of that advertising 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. Radio Shack, for example, did that with a game for its ZipZap remote control cars.
"If the audience is disappearing from TV and print becomes less effective ... advertisers need to go where the eyeballs are," Goodman told the Advertising in Games Forum in New York.
Goodman said video game producers are more keen to seek out advertising revenue to maintain margins.
"A new revenue source is needed because even if the price of games goes up, it will be insufficient to meet rising production costs," he said, adding that only about 10 percent of video games become popular enough to make money.
The ad industry has held out video-game advertising as a way to reach young men ages 18 to 34, a coveted demographic that is slipping away from the grasp of traditional media.
Earlier this week, Massive launched a network to place and serve ads within about 40 different games like "Anarchy Online" and the new "Splinter Cell Chaos Theory."
Blue-chip advertisers such as Coca-Cola, Intel and Nestle have signed on to the program, with ads appearing within the virtual game landscape as billboards, vending machines or store windows.
Industry analysts point out that on average, consumers spend one hour per day playing video games, about the same amount of time devoted to the Internet. Internet advertising is expected to top $16 billion by 2009, according to JupiterResearch.
Video-game advertising will also get a boost from technologies that help target individual consumers better and rotate advertising messages more easily, as well as the rise of games played on shared networks like the Internet or wireless devices, they said.
Mitch Davis, chief executive of video game ad network Massive Inc., said video game advertising was expected to top $1 billion in the United States by 2010, and approach $2.5 billion worldwide.
His view was partly supported by a forecast from Yankee Group, which figures game advertising will rise to about $800 million in 2009 from nearly $120 million in 2004.
More than one-third of that advertising 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. Radio Shack, for example, did that with a game for its ZipZap remote control cars.
"If the audience is disappearing from TV and print becomes less effective ... advertisers need to go where the eyeballs are," Goodman told the Advertising in Games Forum in New York.
Goodman said video game producers are more keen to seek out advertising revenue to maintain margins.
"A new revenue source is needed because even if the price of games goes up, it will be insufficient to meet rising production costs," he said, adding that only about 10 percent of video games become popular enough to make money.
The ad industry has held out video-game advertising as a way to reach young men ages 18 to 34, a coveted demographic that is slipping away from the grasp of traditional media.
Earlier this week, Massive launched a network to place and serve ads within about 40 different games like "Anarchy Online" and the new "Splinter Cell Chaos Theory."
Blue-chip advertisers such as Coca-Cola, Intel and Nestle have signed on to the program, with ads appearing within the virtual game landscape as billboards, vending machines or store windows.
Industry analysts point out that on average, consumers spend one hour per day playing video games, about the same amount of time devoted to the Internet. Internet advertising is expected to top $16 billion by 2009, according to JupiterResearch.
Video-game advertising will also get a boost from technologies that help target individual consumers better and rotate advertising messages more easily, as well as the rise of games played on shared networks like the Internet or wireless devices, they said.
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