the gaming industry / executive summary / p.02

CHAPTERS /

01 / pages 02-03EXECUTIVE SUMMARY

02 / Introduction

The relationship between advertisers and videogames has evolved nearly as much as game playitself. PricewaterhouseCoopers recently forecastthat the worldwide video game market wouldbecome a $46bn industry by 2010. Gaming iscoming of age as a formidable player alongsidetelevision, music and film for the timeshare andentertainment dollar spend of the average 18-34year-old.

03 / The Technology

Gaming exists across many different devices, andchanges accordingly. The dominant platforms arecomputers, consoles, mobile phones and handhelddevices. Computers are still the most dominantplatform, but seventh generation consoles such asthe Nintendo Wii, Microsoft Xbox 360 and SonyPlayStation 3 have captured the imaginations ofgamers worldwide. Handheld units such asNintendo's DS and Sony's PSP are also factors.

04 / The Advertising

The advent of broadband connectivity forcomputer systems and consoles has ushered inthe next generation of game-specific advertising.Dynamic networks now have the ability to deliveruser-targeted ads in real time. New technologiesin Flash and Shockwave have re-energisedadvergames. Social worlds such as Second Lifeand Habbo Hotel have the potential to providericher, more meaningful brand interactions.

05 / The Landscape

Dynamic in-game networks such as Massive andIGA currently dominate the market. They operateas virtual media planners of sorts, and act as afacilitator and service delivery solution fordevelopers and brands. Dynamic in-game bannersand video ads are currently the most common formof advertising; more integrated forms of productplacement are set to define the future.

06 / Consumer Behaviour

Evidence is mounting to suggest that gaming istaking significant chunks out of television viewingtime. Usage patterns are also expanding - gamersare gaming more, and for larger chunks of time.The numbers are also skewing to a much older,more affluent, and more gender-neutraldemographic. Part of that is due to the massivesuccess of Nintendo's Wii, which combined aninclusive marketing campaign with a revolutionarygameplay interface.

07 / Marketing & Promotion

Product placement is one of the most desirableforms of integration, but few marketers have crackedthe case so far. Brands are flocking to Second Life,where the marketing possibilities are endless;entertainment, autos, banking services, clothinglines all have a voice when life is the name of thegame. The question of effectiveness is dominatingcurrent industry discourse - are players tooimmersed in what they're doing to get the message?

A / Video games constitute the fastest-growing market in the entertainment sphere

B / Internet-connected consoles and PCs have opened up new opportunities for brands

C / Dynamically-delivered ad content is increasingly becoming the norm

D / Advergames, MMOs and mobile content are getting more sophisticated

E / The profile of the average gamer is changing; wider age ranges and more women

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / executive summary / p.03

08 / Disruption

Is there a backlash ahead? Gamers onlyappreciate ads that increase the realism and/orreward them somehow. Gamers' strong and vocalonline presence means that an ad that's too 'loud'or delivered in the wrong context can have adamning and lasting effect. Social communitiessuch as Second Life may eventually resent aninflux of brand involvement; virtual citizen anarchygroups have already been launched as countermeasures to excessive branding.

09 / Fact Or Fantasy

New technology and the public's unquenchablethirst for 'casual' games have the potential to givethe advergame genre a much-needed facelift.Many believe that the Second Life phenomenon isa house of cards constructed by PR flaks skilled in

the art of misdirection. The merit of social worldsrelative to brand and agency investment in themcontinues to be an industry hot button.

10 / The Future View

As the Internet, television and consoles converge,developers will begin 'the battle for the living room'in earnest. Gaming fidelity will improve as always,but the real innovators will focus on the interface.Games and gaming IPs will become even moreinextricably entwined with Hollywood and themainstream media. In the face of Microsoft'spurchase of in-game advertising specialistsMassive, further synergies between game networksand developers loom.

11 / Contagious Point of View

Early adopter brands look set to reap long-termbenefits from involvement in this area. The trend ofbranded utility - the provision of services andexperiences as opposed to marketing messages -is thrown into sharp relief in the gaming arena.Respect for the environment and the gamersthemselves is key for successful innovation.

12 / References, Links, Jargon

Links to references, games, companies and abreakdown of jargon.

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / index / p.04

INDEX /THE GAMING INDUSTRY

01 / pages 02-03EXECUTIVE SUMMARY

02 / pages 05-06INTRODUCTION

03 / pages 07-10THE TECHNOLOGY

04 / pages 11-22THE ADVERTISING

05 / pages 23-25THE LANDSCAPE

06 / pages 26-31CONSUMER BEHAVIOUR

07 / pages 32-36MARKETING & PROMOTION

08 / pages 37-42THE BUSINESS ANGLE

09 / pages 43-44DISRUPTION & RESISTANCE TO CHANGE

10 / page 45FACT OR FANTASY

11 / page 46-47THE FUTURE VIEW

12 / page 48CONCLUSION

13 / pages 49-51REFERENCES / LINKS / JARGON

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / introduction / p.05

02 / pages 05-06 IN THE BEGINNING...

…there was nothing but black, white, and a single brand

In 1976, a game developer called Midway released a standuparcade game titled, endearingly, Datsun 280 Zzzap. Outside of thefriendly liberties it took with the spell check function, there was little onthe surface to distinguish Datsun 280 Zzzap from its counterparts. Aniteration of the 1976 first person racer Night Driver, it offered amonochromatic graphical interface, clunky gameplay and little-to-noreplay value. Although it sank out of gamers' consciousness with aquickness, it has since achieved a posthumous notoriety in the worldof advertising. By virtue of its title, the function of a simple contra dealwith the now-defunct auto brand, Datsun 280 Zzzap is believed to beone of the earliest examples of advertisers and video gamedevelopers working together.

30 years on, the relationship between both entities has evolvednearly as much as the gameplay itself. PricewaterhouseCoopersrecently forecasted that the worldwide video game market wouldbecome a $46bn industry by 2010 (up significantly from 2005'sreported total of $27bn). Another study from ABI Research had aneven more optimistic outlook, predicting the overall market wouldballoon to just under $65.9bn by 2011. On its own, the Americanmarket posted a robust growth in 2006, accounting for $12.5bn insales, a $2bn increase over the year prior. Meanwhile, software salesin the UK totaled $2.7bn in 2006, a number likely to increasedramatically now that the Xbox 360, Nintendo Wii and PlayStation 3have entered the market in 2007. So far, the early sales results from2007 point to another rapid increase in growth. According to the NPDGroup, retail sales of hardware and software increased by 78% year-on-year from January 2007 to January 2006, where it accounted foran impressive $1.25bn. Leading the pack among consoles was theWii, which, despite shortages, still sold 436,000 units. Rounding outthe top four sellers in America for January 2007 was the PlayStation 2(299,000), the Xbox 360 (294,000) and the PlayStation 3 (244,000).

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / introduction /

Because of these numbers as well as the gamingdemographic's gradual shift towards an older, moresophisticated and increasingly gender-neutral playerbase, marketers are beginning to cotton on. Fuelled byrapid advancements in the dynamic advertisingspheres, the bullish computer game market, and theonline integration of 7th generation consoles such asMicrosoft's Xbox 360, Nintendo's Wii and Sony'sPlayStation 3, not to mention a sudden awareness ofgaming as a formidable player alongside television,music and film for the timeshare and entertainmentdollar spend of the average 18-34 year old, advertisersare officially in full-on gold rush mode. And while mostbrands are still behind the curve in trying to find clever,valuable and seamless ways to integrate themselveswith the gaming experience, they're catching up quickly.Between in-game advertising, advergames, productplacement, mobile games, underwritten titles and othercreative integration approaches, marketers have theireyes and pocketbooks turned towards the gamingindustry in a way they didn't as recently as two yearsago. So: where is all this all headed? How is the marketevolving? What types of games lend themselves best toadvertising? What kind of advertising lends itself bestto games? What is the marketer's ultimate role in thegaming sphere? And what does the future hold forgame developers, advertisers and brands?

In the following pages, Contagious will attempt toanswer those questions. But, before we go any further,let's first outline the most popular gaming platforms andthe most common ways in which advertising and videogames have converged.

link / www.playstation.com

p.06

Night Driver /

280-ZZZAP /

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / what is the technology? / p.07

03 / pages 07-10 WHAT IS THE TECHNOLOGY?

03.01 / The Major Platforms

Personal Computers

Traditional video game consoles may get most of the attention, butdon't let the smokescreen fool you: personal computers are still, by farand away, the single most dominant platform in the gaming industry.While their sheer ubiquity makes it difficult to estimate exactly howmany people are using computers for gaming purposes on a globalscale, VP sales for the in-game advertising network Double FusionJulie Shumaker says that there were '250m global-connected PCgamers' in 2006, a number that still tops the combined current globalsales of the big six consoles: Sony's PlayStation 2 and PlayStation 3;Microsoft's Xbox and Xbox 360; and Nintendo's Gamecube and Wii.Despite the larger user base, however, the overall sales of computergames pale in comparison to those for consoles. In fact, according toa report released by the Entertainment Software Association (ESA),the total dollar sales of computer games in America decreased from$1.1bn dollars in 2004 to $953m dollars in 2005.

Consoles

While 2006 saw the Xbox 360, PlayStation 3 and Nintendo Wii -known collectively as 'seventh generation consoles' - finally unveiledto gamers, their predecessors still account for the majority of theworld's console penetration. Leading the pack is Sony's PlayStation2, which, as of last September, had shipped 115m pieces worldwide(roughly 45m of those in the U.S. and 42m in Europe) and, thanks toaggressive new price cuts, shows no signs of slowing down.

Next up is Microsoft's Xbox with global sales just under 25m,followed by Nintendo's Gamecube with around 21m.

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / what is the technology? / p.08

03.02 / Console hardware sales

Although their staggered release times make themdifficult to compare, the quest for seventhgeneration supremacy appears at this point to be atwo horse race. The earliest out of the gate (and,consequently, the current sales leader) is the Xbox360, which, according to figures released byMicrosoft in January, has sold 10.4m consolesworldwide. Next up is Nintendo's Wii, which hasso far logged roughly 4.5m in global sales andmaintains huge consumer demand in the face ofworldwide scarcity. Meanwhile, Sony's PlayStation3 has so far been unable to recreate the levels ofconsumer demand that defined its predecessor.Hamstrung by a long string of manufacturingdelays, the lack of a killer, must-have title,mediocre reviews and an exorbitant price tag (thelow-end version sells in America for a list price of$600US), the PS3 has so far only managed to sellabout 1.4m units worldwide. In terms oftechnological specifications, the PS3 is easily themost advanced of the trio, but pundits nowsuggest that Sony's preoccupation with graphicsengineers, processor power and other technologicalbonuses (such as the inclusion of a pricy Blu-Rayhigh definition DVD optical drive) have had theadverse effect of pricing it out of the range of theaverage gamer. With this strategy, Sony appearsto have grossly misread the market; as thebreakout success of the Wii is demonstrating,gamers still prize the overall gameplay experience(ie. the fun factor) over visual and audio fidelity. TheWii is an organic extension of Nintendo'sphilosophy to appeal to lapsed and non-gamers.Design plays a big part in this. Where the NintendoDS handheld console echoed the original orangeDonkey Kong dual screen that makes anyone over

Console hardware sales /

Company Platform Released Sales (Millions)

Sony PlayStation 2 2000 115.36

Sony PlayStation 1995 102.49

Nintendo Nintendo Entertainment System 1985 61.9

Nintendo Super Nintendo Entertainment System 1991 49.1

Nintendo Nintendo 64 1996 32.93

Sega Sega Mega Drive/Sega Genesis 1988 29

Microsoft Xbox 2001 24

Nintendo GameCube 2001 21.52

Sega Sega Master System 1986 13

Microsoft Xbox 360 2005 10.4

Sega Dreamcast 1998 8.2

Sega Mega CD 1991 6

Nintendo Wii 2006 4.4

Sega Saturn 1994 1.4

Sony PlayStation 3 2006 1.26

Handheld device sales /

Company Platform Released Sales (Millions)

Nintendo Game Boy Advance 2001 78.86m

Nintendo Game Boy 1989 69.42m

Nintendo Game Boy Color 1998 49.54m

Nintendo Nintendo DS 2004 35.61m

Sony PlayStation Portable 2005 17.03m

Sega Sega Game Gear 1991 8.65m

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry /what is the technology? / p.09

30 all misty-eyed with nostalgia, the Wii sports afuturistic straightforward design. Simplicity is key.As Nicola Espindola, account director at LeoBurnett in London, the agency that handles theabove-the-line account points out: 'You don't haveto understand how the controller works; anyonecan just pick it up and play.' The graphics don'tpretend to come close to those on an Xbox 360,while the low price tag suggests family fun or anadditional console for a serious gamer.

Targeting

Saneel Radia, vice president and group girectorat Play/Denuo, LA, believes targeting in this area issimpler than it looks. 'In terms of which platform tostart from, gaming is surprisingly segmented interms of demographics,' Radia told Contagious.'Just knowing who your target consumer is willdrive which platforms are most relevant right offthe bat. Clearly, a women 35+ is more likely to beplaying an online casual game than a consolegame and a teen is more likely to be using ahandheld device than their older counterparts.'

It's important to remember that variables such asfree firmware fixes, price drops and desirable newplatform-specific games mean that the next-generation console war is far from over. In otherwords: this one's a marathon, not a race. ChrisKhouri, Media and Broadcasting Analyst atDatamonitor, considers that the Wii's long termsuccess is not assured. 'There is strongcompetition from Sony and Microsoft (particularlyas price points drop) and the Wii's initial hypemight fall by the wayside,' he commented.'Consumers are expected to increasingly usevideo games consoles as portals to access, viewand store all forms of media content and the Wii's

limitations in this area could hinder its continuingadoption. In order for the console to thrive,Nintendo and third party games publishers needto persist in creating innovative titles and inventiveonline services.'

03.03 / Mobile/Handheld

The resurgence of handheld gaming platformssuch as the Nintendo DS/DS Lite and the SonyPSP, (not to mention the iPod's coming out as asecond-tier gaming utility) has combined with thestrong-as-ever 3G mobile phone market to givehandheld gaming its rosiest outlook to date. Sinceits release in 2004, Nintendo's DS and DS Litehave sold over 34m units worldwide. In that time,Sony's pricier PSP has also performed decently,selling close to 25m units worldwide.

The mobile sphere currently boasts 1.94bnusers worldwide, carriers and developers areheralding 3G networks as the shot in the arm themobile gaming industry requires. While networkuptake is inevitable, 3G is still years away frombecoming the de facto mobile phone protocol.According to a study released by AnalysysResearch, 3G penetration is currently at 40% inmobile phone crazy Japan and South Korea, whilethe Forrester Group predicts that the UK will finish2007 with a penetration rate just under 20%.Nonetheless, research groups forecast hugegains in 3G penetration rates over the next fewyears; last June, ZDNet Research predicted 3Gwould enjoy a 60% market share in WesternEurope by 2010, while mobile research companyNSR says there will be 1.2billion global 3G usersby the same time.

Wii Sports /

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / soundbites / p.10

'Connectivity takes this industry from a one-time, oncea year relationship to a 24/7, 365 day relationship witha consumer, and brings an opportunity for a marketer toparticipate in a way that they get access to theconsumers they want access to.' Julie Shumaker / VP Sales / Double Fusion

'Videos games are the fastest growing and largest ofany entertainment category. It's bigger than film, books,and music, and it's growing at 20-25% compound perannum.'Mitch Davis / former CEO and founder / Massive Incorporated

'Gamers aren't one group anymore. Gamers will soonbecome as diverse as the movie-going population andthe television-watching population.'Sam Bergen / Digital and Emerging Media Strategist /Saatchi and Saatchi, LA

'I think the number one mistake marketers are making isnot seeing the individual values of the various in-gameadvertising opportunities.'Julie Shumaker / VP Sales / Double Fusion

‘Users are using social virtual worlds in very differentways than they are using gaming worlds. Gamingworlds can be an escape where you concentrate onleveling up. For its users, social virtual worlds are allabout extending their own personality … I've found thatlots of users, especially the younger ones, are reallysavvy about associating themselves with brands thatthey identify with in order to communicate somethingabout themselves or at least what they aspire to be. Youmight see kids in There or Second Life or Habbo Hotelrunning around with brands in their screen names orbranded items that convey something about who theyaspire to be.' Betsy Book / founder of virtualworldsreview.com andproduct manager / Makena

'We're seeing a lot of user-created brands. Theseworlds have their own life and the advertising that takesplace inside them has to account for the fact that this isnot the real world, this is a world in which theircompetitors are not the other big retail apparel storesbut rather some guy who makes shirts that are reallypopular, and that's a different kid of strategy for acompany to think about.'Ian Bogost / Georgia Institute of Technology assistantprofessor and ad-gaming pundit

GAMING / SOUNDBITES

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / the advertising / p.11

04 / pages 11-22 THE ADVERTISING

04.01 / B.O. vs A.O. (Before Online vs. After Online)

It's probably most helpful to think about the history ofadvertising and video games in two distinct parts: pre-and post- online playability. In the pre- era, advertising invideo games remained static by necessity, and evolvedfrom models that saw brands such as Purina andJohnson & Johnson releasing branded games aspromotional rewards in the early 80s to the eventualpurchase of ad space within existing games themselves,such as adidas, Nokia, Coca-Cola, Mastercard andGillette did across a variety of EA-branded sports titlesin the mid-90s. These partnerships would take the formof ads in sports arenas, such as adidas and Panasonic'sfield-level ads in FIFA International Soccer 1994, orrinkside tags for MasterCard and Coke in the hockeytitle NHL’98. While there are other examples of creativesynergies between brands and games from this period,the overwhelming majority of pre-era deals wererelatively unsophisticated from a media buyingperspective, the virtual equivalents of simple sponsorshipcontracts and billboard purchases.

Although personal computers and dialup access goback to the late 70s, mass market computer gamesdidn't fully embrace the communal properties of theInternet until the broadband boom of the earlynoughties, at which point designers facilitated a seachange away from single-player offline titles towardsgames that emphasised a multiplayer, online experience.Led by PC games like World Of Warcraft and consoletitles like Halo and Gears Of War, multiplayer onlinegames have quickly become the standard for seriousgamers. Paired with the decision by hardwaredevelopers to embrace online access as a fundamental

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / the advertising /

part of gameplay, this massive shift has opened the doorfor newer, far more sophisticated kinds of advertising.'We're a 25-year-old industry that has spent prettymuch 22 years thinking about game consumers in oneway,' says Shumaker. 'Connectivity takes this industryfrom a one-time, once a year relationship to a 24/7, 365day relationship with a consumer, and brings anopportunity for a marketer to participate in a way thatthey get access to the consumers they want access to.'

Let's look at some of the most common types ofrevenue models for video games and advertising:

04.02 / Revenue Models

In-game Advertising

Thanks to its generous trend outlooks, in-gameadvertising dominates the video game and advertisinglandscape. Last summer, American researchconglomerate the Yankee Group made waves byprojecting the in-game ad market would quintuple invalue to $732m dollars by the end of 2010, while IGAnetworks forecast the market would be worth $1.2bnby the same time. In a keynote address delivered duringthe Advertising in Games conference in New York lastyear, Massive Incorporated former CEO and founderMitch Davis revealed an even bolder outlook, predictingthe overall market would tally $1.8bn by the end of thedecade. Regardless of which view (and whose marketdefinition) you subscribe to, massive growth is on thehorizon. All this upside is for an industry that, accordingto Davis, didn't even exist five years ago. 'The originalidea for the business actually came when I was playingGrand Theft Auto on a connected console,' he said tous, just a month before leaving Massive to start his ownbusiness. 'There are fake ads in that game; I hadexperience in the media industry and softwaredevelopment, and thought, 'Wow, what if we could

change those out in real time so you saw an ad forChrysler one day and for Pepsi the next?' So that wasthe idea. I immediately jumped on the Internet to seewho was doing it - this was back in 2002 - and, to mysurprise, nobody was.' What a difference five yearsmakes. Emboldened by the positive forecasts, andlooking to leverage their software catalogue against aproven gaming network, Microsoft purchased Massivefor somewhere purportedly between $200-400mn lastyear.

Caution Advised

But marketers shouldn't interpret this rosy outlook aspermission to run rampant. Gamers are still extremelyprotective of their gaming environments, and onlytolerate ads if they're delivered within the appropriatecontext. Saneel Radia of Play comments, 'How a brandapproaches the gaming industry should be directly tiedto their objectives. Some brands simply want anadditional medium that will help them get in front oftarget consumers. That's easy enough these days asmost game publishers have a team dedicated toworking with brands for integration, or are representedby a third party, such as Double Fusion or IGA. On theother end of the spectrum are those brands that areleveraging games as a communication platform. It'sthese brands that tend to approach the industry in themost broad-based way. They're looking at the gameexperience well beyond when consumers have acontroller (or keyboard) in hand. These are the brandsthat understand that the gaming experience includesopportunities well beyond in-game integration. Thewisest of the group are even looking to leverage theseAAA content creators for proprietary brandexperiences.'

The general rule for successful integration is asfollows: in-game advertising should either enhance

p.12

Second Life / adidas /link / www.secondlife.com

Jeep Games / Mountain Madness /link / www.jeep.com/games

Wrigly’s Candystand / Dodgeball /link / www.candystand.com

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / the advertising /

gameplay by adding to the overall realism or somehowreward the gamer (via free bonuses or subsidisedsubscription costs). Anything else has the potential tobackfire. We'll explore those positive and negativeuptake factors more in-depth later in the report.

04.03 / Advergaming

In the loosest sense of the word, 'advergame'encompasses any game experience that is underwrittenor initiated by a brand or product. Under the moremodern definition, 'advergame' represents a branded,browser-based game programmed in Shockwave orFlash. At their best, these games scratch the 'casual' (asopposed to 'hardcore') gaming itch by virtue of theirsimplicity and re-playability. Although traditionally themost maligned of the major formats, no doubt as a resultof the sheer glut of inferior examples plastered all overthe Internet, advergames are nonetheless an increasinglypopular component of the gaming marketplace. In aseparate report issued at the very end of 2004, TheYankee Group predicted that the then $79m industrywould become worth over a quarter of a billion dollars by2008.

While many brands and developers have traditionallybeen guilty of lazily repackaging known games such asTetris and Bejewelled in branded skins, a newgeneration of ad-friendly, game developers are pushingthe advergaming model forward. Led by companies likeBoston's Barbarian Group, which has createdcompelling web games for brands like HP, Comcastand Red Bull, and Ottawa's Fuel Industries, which hasdone the same for 20th Century Fox HomeEntertainment, Sprite and Mazda, the advergame hasslowly become relevant again. Not only have advancesin Flash and Shockwave technologies enableddevelopers to do increasingly complicated work, butmarketers are suddenly revisiting traditional advergame

deployment strategies. 'One thing that has becomemore sophisticated is that brands have started to puttheir games in places where people find games ratherthan on their websites,' says Georgia Institute ofTechnology assistant professor and ad-gaming punditIan Bogost. 'Yahoo Games has this Jeep gameschannel, for example, that's a very different strategy thanwe saw in the '90s.' Similarly, one of the largest onlinegaming portals on the Internet is the Wrigley-ownedand branded www.candystand.com, which, with over80 titles, plays like traditional advergaming on designersteroids.

The term advergaming, as with everything in the newmarketing world, can be applied to a broad range ofexperiences. US stationery retailer Office Max scored ahit in December 2006 with a viral campaign entitled 'ElfYourself'. Users were encouraged to upload a picture oftheir faces to the site, which was then superimposedonto a manic dancing elf. Crucially, the elves could thenforward their Yuletide message on to friends. Thecampaign received over 36m hits in just five weeks,which bested the previous accepted benchmark forviral success (Crispin Porter's Subservient Chicken) byover 20m. It also contributed to a 20% increase inholiday traffic to Office Max's website.

04.04 / Social Worlds/MMORPGs

MMORPG stands for 'massively multiplayer onlineroleplaying game'. While it's generally used as a catch-all for any computer game that relies on a massivecommunity of players to help drive the action, the mostinteresting and relevant sub-genre as it pertains tobrand involvement is the one known as 'social worlds'.Best exemplified by titles like Sims Online, Habbo Hoteland, most notoriously, Second Life, social worlds houseself-contained virtual societies and economies thatallow users to interact with each other, as well as trade

p.13

Tetris /link / www.tetris.com

Bejeweled /

Need for Speed Underground 2 /link / www.nfs.ea.com

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / the advertising / p.14

in goods and services. Because the cultivation of anonline persona and the accumulation of cultural capitalplay a significant function in these environments, socialworlds are not only well suited to brand intervention -they practically demand it. Brands like adidas, AmericanApparel, Dell and Pontiac are among the many to haveestablished some sort of online presence in SecondLife over the last two years. Meanwhile, othercompanies have utilised Second Life's uniqueenvironment in decidedly non-traditional ways; lastyear, hotel conglomerate Starwood (owner of theWestin, Sheraton and W chains) used the venue as aplatform to introduce users to a new line of hotels, whileinstitutions like the Harvard Law School, the Universityof Florida and Pepperdine University have seized uponSL as the ideal platform from which to offer distanceeducation courses.

Because Second Life has a real dollar to 'Linden dollar'exchange rate, its fledgling economy has thrown upsome extraordinary statistics. Since January '07, around$1.8m real dollars have been spent daily in-world, andin December 2006, Second Life's first dollar millionairewas spawned off the back of some shrewd propertydevelopment. Second Life can thus offer an actualrevenue stream for brands integrating products into theworld. For example, Reebok's SL presence allowsusers to design their own shoe, and then click straightthrough to the Reebok website where the design isready and waiting for them to purchase. However, therehas been considerable negativity from the Second Lifecommunity towards ill-thought brand presence in thisarea - for example, American Apparel's store can bedifficult to access via the front door and is oftenunderstaffed, and Nissan was criticised for giving carsaway for free - a mistake which could upset the balanceof an fledgling economy.

Not surprisingly, the ad world is getting involved as

well. Large global network agencies Leo Burnett andBBH embraced the technology by establishing theirown Second Life digital outposts in 2006. Elsewhere,October saw Crayon - a Second Life-based 'newmarketing' company founded by author-bloggerJoseph Jaffe - open its virtual doors to the public. Whilecontroversy rages over the rate at which Second Life'smeaningful user base is actually increasing (more onthat later), environments such as these offer brands andinstitutions arguably the most room to evolve from atechnological and creative standpoint.

04.05 / Politics in Second Life

The nature of social networking has made it a potenttool for political electioneering, with many candidatesturning to MySpace and YouTube to put their pointacross and connect with new followers. Second Life isno exception, yet it is not without its pitfalls. Democratpresidential candidate John Edwards' presence inSecond Life, whilst being popular amongst the largelyleft-wing liberal community, was defaced by a group ofSecond Lifers bearing 'Bush '08' tags in March 2007.

France's presidential candidate Ségolène Royal hasalso opened an office in Second Life, where visitors canpick up badges for their avatars marked 'SégolèneRoyal for France'. The office drew a stream of visitors inits first week, chatting about issues such as France'sposition in the European Union.

France's National Front also has a presence in theonline world. Cyril Parisi, who manages the party'sSecond Life presence claims: 'In cyberspace we canmake ourselves heard, which isn't the case in the officialmedia.' But, as in the real world, the National Front'smovements have drawn protests. A group called the'Second Life Left Unity' have moved in next to theFrench National Front's office, vowing to carry outprotests there until the ultra-right wingers move out or

Second Life Agitators /

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / the advertising / p.15

are ejected. They wrote on their blog: 'Whereverfascists are, we will ensure they get no peace.' Despitefears, it appears that freedom of speech on the Internetis alive and well.http://slleftunity.blogspot.com

04.06 / World of Warcraft

Other MMORPGs include the hugely popular World ofWarcraft, a subscription-based fantasy game boastingsomething in the region of 8.5m players. Through thetrade of various objects and the completion of missions,players can build up their character's strengths andundertake ever-more complex tasks. The game ispublished by Blizzard Entertainment, and financedthrough cheap subscription packages, at around $15(£8) per month. Profits from World of Warcraft arefrequently cited as saving parent company Vivendi froma profit plunge in 2000.

WOW's first expansion pack - World of Warcraft: TheBurning Crusade - was launched in January 2007. It hit2.4m sales in its first 24 hours of availability, andBlizzard claims it has 'established the new one-monthrecord for PC game sales,' selling around 3.5m copiesin total. It's worth pointing out that if WOW were anation it would be the 91st most populous nation onearth, just after Rwanda.

WOW, as with many other MMORPGS, is fantasy-based. Other games such as Roma Victor are historicalin orientation. This obviously poses problems foradvertisers, as any kind of in-game integration would beincongruous and, no doubt, emphatically rejected.However, brands such as Coca-Cola in Japan havemanaged to achieve integration with games such asFinal Fantasy by using the characters to decoratepackaging, and giving players the chance to winmerchandising and tickets to gaming events.

MMORPG to watch

The Lord of The Rings MMORPG game will be releasedby Turbine, Inc in April 2007. Given the existingenthusiasm for the original books and subsequent films,plus the dedicated community already surrounding theLOTR, it's fair to say that the game could attractaudiences of millions. Talking to The Guardiannewspaper's games blog in March 2007, Turbine’sexecutive producer Jeffrey Steefel said: 'what Blizzardhas managed to do [with WOW] is hugely expand themarket from something that was niche to mainstreamentertainment. It has changed the entire landscapewhich means now is the perfect time to come out with aproduct like Lord of the Rings Online. After all, there'sbarely a person on the planet who hasn't heard of Lordof the Rings right? It also gives us a chance to reach outto a wider space, not just the WoW players, but RPGfans generally who have always wanted to experiencethis world.'

The nature of World of Warcraft was satirised to greateffect in series 10 of the popular animated series SouthPark, in an episode entitled 'Make Love Not Warcraft.'The mechanics of the WOW were also spoofed in thisvideo for eco-brand Fair Trade.www.youtube.com/watch?v=MvcGdJ-09v4

04.07 / What impact have MMOs and social worlds

had on gaming?

Much like user-generated content has fundamentallyaltered the way marketers think about advertising, sohave MMORPGs changed the way developers thinkabout games. Connectivity and mass-playability havequickly become standard in the software worlds. Veryfew current high-profile titles, whether console or PC-based, ship without some form of online-playabilityfunction. Granted, some of today's most popular titlesmight not lend themselves particularly well to

The Passenger /link / www.the-passenger.com

World of Warcraft /link / www.worldofwarcraft.com

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / the advertising /

advertising, but it's a general development that Bogostsays bodes well for future marketers. 'MMOs --especially now that World of Warcraft has become soridiculously popular - have broken out of theirperception as a niche market for weirdos and are nowclearly an opportunity to get a wide variety of people,' hesays. 'I think we'll probably start to see the kinds of newMMOs developed and tuned slightly in favour ofadvertising.'

04.08 / Mobile Gaming

Unlike video game consoles and computers, mobilephones are traditionally regarded as a much morepersonal extension of the user. As a result, advertisershave traditionally trodden more lightly in the mobilegaming sphere. Nonetheless, with some of the mostpopular mobile games funded by the one-time userpurchase model, many believe it's simply a matter oftime before brands make significant inroads into themarket. Where in-game advertising represents anadditional revenue stream for console titles, manycompanies, such as the San Francisco-based Greystripe,believe that marketers have a more fundamental role toplay in the mobile gaming world. In an interview given toGamasutra.com last September, Greystripe CEOMichael Chang outlined that distinction. 'What isrevolutionary in mobile is that ad-supported content willbecome the total revenue stream for the publisher,' hesaid. 'The consumer will never have to pay.' It's thatcritical difference that has industry watchdogs such asPocketGamer.co.uk and Game Developers Conference'07 heralding the convergence of advertising andmobile games as a major development to watch for in2007.

Statistically, the mobile gaming world poses anothermassive opportunity for brands. According to researchconducted by In-Stat/MDR, the American mobile

gaming market will near the $2bn mark by 2009, whileJuniper Research contends the worldwide market willbe worth $18.5bn by the same time, with 39% of thatcoming from the Asia-Pacifics, 37% from Europe and15% from North America. Of all the mobile gamesaccessed in the U.S. in 2005, 53% were userdownloaded, 39% pre-existed on the carrier service,and 8% were web-based. Downloaders say the largestfactors in their purchasing decisions were price, free-trial period, and graphics - in that order. While 34% ofdownloaders were between the ages of 13-17 and only22% were over 35, an eye-opening 44% were women -more proof that there is no longer one dominant marketin any particular sphere.

04.09 / Alternate Reality Games

Above and beyond these major categories, there areother, more niche areas where advertisers and gamerscan intersect. Of all the brand spanking new means ofcommunication currently befuddling marketers, theconcept of the alternate reality game (ARG) is perhapsthe hardest to compute. Put simply, an ARG is anextended experience through which a large group ofplayers collaborate to solve clues and reach the game'sconclusion. The gigantic reservoir of intellectual capitalassembled online is known as the hive mind - aseething, yet industrious community held together by ashared love of problem-solving.

42 Entertainment

Despite what the press coverage might indicate, only avery small percentage - about 5%, according to popularweb destination the Alternate Reality Gaming Network(www.argn.com) - features some kind of brandedinvolvement. To date, most of this activity comes fromthe leisure and entertainment sectors, tapping into thewired community to create a phenomenal buzz for, say,a videogame launch or a film release. For example, in

p.16

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / the advertising / p.17

2001, a team at Microsoft Game Studiosattempted an experiment entitled The Beast topromote the Steven Spielberg film AI: ArtificialIntelligence, headed by a team including JordanWeisman and Elan Lee. The Beast began with afictitious credit planted in the pre-releasemarketing material, and quickly unravelled into amurder mystery involving the web, phone lines, liveevents, cryptic emails and, crucially, over 3mplayers worldwide. The team of 'puppet masters'eventually formed a company called 42Entertainment.

'The core concept of what we do is in the idea ofa distributed narrative - a storytelling processorganic to the web,' explains Weisman. 'Everyoneis trained to act online as an archaeologist does -search through the crap for a scrap of info, or ashard of pottery. Eventually, if you find enoughshards, you don't only get the pot - you get tounderstand something about the culture. And ifmillions of people are helping you look, yourunderstanding is accelerated.'

Since then, Pasadena-based 42 Entertainmenthave constructed ARGs for a number of variedclients, most recently for the launch of MicrosoftVista. Other companies working in this areainclude New York's Campfire, an extension of filmproducers Chelsea Pictures dedicated to creatingimmersive and interactive brand experiences.Their work to date has included the hugelysuccessful buzz campaign around hit movie 'TheBlair Witch Project', and an ARG for the launch ofAudi's A3 entitled 'The Art of the Heist'.

04.10 / Case studies on key branded ARGs

MICROSOFT VISTA / THE VANISHING POINT

(42 ENTERTAINMENT)

Challenge / Enthuse everyone - from thetechnically aware to the man on the street - aboutthe launch of Microsoft Vista

Solution / Vanishing Point' was an experientialonline and offline campaign. The global puzzlechallenge offered an array of prizes, from VistaPCs to Xbox 360s to ZUNEs, as well as theprospect of a trip into space to see 'the UltimateVista'. In December, special puzzle boxescontaining a USB key and a note from puzzlemistress Loki (Norse goddess of mischief) weresent out to bloggers. Each week, twelve puzzleswere be posted on a bespoke website along withfootage of an unusual real world event. To arrive atthe correct answer, players combined both onlineand real world elements.

Players could either show up at the physicallocation when a countdown hit zero, or checkonline to view the recorded footage, encouragingthe spirit of collaboration between players. The

Consumer Electronics Show in Las Vegas was thefirst of these real world events, with messagesprojected into the night sky above the Bellagio.Countdown timers, GPS codes and fadedpictures were posted to the website as clues tothe next stage of the game, which generatedsignificant buzz for the brand.

Results / 90,000 people registered for thecontest to win the prizes, and over a million peopleplayed along with various elements of the game.http://vanishingpointgame.com

A&E TELEVISION NETWORKS / THE

SOPRANOS (CIVIC ENTERTAINMENT GROUP)

Challenge / Create a national campaign to driveviewership and optimize The Sopranos viewingexperience for launch on A&E

Solution / An online game and scavenger hunt,conceived by Civic Entertainment Group NewYork. Players attemped to predict the events ofeach episode in order to win prizes, including aseason finale of a massive suitcase containing$100,000. Participants were challenged to

link / www.hbo.com/sopranos

link / www.windowsvista.com

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / the advertising / p.18

collect a total of 36 game pieces from the realworld, including roadside billboards, print ads andonline ads, each representing a different characteror setting. Pictures of the trophies were registeredby sending pictures via mobile phone.Surveillance-style imaging technology designedby Mobot in Massachusetts was programmed torecognise the pictures. Players strategicallyarranged selected pieces on a grid-like gameboard online, and points were scored when eachcharacter appeared onscreen, with additionalpoints scored if characters placed next to eachother on the grid appear onscreen together.

Results / The series premiere was the highestrated ever for an off-net cable series. High profilemedia exposure stories ran in the New York Times,Chicago Tribune and Hollywood Reporteramongst others. The game spurred activeconversion and extended engagement levelsthrough thousands of posts and hundreds ofthousands of views on the A&E and Slickdeals.netmessage boards, and generated the greatest useractivity in the history of the aetv.com messageboards.www.suitcaseofcash.com

P&G, COVERGIRL, BEINGGIRL.COM /

CATHY'S BOOK: IF FOUND CALL

650-266-8233 (42 ENTERTAINMENT)

Challenge / Create the first immersive multimediabook experience - and get it published!

Solution / Writer Sean Stewart teamed up withJordan Weisman and illustrator Cathy Brigg, tospin a narrative based around a feisty youngheroine, the eponymous Cathy. Recently dumpedunceremoniously by her mysterious boyfriendVictor, Cathy sets about unravelling his secretswith the help of best friend Emma, recording allevents in her trusty journal.

The book comes with a clear 'evidence pack' ofvarious items that Cathy picks up on her searchcontaining phone numbers and clues to beunravelled. In addition to this, Cathy's doodlesleave hints throughout the text, and amateursleuths can 'hack' into private voicemail messagesto reveal extra information. Cathy and Emma boasttheir own MySpace pages, and the Cathy's Booksite directs users to a bespoke forum designed tolook like a Chinese phone company website,where they can discuss the story with other fans.

Characters from the book also appear periodicallyon this forum.

Despite initial difficulties in bringing the book topress, publishing House Running Press sold therights to Cathy's Book to five other countries atthis year's Bologna Book Fair. Concurrently, it wassuggested that Beinggirl.com, P&G's webdestination for teenage girls, conduct an editorialtie-in with various CoverGirl products and anadvertising campaign conducted through theBeinggirl website. Direct mailouts via AOL alsotargeted 3-4m teenagers.

Results / Prior to publication in October 2006,extensive media coverage generated in excess of120,000 pre-release hardcover orders in the USAalone. Foreign rights in countries such asGermany, Japan and the UK have also beensnapped up.

www.cathysbook.comwww.doubletalkwireless.com

ACTIVISION, GUN / LAST CALL POKER

(42 ENTERTAINMENT)

Challenge / Promote GUN, a Wild-Westernthemed videogame, to a gaming audiencetypically drawn to First Person Shoot-Em-Ups(FPS).

link / www.cathysbook.com link / www.lastcallpoker.com

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / the advertising / p.19

Solution / A fusion of avatar culture, real worldinteraction, product-based incentives and apopular online sensation, Last Call Poker wove anarrative tracking six stories of American violencethrough the ages to the time of the game's release.The campaign was based around the insight that acompelling link between the Wild West and thepresent day is poker - now an online phenomenon.At lastcallpoker.com, users chose from a variety ofcharacters, and played poker to gain access toclues and content. Real world integration developed through thebackstory: a wealthy cardplayer, Lionel 'Lucky'Brown set aside a small sum in his will for memorialpoker games in some of his favourite cemeteries.Participants in selected cities were invited toattend the memorials and play a round of'Tombstone Hold'em' with other enthusiasts.These events used the 'language of thetombstone'. Different tombstone shapescorresponded to different card suits, and the dateof death was used to indicate what the number ofthe card would be. The dealer flipped three cards,and participants then searched the cemetery forthe fourth and fifth. Online, they were alsoencouraged to share their own stories andpictures relating to life beyond the grave.Throughout the game, incentives to pre-orderGUN were offered, including the chance todiscover secrets to be unravelled for extraweapons and gold.

Results / Over half a million players activelyparticipated during the eight week campaign, andmany tens of millions of hands of poker wereplayed. Bespoke poker chips designed especiallyfor the game became collector's items. Activisionhas noted that GUN sold the best among new

video game properties and has hinted at thepossibility of a sequel.

www.lastcallpoker.com

VOLVO / PIRATES OF THE CARIBBEAN

(HABERMAN & ASSOCIATES, EURO RSCG)

Challenge / Raise the profile of Volvo in theincreasingly competitive worldwide SUV market

Solution / A two month global multi-mediatreasure hunt for an $82,000 car, part of Volvo'ssponsorship of Disney's Pirates of the Caribbean: Dead Man's Chest. Players picked up maps attheir local Volvo dealer, and the top participantswere invited to a remote Caribbean island tocomplete the treasure hunt in real time and in reallife. The winning participant solved a series ofclues to reveal the location of some buriedtreasure - a Volvo XC90 SUV.

Results / 52,000 people participated in the USalone. Volvo posted webisodes documenting thecompetition online, and 7 finalists were eventually

awarded new cars.http://thehunt.volvocars.net/us/thehunt

MICROSOFT GAME STUDIO, HALO 2 /

ILOVEBEES (42 ENTERTAINMENT)

Challenge / Create an immersive, interactiveexperience for the launch of Halo2, the sequel tohit Xbox game Halo. Attract the attention of themainstream press as well as dedicated Halo fansand Xbox gamers, bringing non-gamers intocontact with the Halo brand

Solution / the ilovebees alternate reality game,based around a radio drama that was broken downand delivered via ringing payphones. At the centreof the campaign was a website run by a NapaValley-based beekeeper, www.ilovebeescom,which had ostensibly been hacked by someoneleaving GPS coordinates. The URL for the site wasseeded at the end of cinematic trailers for Halo2,and small plastic bears containing a scrambledversion of the URL were sent in the post to keen

link / www.ilovebees.com

Pirates of the Carribean /link / www.volvocars.us/thehunt

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / the advertising /

gamers on the Alternate Reality Gaming Network(www.argn.com).

The story revolved around a futuristic AI entityfrom the 26th century known as Melissa, whosemilitary starship is thrown back in time andstranded as part of the hacked code onilovebees.com. The code, when unravelled,revealed the GPS coordinates of 50 payphones inthe US and in other locations around the world.When the player gave a secret password to thevoice on the other end of the line (sometimesrecorded, sometimes part of the 42 Entertainmentteam delivering live information), the nextinstalment of the drama was played out.

Results / ilovebees attracted upwards of 3mplayers. At the 'top tier' of the gaming pyramid,25,000 players rushed out to answer payphones.Active puzzle solvers comprised 750,000 regularcontributors to message boards and onlineresearch, and around 2m casual players took partin some element of the game. www.ilovebees.comlogged 80m hits, and as well as extensivecoverage in games publications, the mainstreampress such as the New York Times and CNNdocumented the community's progress.

At the launch, Halo 2 made $125m in one day,smashing records for both gaming and Hollywoodlaunch weekends. It was described by Microsoftfounder Bill Gates as the 'single most successfulentertainment product launch in history'. The 42Entertainment team won the 2005 GameDevelopers Choice Awards' Innovation Awardand the International Academy of Digital Arts andSciences' Webby Award.www.ilovebees.com

AUDI OF AMERICA / A3 - THE ART OF THE

HEIST (CAMPFIRE, MCKINNEY SILVER)

Challenge / Find a pioneering way to connectwith the A3's target consumer, using a fraction ofthe average auto launch budget

Solution / Alternate reality gaming meetsbranded content. An elaborate 3-month viralcampaign (or 'living movie') allowed the audienceto participate on various levels, and began in NewYork with the fictional theft of an Audi A3.

Players participated in the adventures of NishaRoberts and Ian Yarbrough, specialists inrecovering stolen art, as they tracked down digitalclues hidden in Audis across America. The tale ofdesigner Virgil Tatum, developing a game basedon Roberts, also played into the narrative. Onlineads encouraged people to help find the stolen A3,and a microsite at stolenA3.com enabled gamersto follow the action. Campfire also set up a fictionalsite for Roberts and Yarbrough's company atlastresortretrieval.com, and a site for Tatum atvirgilkingofcode.com.

The campaign used blogs and wild postings tokeep the public updated, and additionally, playerscreated wikis and fan sites, such asheist.smirkbox.com to help others keep up.

The effort was also supported by TV, print, andoutdoor media, which contained crypticreferences to the Stolen A3 mystery.

Results / Over 45m PR impressions weregenerated, including articles in Fortune, BusinessWeek, Wired and Forbes. There were 2.5m hits onaudiusa.com in 3 months, the most in Audi'shistory, and 200,000 visitors in a single day. Thenarrative engaged 500,000 story participants,

p.20

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

generated 10,000 dealer leads, 4,000 test drivesand ultimately, Audi sold over a thousand of its A3model in 90 days, well exceeding expectations.

04.09 / Sponsorship / Content

Pontiac Virtual NCAA Final 4

There's also the category of off-game promotionsand sponsorships, which typically involve theintegration the online gaming sphere with somesort of real life event. In one example, DoubleFusion's Shumaker recalls a Pontiac-brandedvirtual Final Four NCAA college basketballtournament that was held in conjunction with thereal thing. 'Gamers could play as if they were thereal teams that were playing live that weekend,'she says. 'The beauty there is, it gets Pontiacpress; it's a promotional activation tool [where]they're getting people to sign up and acquiring adatabase of names; and they're gettingconsumers what they want, which is a really cool

tournament. So the gamer wins, the marketer winsand of course [the developer] wins, because theirgame gets talked about.'

‘In the case of the Pontiac Virtual NCAA Final 4,we approached games as a key part of the overallcollege basketball experience. Our target audiencewasn’t just gamers - it was all college basketballfans. By letting gamers generate content in theform of video highlights and predict upsets in thetournament, Pontiac owns a unique and highlycoveted piece of the college basketball experienceany fan would find compelling,’ explains ChrisHornberger, the advertising manager at Pontiac.‘Pontiac then uses multiple media channels todistribute this NCAA content to passionate fansduring key windows of time when they're mostactively craving news about the tournament, butare only finding the same recap and analysisavailable through most media. It is this process ofcreating a proprietary brand experience,generating

content from it, then distributing it via our partnersat CBS and the NCAA, that allows Pontiac's brandto have one of the deepest college basketballrelated marketing experiences currently available tofans.’

Cadillac V-Series

Arc and Play/Denuo were the architects of asimilar win-win situation last year for Cadillac andMicrosoft. Tim Irvine, senior vice president at ARCWorldwide, explains the motivation behind thecampaign. 'Following the success of the "CadillacUnder 5" campaign and the launch of the V-Seriescars, Cadillac wanted to continue to raiseawareness with a younger audience, and a tie-inwith Xbox console gaming emerged as a dramaticway to reach those consumers. Play, the gamingdivision of Publicis, brokered a relationship withMicrosoft. Cadillac became the first advertiser tosponsor an expansion pack within the Xbox 360game Project Gotham Racing 3 (PGR3) featuring

p.21the gaming industry / the advertising /

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / the advertising /

the three V-Series vehicles.' The agencies launched ajoint venture that saw them make the entirety ofCadillac's V-Series vehicles available as freedownloadable add-ons for the Xbox 360 game ProjectGotham Racing 3. According to Irvine, 'the downloadableexpansion pack allows gamers to drive the V-Seriesvehicles within PGR3, experiencing all of the power,handling and engineering characteristics of the realcars in the Xbox gaming environment. We wanted tocreate excitement and buzz, and to shift perceptions ofCadillac as an old and slow brand commonlyassociated with your grandfather to a young, fast,performance-oriented brand. Arc created a micrositewhere users can find out about the expansion pack andthe "Cadillac Elite Player Status" gamer picture. Wealso wanted the website to demonstrate the youthfuldynamism of the game experience to those who don'thave an Xbox live connection or who aren't gamers.'

The initiative proved extremely successful for Cadillac,attracting attention and plaudits for donating freecontent for players of a console for which games costaround $60. 'Overall, this was a great opportunity topartner with Play and Leo Burnett to provide a trulyintegrated campaign-and it has been an overwhelmingsuccess,' commented Irvine. 'In the first month, gamersworldwide downloaded the V-Series Expansion Packmore than 150,000 times and logged 7,600 hours ofracing with Cadillac V-Series cars. The vseriescollection.com microsite was extremely popular, withmore than 169,000 page views, 58,000 visits and anaverage time of 2.27 minutes spent on the website.'

He went on to conclude: 'Moreover, free publicity fromthe game editors' websites reached millions ofconsumers a month. We gave editors a chance to test-drive real Cadillacs during a major gaming conference,and one of them reported back, "That's a Cadillac? Thiscar is bad ass!"

p.22

links /www.secondlife.comwww.jeep.com / gameswww.candystand.comwww.tetris.comwww.nfs.ea.comhttp://slleftunity.blogspot.comwww.the-passenger.comwww.worldofwarcraft.comwww.argn.comwww.windowsvista.comhttp://vanishingpointgame.comwww.hbo.com/sopranoswww.cathysbook.comwww.doubletalkwireless.comwww.lastcallpoker.comwww.volvocars.us/thehuntwww.ilovebees.comwww.stolenA3.comwww.virgilkingofcode.comwww.heist.smirkbox.com

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / the lanscape / p.23

05 / pages 23-25 THE LANDSCAPE

05.01 / How has advertising evolved along with gaming? Where

is it going?

Thanks in no small part to the efforts of new-model game networkssuch as Massive, Double Fusion and IGA Worldwide, which supplythe software and services required to syndicate dynamic advertisingcontent within online computer and console gaming environments,in-game advertising has come a long way in a very short period of time.As far as the beginnings of the industry, even competitors like DoubleFusion readily acknowledge that a lot of that initial groundwork -whether with respect to client education or determining the businessmodel - was laid by Mitch Davis and Massive Incorporated.'Everything we heard from talking to big advertisers and agencies likeCoke and McDonalds and OMD and WPP and so forth was that theywanted to be able to buy in-game advertising the same way theybought [it on] television and cable and the Internet,' recalls Davis.'They wanted to be able to run campaigns across multiple games toreach a large audience, to be able to change their creative out in realtime and to have effective measurement around it.'

The more conversations he had, the more Davis discovered thatpublishers were looking for a turnkey solution. 'They wanted someoneto manage it and to deliver against it,' he explains. 'They're not mediacompanies - they're highly specialised at producing great games.'With that in mind, Massive undertook the task of building its ownnetwork, first by developing a deployment infrastructure and then bypopulating it with publishers, games and advertisers. Massive'snetwork currently includes 40 major publishers, including EA,Activision, Universal Games and Microsoft, and expects to serviceover 100 major titles this year. On the advertising side, its rosterincludes blue chip brands such as McDonalds, Coke, WarnerBrothers, Chrysler and Unilever. In terms of technological growth,Davis is most excited about the network's increasing sophistication inthe realm of custom ad-serving. 'Because we connect to consoles likethe 360 and PC games, we have the ability to target and to do very

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / the lanscape / p.24

clever things,' he says. 'We can do gay pride advertising, we can runcampaigns that are only seen after eight o'clock at night, we can dogeo-typing. We ran a campaign across 12 different [European]countries in eight languages to launch the V for Vendetta movie.'

05.02 / In-game Advertising

According to Shumaker, who left her role as EA's national director ofsales for video game advertising to join Double Fusion, in-gameadvertising currently takes three major forms: 2D billboards, video ads(either pre-rolled between gaming levels or integrated into theenvironment) and product placement. 2D billboards and videos adsare dynamic, meaning networks like Massive, Double Fusion and IGAhave the ability to deliver them based on user-specific information,and thus tailor to its demographic in a way that general television can't.While it's not considered a dynamic technology, the last category(product placement) is one of increasing interest to brands anddevelopers. IGA Worldwide CEO Justin Townsend explains. 'There'swhat you would call situation placement and then there's plotintegration,' he says. '[Situation placement] could be a set of Brembobrakes [in a racing game] that allow you to brake harder, a pair ofsports shoes that allow you to run faster or Red Bull drink that givesyou energy and allows you to jump higher and achieve the goals withinthe game. A situation placement is where you're really looking toinvolve a brand within a storyline of a game. So, if your main characterfrequently has to use his credit cards to make purchases at shops, youcould see Visa integrated into the storyline and the plot of the game.'

Due to its high level of user engagement, product placement isnaturally viewed by brands as the most desirable form of in-gameadvertising, but Shumaker is quick to caution marketers againstpursuing product placement at the cost of everything else. 'Going into2007, I think the number one mistake marketers are making is notseeing the individual values of the various in-game advertisingopportunities,' she says. 'What we hear a lot now is, "Well, I wantproduct placement," and then [brands] realise that the lead times arelonger and that the message is fixed and it has to be a global message,and they go, "That doesn't really work for me, but I wanted interactivityand a storyline, so I won't buy 2-D billboards." 2-D billboards as astand-alone do have value, they just have a different kind of value.' Sony Billboard /

link / www.vforvendetta.warnerbros.com

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / soundbites / p.25

'I wouldn't say [ads] are a poor investment - I would saythere are better ways to optimise the ad investment in agame…' Alison Walkton / head of video game research /Bunnyfoot

'In gaming, intrusive ads can detract from theexperience and that has a negative effect on the brand- but good advertising can make the games morerealistic - and good approaches can enhance thegame.'Simon Andrews / digital chief strategy officer / Mindshare

'There is an entire component to this industry that ismore akin to partnering with entertainment partnersthan technology vendors. I would say that it's thosecustom, bigger opportunities that this agency modelfails to deliver against in most cases.'Saneel Radia / vice president and group director / Play

'This space is exploding , and we're actively expandingour operations to realise the businesses' full potential.'Cory Van Arsdale / CEO Massive

'The price to make an MMO just keeps skyrocketing. Itcosts millions and millions a year, and it goes up everyyear if you want to stay on top technology-wise. Unlessyou're in the top three game companies and have hugebudgets, its really difficult for some of these otherincredibly creative and talented people to get theirgames to market.' Terri Perkins / Product Manager / Funcom

'What is revolutionary in mobile is that ad supported willbecome the total revenue stream for the publisher. Theconsumer will never have to pay.' Michael Chang / CEO Greystripe

'It's about integrating yourself to the point where it'sorganic and seems natural, and there's not much of aquestion of whether or not you paid for it, it just seemsright.'Sam Bergen / Digital and Emerging Media Strategist /Saatchi and Saatchi, LA

'The growth of this medium has really happenedbecause technology has enabled gamers. Those whoused to hit a juncture in their lives and leave gaming nolonger need to, because gaming keeps up with them.Those consumers didn't used to impact marketingbudgets and media plans.'Julie Shumaker / VP Sales / Double Fusion

'From a technology and intrigue perspective, I'm a hugefan of virtual reality and it's something that's kind of neatto look at. Will it manifest where everybody is onSecond Life in the future? I don't think so, but I thinkwhat you'll see are synthetic places and virtual worldsevolving into becoming places for people to haveexperiences online as well as the existing web.'Brady Gilchrist / EVP Strategy / Fuel Industries

GAMING / SOUNDBITES

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02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / consumer behaviour / p.26

06 / pages 26-31 CONSUMER BEHAVIOUR

06.01 / How does gaming stack up to other media?

For all that's been written about the decline of themusic-buying and film-going populations, comparativelylittle has been written about the industry emerging intheir place. We'll give you three guesses at the answer,and here's a big hint: it's not bowling. 'Video games arethe fastest growing and largest of any entertainmentcategory,' says Davis. 'It's bigger than film, books andmusic, and it's growing at 20-25% compound perannum.' Moreover, says Davis, it's also the largestindustry in terms of total time expenditure, accountingfor an incredible 15 billion hours of overall usergameplay in 2006. Given the majority of those hours arespent by males aged 18-34, marketers looking to targetthat coveted demographic might want to think twicebefore their next television ad spend. 'The top ratednetwork show of 2004 was The Sopranos, whichgenerated in the region of 160m eyeball-hours,' saysTownsend. 'The top rated game of 2004 was NFLMadden, and that had over 400m eyeball-hours.'

Tellingly, gamers' usage patterns are also changing.The busiest hours on the Massive network occurbetween 4-10pm every night, a period which - notcoincidentally - directly corresponds to primetimetelevision viewing hours. 'Nielsen produced a report in2006 that said they're seeing a 12% decrease in theamount of time that males aged 18-34 spend watchingprimetime TV,' says Townsend. 'And within the sametarget group, there's a 20% increase in the amount oftime spent playing games.' If that's not proof enough,consider how little old Mario stacks up to GeorgeLucas' Star Wars empire. In all its various iterations andoffshoot, the former is worth a net total of $10.5bn

worldwide; the latter, only $3.5bn.

06.02 / How are gamers and content evolving?

If it seems like far more thirtysomethings are carryingPSPs than did Gameboys, it's for good reason. In theearly '90s, gaming was pretty much the sole domain ofyour average 14-25 year old male. And although thetechnologies of those early consoles improved at whatseemed like a rapid rate at the time, it ultimately wasn'tenough to the hold the attention of the more maturegamer. In other words, there was a time when gamingwas something people grew out of. That's no longer thecase. As evidenced by one study after another, theaverage age of the modern day gamer is increasing. Thesophistication of current consoles and titles are nowsuch that gaming is no longer seen as mere child's play.'The growth of this medium has really happenedbecause technology has enabled gamers,' saysShumaker. 'Those who used to hit a juncture in theirlives and leave gaming no longer need to, becausegaming keeps up with them. Those consumers didn'tused to impact marketing budgets and media plans.'

According a study by the Electronic SoftwareAssociation, the age of the average American gamer in2005 was 33 years old, 25% of the overall gamingmarket was over 50, and 38% of them were female.According to The Observer, 17% of Sony PlayStationowners are over 50. Recent research by Comscore hasturned up even more dramatic numbers; a paperreleased last September contends the average gameris 41, and that females account for 52% of the overallgaming audience. The numbers across the pond arejust as encouraging. In December 2006, TNS

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02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / consumer behaviour / p.27

Worldpanel Entertainment released a survey showingthe over-45 age group to be the fastest growing gamedemo in the UK, increasing at a rate of 41% over the lastfour years. The same survey said that game sales towoman had increased by 67% over the same period, anumber even more eye-opening when set against thepaltry 4% gains on the male side.

G Tech

How do we explain this boom in the female market?According to the London-based The Future Laboratory,it's the product of technology and gaming companiesfinally learning to address a whole new generation ofInternet and tech-friendly females. This phenomenon,best exemplified by brain training games like Dr.Kawashima's Brain Training and Brain Age (both hugehits with the female demographic) as well as colourful,invitingly designed handheld systems (such as theNintendo DS), is what Future Lab refers to as the 'GTech' trend.

As far as gamer motivation goes, Saneel Radia hassome interesting theories. 'When men aged 18-34 playgames, they're generally playing for the competition,' hecomments. 'They're the guys most likely to use XboxLive to crush an opponent online and tell them about itwhile they're doing it. Most females, specifically thoseover 35, are playing to relieve stress. The last thing theywant is an intense game experience that's going to leavethem feeling worn. Thus, you'll notice they choosegames that allow them to socialize or take some timebetween turns.'

He goes on to say: 'What this means for content is thatthe console gaming experience is clearly moving to onewith a focus on connectivity, while the casual gamesexperience is moving toward one that's morenetworked. They both have the same underlying IPprinciples, but the wrapper is much different (e.g., a

friends leaderboard for all Live Arcade games vs. an in-game chat / invitation functionality on casual gamessites).'

06.03 / The Wii Effect

Because the average title can take anywhere from 2-5years to develop, it will probably be at least a couplemore years before we see the full implications of thosenumbers from a software perspective, but even still,there are already numerous examples of gamingcontent conforming to fit its widening demographic.The most compelling recent example of that is theNintendo Wii. Where Sony and Microsoft have typicallyappealed to the tech-obsessed gamer with heady listsof technical specifications, Nintendo has always taken aslightly different route, emphasising fun, inclusivenessand playability above all else. Ty Liotta, a buyer for theonline gadget emporium Thinkgeek.com, says that upuntil the Wii, Nintendo had been hindered by thatreputation. '[They] used to have an image problembecause they were seen as makes of kiddie consoles,'he says. 'But now, people who played their originalhandhelds are older and don't worry about being cool orhow badass they shooting something up. Peoplebuying Wiis are older and may have families of their ownand don't want their kids to play Grand Theft Auto on thePlayStation. Wii gives them something a bit morewholesome.' As evidenced by its advertising campaign,Nintendo planned to take this more inclusive tack fromday one. 'It's the biggest dread,' jokes Jenny Squires,communications director for Nintendo's UK mediaagency of record, MEC. 'A client saying that their targetaudience is everyone from six to 66.'

Nintendo's decision to embrace the larger marketwasn't their only recent innovation. With the Wii, theJapanese gaming giant also broke away from the typicalgaming controller factor form. Rather than a traditional,

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02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

two-handed, X-shaped controller with buttonsand a directional keypad, the Wii's controller hasthe shape of slim remote control, and interfaceswith the console using a complicated infraredtriangulation technology. Where other consolesconfine the gamer to their couch, the Wii demandsa degree of physical activity; depending on thegame, players can use different controllergestures to simulate anything from the stab of asword to the swing of a golf club. Along with manypundits, Sam Bergen, digital and emerging mediastrategist at Los Angeles' Saatchi & Saatchi, saysthat this unique, un-videogame interface gives theWii potential to reach an entirely newdemographic. 'I was listening to NPR the otherday, and they were recommending that people buythe Wii instead of Trivial Pursuit,' he says. 'Theywere positioning it as “When you have a dinnerparty, don't pull out Scrabble, pull out the Wii.” Itotally agree with that and I honestly couldn't bemore excited about [the development].'

The Casual Gamer

In addition to seducing users with its newinterface, Townsend says there's another reasonthe Wii has the potential to further stretch thegaming demographic, and that's Nintendo'sdedication to the casual gamer. 'The kind of gamesthat you see with the PlayStation 3 and the Xbox360 require that the gamer commits quite a fewhours of time in one sitting to play,' he says. 'Ifyou're a gamer, you know exactly what I mean - twoor three hours can fly by before you know it. Thewhole point of the games that the Wii are bringingto market is they're the kinds of games you can pickup and put down inside of 30 minutes. And whatyou do there is you attract a whole different kind ofgamer. Ultimately, that means that as this industryevolves over the next three or four years, our targetand reachable audiences will become much,much broader and deeper.' All of this speaks toNintendo's original intent with the Wii: to bringgaming 'out of the bedroom and into the livingroom', and to remake it as a more social and family-friendly activity.

As the Wii ingratiates itself to a completelydifferent kind of audience, Bergen says it couldeven transcend its use as a traditional gamingsystem. He cites a Google Earth-styled appletcalled Wii Earth on Nintendo's user network as ahint to how things might evolve. 'It's the wholeglobe with all the weather around all the big citiesin the world at the same point in time. You canzoom in and out of it, mouse over each individualcity, click on them, and it will tell you the weather,temperature, and time of day,' he marvels. 'Whenit's raining, you hear raindrop sounds. The othernight I sat in front of this huge 110' projection highdefinition vision of this thing for like ten minutes justplaying with it, and it's not what you think of whenyou think of gaming at all. My friend's got this hugescreen in his bedroom, and he just turns it on in themorning. It plays music in the background, and youcan spend a minute or two checking out weather,and that's it. But it's become a part of his morningritual, and to me, that's huge. It's a whole new wayinto the home.'

p.28the gaming industry / consumer behaviour /

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02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / consumer behaviour / p.29

The net effect of all this for advertisers could beenormous. Current console titles only lend themselvesto messages from specific product categories, but aWii network targeted to home and family users couldblow the doors open on branding potential. 'It couldallow much more everyday household brands where theaverage buyers are homeowners to actually beginutilising this space,' Bergen explains. 'If they open thatup to advertisers, that's where more packaged goodstype brands that have not been in gaming before will beable to get in, because the games will be less expensiveand they'll be targeted to these people.'

So what's the biggest takeaway from these emergingtrends? 'Gamers aren't one group anymore,' answersBergen. 'That's the biggest thing. Gamers will soonbecome as diverse as the movie-going population andthe television-watching population. People who arealways going to want hardcore role-playing gameswhere you have to play for an hour before you can saveyour progress. But now there's a huge generation thatare maybe waiting 20 minutes for their wife to finishputting their makeup on. I'd never turn on Halo for that,but I'd turn on Geometry Wars in a hot minute.'

06.04 / Advergame 2.0

One of the most accomplished Shockwave developersin the gaming industry, Fuel Industries' Brian Robbinshas been around for advergaming's many ups anddowns; tellingly, he says he's never been moreenthusiastic or inspired about the genre's potential thanhe is right now. It's a development he attributes largelyto major advances in the accompanying technology.'Five years ago, Flash and Shockwave were limitedmore or less to straight animation,' he says. 'That wasabout all you could do; you could tack some stufftogether but it would take a lot of work. Whereas todaywith Flash or something like Ajax, you're able to do more

dynamic things; you can do a full-on game, big 3D stuff,render graphics - you can almost make whatever type ofgame you can conceive of.'

Having just completed two new projects for Wrigley'saforementioned www.candystand.com, Robbins sees2.0 advergames falling within one of two streams. 'Oneis where we try to create this really big world, almost likea small MMO sort of thing, where you've got a massiveamount of content. You can see that with [Fuel's recentCandystand contribution] GT Racing, where there's 30different events to race in,' he says. 'The other directionwe're going in, which is equally valid, is something likethe Candystand Miniputt game, where you have a reallysimple experience at the core but it's executed reallywell, and everything is perfectly integrated with anddesigned around the brand.'

Case in point: BBH New York based its most recentadvergame for Axe around content lifted directly fromthe brand's latest broadcast spot. Directed by Traktor,the commercial hinges around lovebirds whoaccumulate a thick layer of dirt, oil and tomato stainsafter a comically exaggerated roll down a mountain. Inwww.dirtyrolling.com, the player manoeuvres thecouple as they freefall with the intent of getting them asdirty as possible. From the tomato patch to the oil stainsto the vivacious Italian looker who joins the couple for abrief spell, every single element from the spot isreinforced in the game.

Beyond browsers, there's also Crispin, Porter &Bogusky's recent initiative for Burger King, whichchallenged our concept of the advergame by aligning itwith the halcyon days of the value-added toy. With thehelp of England's Blitz Games, Crispin rolled out threebranded Xbox 360 titles in which Burger King's titularmascot figured heavily, and sold them in-store withvalue meals for an additional $3.99 (US) apiece.

Wii Earth /

Burger King / Pocket Bike Racer /link / www.burgerking.com

Wringly’s Candystand /link / www.candystand.com

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02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / consumer behaviour /

Offered between November 19th and December 24th,2006, the games topped a cumulative 3.2m in sales,and were widely attributed with helping Burger King'ssecond quarter U.S. profit jump by 41%.

06.05 / What content do gamers love?

The reigning champion of American football games(Madden NFL 07) took top prize as the best-sellinggame of 2006. But while sports games havetraditionally dominated the console world (accountingfor five of America's top six selling titles in 2005), theemergence of seventh-generation platforms in 2006brought a spate of high-profile first-person adventuregames such as Gears of War and The Legend of Zeldathat temporarily restored the balance. These two basiccategories form the backbone of the consolemarketplace as it exists right now. Correspondingly,sports games and closed-network adventure gamesare not nearly as prevalent on computing platforms asthey once were. Instead, the most popular computergames have evolved into titles that take full advantage ofthe platform, either via immersive, adventure-themedMMORPGs like World of Warcraft and Guild Wars,investment-heavy social worlds like Second Life andThe Sims Online, or with highly complex 'God games'where users can build, scale and cultivate virtualenvironments (Roller Coaster Tycoon 3, Civilization 4).Because of console dominance in the highly graphical,arcade style game, the middle class of computer gamehas been almost completely phased out; PC gamesnow generally take the form of hugely sophisticated,time-demanding pieces of software or free, casual,browser-based Flash games.

p.30

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02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / consumer behaviour / p.31

Top 10 December 2006 Includes All Platforms consoles and portables) Units

Madden NFL 07 – Electronic Arts 1.9mm

Call Of Duty 3 – Activision 1.1mm

Legend of Zelda: Twilight Princess – Nintendo 1.1mm

Cars – THQ 874.0 K

Need for Speed: Carbon – Electronic Arts 871.6 K

360 Gears of War (Inc. Collector’s) – Microsoft 815.7 K

PS2 Guitar Hero 2 W/Guitar (Inc. bundle) – Activision 805.2 K

Lego Star Wars II: The Original Trilogy – LucasArts 792.3 K

WWE Smackdown vs. Raw 2007 – THQ 731.6 K

Tony Hawk’s Project 8 – Activision 713.9 K

Top 10 Accessory Items – December 2006 Units

360 Wireless Controller 823.8 K

Wii Remote Controller 646.7 K

Wii Nunchuk Controller 497.1 K

PS2 8 Meg Memory Card 474.8 K

PS3 Six Axis Wireless Controller 336.0 K

PS2 Memory Card 8 Meg 286.0 K

PS2/PS Dual Shock2 Controller 263.4 K

PS2/PS Blue Dual Shock2 Controller 245.2 K

360 Play & Charge Kit 224.6 K

PS2 Cordless Action Controller 219.9 K

Top 10 Video Games – December 2006 Units

360 Gears of War (Inc. Collector’s) – Microsoft 815.7 K

PS2 Guitar Hero 2 W/Guitar(Inc. Standalone) – Activision 805.2 K

PS2 Madden NFL 07 (Inc. Hall of Fame) – Electronic Arts 737.1 K

GCN Legend of Zelda: Twilight Princess – Nintendo 532.9 K

Wii Legend of Zelda: Twilight Princess – Nintendo 519.2 K

PS2 WWE Smackdown vs. Raw 2007 – THQ 484.5 K

NDS New Super Mario Bros – Nintendo 427.5 K

360 Call of Duty 3 – Activision 410.8 K

NDS Yoshi’s Island 2 – Nintendo 407.2 K

PS2 Call of Duty 3 – Activision 365.3 K

Top 10 Video Games – Annual 2006 Units

PS2 Madden NFL 07 (Inc. Hall of Fame) – Electronic Arts 2.8mm

NDS New Super Mario Bros – Nintendo 2.0mm

360 Gears of War (Inc. Collector’s) – Microsoft 1.8mm

PS2 Kingdom Hearts II – Square Enix 1.7mm

PS2 Guitar Hero 2 W/Guitar (Inc. Standalone) – Activision 1.3mm

PS2 Final Fantasy XII – Square Enix 1.3mm

NDS Brain Age: Train Your Brain – Nintendo 1.1mm

360 Madden NFL 07 – Electronic Arts 1.1mm

360 Tom Clancy’s Graw – Ubisoft 1.0mm

PS2 NCAA Football 07 – Electronic Arts 1.0mm

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / marketing, advertising & promotion / p.32

07 / pages 32-36MARKETING, ADVERTISING & PROMOTION

07.01 / What is product placement's full potential?

Marketers and gaming networks may have settled on dynamic in-game advertising as their weapon of choice (for the next little while,anyway), but the numbers also point to product placement as anexponential growth market. The tactic accounted for a modest $79min revenue in 2003, but according to the Yankee Group, that numberis set to reach $260m by 2008. Product placement offers a richerbrand interaction experience, alas, only a few marketers have gotten itright so far. In Ubisoft's multi-platform title Splinter Cell: PandoraTomorrow, players get instructions and updates from a Sony EricssonP900 mobile phone. The synergy made sense for both sides,heightening gameplay while simultaneously creating brandawareness. Elsewhere, Activision's Ski Resort Tycoon used thegame's entrepreneurial theme as a springboard to introduce brandinginto the environment, and then rewarded players with money andprivileges relative to their level of ad involvement.

While it's inevitable that we'll see even tighter integration betweenproducts and storylines in traditional games going forward, Bogost ishugely critical of the level of integration he's seen so far. In a bookcalled Persuasive Games, due for release via M.I.T. Press this spring,he argues that developers and marketers are still light years away fromrealising the full potential of their powers. According to Bogost, aformer game designer himself, advertisers are too wrapped up invirtual media planning strategies to acknowledge the possibilitiesafforded by video gameplay's uniquely immersive and tactileproperties. 'What makes video games really powerful as a medium isthat they can simulate how things work,' he explains. 'And so the mostpromising application of advertising in games would be to actuallysimulate how products and services work, right? Unfortunately, thecreative work and [individual] development [necessary to accomplishthat] clashes with the current value systems of the advertisingindustry, which have to do with the perpetuation of the media buy.'

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / marketing, advertising & promotion / p.33

Rather than shoehorn a certain type of brand intoan existing game, Bogost says he'd like to seemarketers work more closely with publishers toopen the door up to all product types. 'I was at anadvertising and games conference a couple ofyears ago and I remember one panelist said, “Youknow, there are just some things you can't put in agame. Like, you can't have a game about vacuumcleaners.”That was his specific example, but if youlook at [Japanese megahit] Katamari Damacy in adifferent light, it's basically a game about vacuumcleaners. There is the opportunity to see videogames as a lever that could lead to a fairlysignificant shift in the way that advertising works,and not just the way that advertisers advertise.'

07.02 / What opportunities are there in social

worlds?

Habbo Hotel

Second Life may have been the app that set theblogosphere alight, but rival environments likeHabbo Hotel and There have also racked upconsiderable traffic. Launched by the SulakeCorporation in Finland in 2000, Habbo Hotel'snumbers now dwarf those of Second Life. As ofOctober 2006, 66mn Habbo characters had beencreated on the site, and 7mn unique usersremained active on a monthly basis. Geared toadolescents and teenagers and segmented intocommunities based on native countries (of which atotal of 29 are now represented) the Habboenvironment eschews the visual fidelity ofsomething like Second Life in favour of a morecartoonish, Playmobil-inspired look. But its lack ofrealism hasn't proven a barrier for brands; Coke,Nike, PlayStation, Gillette and Proctor & Gambleare just a few of the brands who've cottoned on to

the benefits of this captive teenaged audience.While the majority of those advertisements weretraditional in-game ads, some brands have gone togreater measures. Last year, L'Oreal set up a hairstudio within Habbo Hotel Netherlands topromote its Garnier line of hair gels and waxes.Users who entered could use Garnier products torestyle their hair or compete in various in-gamecompetitions. The project generated 100,000user visits, 15% of whom ultimately clickedthrough Habbo banners to Garnier's website.Similarly, Sprite Canada launched a self-contained advertising campaign in Habbo lastyear. The project came complete with a virtualspokesperson and a Sprite-branded nightclubcalled Club Thirst where users could interact withthe brand and win Habbo-related prizes.

There

Owned by the Los Angeles-based MakenaTechnologies, There is based much more closelyon Second Life's model. Users have the ability tocustomise their own avatars, join special interestgroups and purchase goods using the software'sproprietary currency, Therebucks. Proponents ofthe software contend that its emotion and gesturalsystem is better than Second Life's, and thatThere's rich toolbox of social networking tools(such as user websites, text and IM abilities andvoice chat) make it easier to meet new people.While the product doesn't generate nearly asmuch press attention, it's generally considered tobe a purer and more wholesome alternative toSecond Life, whose influx of attention hasattracted a swarm of casual and not-entirely-invested new users.

Brand as Identity

The founder of virtualworldsreview.com and theproduct manager for Makena, Betsy Book saysbranding and social worlds go together like redwine and cheese. 'Users are using social virtualworlds in very different ways than they are usinggaming worlds,' she says. 'Gaming worlds can bean escape where you concentrate on leveling up.For its users, social virtual worlds are all aboutextending their own personality - their own brand,if you will. I've found that lots of users, especiallythe younger ones, are really savvy aboutassociating themselves with brands that theyidentify with in order to communicate somethingabout themselves or at least what they aspire tobe. You might see kids in There or Second Life orHabbo Hotel running around with brands in theirscreen names or branded items that conveysomething about who they aspire to be. Whether

Habbo Hotel /link / www.habbo.com

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02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / marketing, advertising & promotion / p.34

that's like a Burberry hat or a hip-hop brand, it sayssomething about the social group or the racialgroup they identify with. It's actually a great tacticto find other people with common interests.'

Book also points to the entertainment sector asbeing particularly well-suited to the communalnature of social worlds. Artists Suzanne Vega andDuran Duran have both given 'live' concerts inSecond Life, and a number of films and televisionshows have seized upon the platform as a socialpromotional tool. 'MTV actually set up VirtualLaguna Beach in There so that fans could view theLaguna Beach premiere with their friends andother fans the night before it aired on MTV,' saysBooks. 'That's a perfect example of a brandthinking about a way to reward their bestcustomers and their fans and making sure thatthey've established this really amazing positiverelationship with them. And all these fans got thefirst look at the episode and were so excited andthat allowed them to go and spread the word.'

Retail Launches

But really, since virtual consumerism is one of thehallmarks of Second Life, opportunities aboundfor all kinds of different brands. Last summer,Toyota unveiled its Scion xB in Second Life byscattering test drive models at variousenvironment locales. Later, it launched adealership where users could purchase andcustom build virtual versions of the car - a perfectextension of the auto's real world customisability.Other brands such as American Apparel andadidas have launched flagship clothing storesinside the environment, which they've used tointroduce new real-world products (such asadidas did last year with the A3 Microride) and

extend cultural cachet. Thanks to endeavourssuch as these, some Second Lifers now havestrains of virtual and real-world product lustsrunning concurrently. (How's that for brandreach?)

For his part, Bogost sees the potential for richer,more meaningful engagement with products insocial worlds, and points to a recent Second Lifeinitiative by banker Wells Fargo as an example ofsocial world marketing done right. 'You don't reallyneed a bank in a virtual world, but there is aneconomy, so why not have banking? ' he says. 'Themain idea was that you could try out banking andmoney management strategies inside this virtualworld, where you can lose money without feelingso bad about it. Or you could just go in [to a virtualbranch] and have conversations from the comfortof your own couch. So hopefully we'll see it grow inthe direction of interacting with company servicesand products rather than just seeing Gap-branded clothes on your avatar.'

But Bogost also says the user-generated natureof social world economies may pose a hurdle forbrands merely looking to co-opt the space.'Obviously Gap or any brand like that transfers intoa virtual world directly,' he says. 'If it has a socialvalue in our world, it probably has the potential fora similar social value in another. But we're alsoseeing a lot of user-created brands. These worldshave their own life and the advertising that takesplace inside them has to account for the fact thatthis is not the real world, this is a world in whichtheir competitors are not the other big retailapparel stores but rather some guy who makesshirts that are really popular, and that's a differentkind of strategy for a company to think about.'

Duran Duran /link / www.secondlife.com

Project Gotham racing 3 /link / www.projectgothamracing.com

Laguna Beach /link / www.secondlife.com

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / marketing, advertising & promotion / p.35

07.03 / How do we measure effectiveness?

While the science of things like total banner viewsand overall ad reach is fairly straightforward, theoverall effectiveness of in-game advertising iscurrently the subject of heated industry debate.While both Massive and IGA point to in-housestudies allegedly proving that product and brandrecall improve as a result of in-game advertising, aUK-based consumer behaviour research groupcalled Bunnyfoot contends that their ownresearch shows exactly the opposite. By usingnon-invasive eye tracking and bio-physiologicalmeasurement techniques, the researchers atBunnyfoot can follow a user's gaze, decipher theoverall order of the elements they're looking at, andeven calculate things like overall fixation lengthand screen 'hotspots'. The company has beenusing these proprietary tools to gauge consumers'responsiveness within the web and TV realm since1999; in 2005, it branched out into video games.

Responsiveness

According to Alison Walton, head of Bunnyfoot'svideo game research department, the heightenedimmersiveness of the video game experiencedoesn't necessarily translate to heightenedresponsiveness to advertising; in fact, a gamer'sintense preoccupation with what they're doingmight actually be precluding them from absorbingany additional information. That's why more deeplyintegrated solutions, such as Arc and Denuo'sProject Gotham Racing 3 initiative for Cadillac,might represent the next step forward for this typeof advertising. But until those types of projectsbecome more commonplace, Walton remainssceptical. 'The problem is that [regular in-gameadvertising exposure] is a different experience

than when you're sat playing something likeProject Gotham Racing 3,' she says. 'Peakparticipant players do not engage at all withadvertising that surrounds the game.'

Bunnyfoot's research, says Walton, isn't anindictment of the notion of advertising withingames, but rather more of how they're beingdeployed. 'I wouldn't say [ads] are a poorinvestment - I would say there are better ways tooptimise the ad investment within a game,' shesays. 'We're here to provide measurement and atool that will enable publishers and developers andad agencies and brands to optimise the games forthe players and also optimise the brand impactwithin the game. So let's make it more effective.Lets make it more real world and lets make it workfor all parties. Let's not piss the gamers off. Let'snot just grab a brand's money here there andeverywhere. Lets develop an in-game advertisingindustry that works and that's effective.'

Different World

Not surprisingly, Bogost isn't convinced of in-game advertising's effectiveness either, andimplies a fundamental lack of understanding onthe part of anyone who equates an in-gamebillboard hit to one in real life. 'There is anassumption that when I am playing a game likeGrand Theft Auto and I walk by an ad, I perceive itin the same way that I would in the real world,which, intuitively, to me, is absolutely not the case,'he says. 'The whole purpose of playing a game is toabstract whole segments of the world and focus inon whatever particular actions the game is about.The rest of the world provides a texture, and yousee this because a lot of games will actually usethat texture to actively mock advertising.'

link / www.rockstargames.com

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / marketing, advertising & promotion /

Like Walton, Bogost cautions marketers not toput too much stock into things like 2D billboardmetrics. 'I'm just not sure we understand yet whatthat player is understanding about the worldthey're exploring in a game,' he says. 'They'remaking decisions but they're also strategising, andthey're consuming that world in a different waythan they are when walking past the ads in asubway tunnel. I don't have any answers to thisquestion. I think this is an active area for some realresearch to be done; proper research - notadvertising industry-funded research.'

Simon Andrews, digital chief strategy officer forMindshare, commented following the release ofthe Bunnyfoot findings: 'We've a lot of experienceof looking at media property data that comes fromtheir ad serving platforms, so we're confident thisis all kosher - we don't deal with companies wedon't trust. I think the Bunnyfoot research isindicative of the trend we find in all media - mostconsumers are ad avoiders and would rather notsee advertising. In gaming, intrusive ads candetract from the experience and that has anegative effect on the brand - but good advertisingcan make the games more realistic - and goodapproaches can enhance the game.'

p.36

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / the business angle / p.37

08 / pages 37-42 THE BUSINESS ANGLE

08.01 / What role are agencies playing in the gaming world?

Saatchi LA

Although traditional ad agencies have made encouraging gesturestowards video games over the past two years, the overwhelmingmajority currently lack the structure or in-house expertise devoted tothe medium. One of the rare exceptions can be found at Saatchi &Saatchi Los Angeles, where, along with Interactive CD Peter Kang,Sam Bergen oversees strategy and creative development for the newmedia element of Saatchi's Toyota account. With projects rangingfrom in-banner advergames promoting the Toyota Yaris to Toyota-sponsored ad interstitials in the enormously popular Xbox 360 titleNBA 2K7, gaming accounts for a massive portion of Bergen's overallworkload. And yet, while Toyota enjoys strong presence in theadvergaming and console worlds as a result of Saatchi's investment,other agencies have yet to follow the lead. Bergen interprets theindustry's overall lack of movement as a sign that, where it comes togaming, agency heads prefer empty talk. 'I'm the only person I know ofin the entire industry who's doing this,' he says. 'They created aposition for me - I used to be in a different department. On the front,every agency's going to say, yes, gaming is great and we want to beinvolved, but a lot of people don't have the knowledge base or thewherewithal to do it. There's a lot of marketers coming into a spacethinking they know how to get involved when they really don't.' WhileShumaker doesn't need to evangelise to agencies nearly as much asshe used to, she still comes up against the occasional brick wall: 'I'll bein a meeting with a planner and one of their first things is, "Games?You've got to be kidding me. I'm not into games. I'm not trying to reach12-year-olds".'

Bergen's job description includes overseeing media spends forToyota's gaming initiatives and scouting new developer and designtalent. An avid gameplayer, Bergen's input helps keep Toyota'sextensions into that world holistic. 'It's about integrating yourself to the

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / the business angle / p.38

point where it's organic and seems natural, and there's not much of aquestion of whether or not you paid for it, it just seems right,' heexplains. 'That's what I strive to achieve every single day - to find cool,creative programs that are going to add value to our consumers andaren't going to get in the way of their experience.' The bulk of themoney on the account, he says, is devoted to partnerships withexisting console brands, and ranges in terms of use from in-gameadvertising buys to the development of special, Toyota-brandedsections in titles like Anarchy Online and NBA 2K7 (which features anin-game replay function branded as the Toyota Fastbreak Reply -exactly as it is in regular basketball broadcasts). Nonetheless, Bergenis careful to make sure that the brand has visibility in more places thanjust consoles. 'The best way for a brand to approach gaming is not tolook at it as console gaming or online gaming or events andpromotions around gaming, it's to look at everything,' he says. 'Mobile,portables, consoles, console online, PC and online casual gaming -that's several different silos, and you should have presence acrossthree or four of those if you want to have a presence in the gamingworld.'

Denuo

In 2006, Publicis Groupe announced the launch of a major strategicinitiative entitled Denuo, designed to anticipate and exploit the rapidlychanging digital, interactive and mobile communication environment.Operating as a standalone business, Denuo incorporated a highperforming games unit, Play (formally of Starcom MediaVest). 'Thecreation of Denuo is a very important strategic decision for ourGroupe’, said Maurice Levy, Chairman and CEO of Publicis Groupe,at the time of launch. 'We are of course already very present in thedigital and interactive universe and have continuously pushed theenvelope with various important marketing innovations. With Denuo,we aim to place the entire Groupe at the very cutting edge ofinnovation - for the benefit of our clients, by helping get the most fortheir brands in this new world; and for the benefit of our Groupe, inidentifying investment opportunities at a very early stage.'

Play's vice president and group director, Saneel Radia, explains theexpansion of Play: 'Since Denuo's inception last year, our team at Play

Anarchy Online /link / www.anarchy-online.com

2142 Battlefield /link / www.battlefield.ea.com

link / www.mortalkombat.com

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02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / the business angle /

has grown twofold. We continue to be recognizedby both the gaming and advertising industries asthe agency leader in helping brands market viagames. We're laser focused on creating uniquebrand experiences for consumers, whether it's the2nd annual Pontiac Virtual NCAA Final 4tournament or the Old Spice ExperienceChallenge for Xbox Live gamers. As true pioneersin the space, we entered the scene as the firstmarketing services company to leveragevideogames and we'll continue to seek out themost valuable and engaging in-and-around-gamebrand integrations for our clients and theirconsumers.'

The Old Spice Experience Challenge wasannounced in February 2007, and represents thefirst exercise in the new Xbox rewards program forXbox Live users. Gamers are able to earn rewardslike games and other prizes in accordance with theamount of Gamerscore achievements theycollect. Participation in the program is free, butrequires a valid Windows Live ID and an Xbox Livegamercard. Gamers taking part in the challengewho managed to increase their Gmerscore by1,500 points or more within the two months of thepromotion received free games, special Old SpiceXbox Rewards gamer pictures, and Old Spicemerchandise. Prizes were limited on a first-come,first-served basis to increase demand and buzzaround the project.

Through a specifically targeted approachdeveloped at Play, Radia is persuaded that Denuohave sidestepped some of the pitfalls of agencyinvolvement in this space. 'I would say mostagencies have bucketed gaming under their onlineplanning teams. This is a great solution for thosebrands approaching the space purely as a

medium, especially in a world where 1) brandshave woken up to have diverse the game playingaudience truly is, and b) the console gamingindustry is actively pursuing the improvement ofdynamically served ad opportunities,' he explains.'That said, there is an entire component to thisindustry that is more akin to partnering withentertainment partners than technology vendors. Iwould say that it's those custom, biggeropportunities that this agency model fails to deliveragainst in most cases.'

08.02 / What are likely strategies between

companies in the face of competition? What

alliances will there be?

Microsoft & Massive

In-game networks are relatively new propositionswithin the gaming space; so new that publishers,agencies and brands are still trying to figure outwhat alliances might logically emerge as thebusiness evolves. One huge indicator of howthings might play out came from Microsoft's recentpurchase of Massive. Much like a televisionnetwork, Massive's number one commodity is thequality and reach of its own network; it stands toreason that a company as heavily invested ingaming as Microsoft should want control overthose resources, not to mention the power to shutrivals (such as Sony Home Entertainment) out ofthe equation. As a direct result of the May 2006sale, Massive's resources were redirected toMicrosoft-owned platforms only, with Xbox Live,MSN Games and various other Microsoft servicesbenefiting. Davis acknowledges that the softwaregiant's May 2006 purchase had an immediateimpact on the company. 'It has changed in anumber of different ways - one is that we always

p.39

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

have access to a lot of resources that MSN has onthe technology side of things,' he says. 'Access interms of data, research, those types of marketingtools that we can use for our advertising partners,and we're also excited to be on the 360 platform,which is the single most important platform wehave now.'

Google & Adscape

In March 2007, Google also moved into this area,buying rival company Adscape for the bargainprice of $23m (£13m). Google has a proven trackrecord in serving advertising across variouscontent platforms, plus Microsoft arch-rivals Sonyhas demonstrated an unwillingness to add titlesdesigned specifically for Sony consoles to an in-game advertising network run by the competition.In the wake of this buyout, Massive CEO Cory Van

Arsdale remained positive, saying: 'We've gotquite a head start here. The Massive team hasbeen working side by side with the Xbox teamwhile utilizing the huge investment Microsoft ismaking in advertising platform technology andworldwide sales execution, creating a powerfulcombination for the in-game advertising industrythat's simply unmatched. We've made fantasticprogress - 50+ live game titles in the networktoday, 60+ blue chip advertisers, and 115million+ game sessions served to date - and we'rejust getting started. This space is exploding, andwe're actively expanding our operations to realisethe businesses' full potential.'

Although these statistics prove that in-gamebanner ads are obviously big business, SimonAndrews of Mindshare said: 'Rather than juststicking ads on top of the game we should look for

ways of embedding the brand in the game. Someexamples we might see in the future could includedrinking Red Bull to give your character moreenergy, or wearing branded trainers to put morespring in your avatar's step. The smartest ideascould be when interaction with the brand deliveredan Easter egg experience - opening up a new level,introducing a new character, or adding someenhanced functionality. With this in mind, I thinkwe'll see banner ads start to disappear - they're thewrong format for this medium.'

The Funcom Model

Another likely future scenario: the skyrocketingcost of development will drive the second tier ofgame developers into advertiser's open arms. Afew years ago, Norwegian game developer/publisher Funcom embraced in-game advertising

the gaming industry / the business angle / p.40

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / the business angle / p.41

as a strategy to defray the cost of upkeep for its enormouslysuccessful MMO, Anarchy Online. It's a scenario that productmanager Terri Perkins says is going to become more and morecommon as developers' budgets balloon. 'The price to make an MMOjust keeps skyrocketing,' she says. 'It costs millions and millions a year,and it goes up every year if you want to stay on top technology-wise.Unless you're in the top three game companies and have hugebudgets, it's really difficult for some of these other incredibly creativeand talented people to get their games to market.'

It's not unlikely that the next decade might yield a new funding modelwhere entire games - or at least elements of them - are completelyunderwritten by brands. 'If we've done our job, in two years when avideo game publisher thinks about their business, they will think abouttheir options differently,' says Shumaker. 'They'll think, "Maybe I wantto launch this level for free as an ad-based game proposition" or"Maybe I want to offer this level to be sponsored, to be paid for by asponsor and gifted to the game consumer." The sky is the limit.'

Hollywood Muscles In

Extrapolating further into the future, Bergen forecasts a two-waysynergy between video games and Hollywood, one that will seefilmmakers look increasingly to games for IPs and for game designersstarting to be idolised on a larger level. Given that adaptations ofconsole titles such as Tomb Raider, Pokemon, Mortal Combat andResident Evil have all performed well in Hollywood, it stands to reasonthat both sides should get even comfier with each other. 'With PeterJackson [originally] signing on to do the Halo [film] and StevenSpielberg signing on to do three games with Electronic Arts, you'reseeing that convergence,' he says.

Lastly, the gold rush for compelling and forward-thinking gameplaycombined with a general agency inability to deliver that in-housebodes well for boutique game developers. Bergen says he's seennumerous developers eager to establish themselves as an agency'snumber one advergaming vendor. As small, nimble companies suchas Brooklyn's Smirk continue to reap awards for innovation inadvertising, it might not be long before agencies start snapping themup as in-house gaming solutions.

EA Fight Night /link / www.easports.com/fightnightround3

Pokemon The Movie /link / www.pokemonthemovie.warnerbros.com

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / soundbites / p.42

Consumers have personal and valuable relationshipswith these spaces, with their avatars, with their otherfriends. It's really a good opportunity to market to themand forge relationships through their brands.' Betsy Book / founder of virtualworldsreview.com andproduct manager / Makena

'We need to evolve and enhance the advertisingmodels much more effectively. We need to create goodgames that integrate advertising well, than can gaugethe user, and enhance, or optimise that brand influenceon the consumer much more effectively.'Alison Walkton / head of video game research /Bunnyfoot

'What's going to be the dominating media hub in theliving room of the future? Is it going to be some kind ofPC device? Is it going to be some kind of consoledevice?' Justin Townsend / CEO / IGA Worldwide

'At the end of the day it's the experience, not aboutoverwhelming people with messages. If you over-message something you can create a negative brandhalo effect. The idea of buying huge reach and hugeamounts of frequency - the conventional wisdom of thatis starting to proven to be ineffective and in some caseseven detrimental to the brand itself.'Brady Gilchrist / EVP Strategy / Fuel Industries

'If we've done our job, in two years when a video gamepublisher thinks about their business, they will thinkabout their options differently. They'll think, "Maybe Iwant to launch this level for free as an ad-based gameproposition" or "Maybe I want to offer this level to besponsored, to be paid for by a sponsor and gifted to thegame consumer." The sky is the limit on where videogame publishers and developers might take this.'Julie Shumaker / VP Sales / Double Fusion

'I'm just not sure we understand yet what that player isunderstanding about the world they're exploring in agame. They're making decisions but they're alsostrategising, and they're consuming that world in adifferent way that they are when walking past the ads ina subway tunnel.'Ian Bogost / Georgia Institute of Technology assistantprofessor and ad-gaming pundit

GAMING / SOUNDBITES

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02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry /disruption & resistance to change / p.43

09 / pages 43-44 DISRUPTION & RESISTANCE TO CHANGE

09.01 / Will there be a backlash? What do

gamers hate?

Tracking

Advertisers, take note: just because we've yet tosee a major gamer backlash doesn't mean itcouldn't happen. Yes, gamers have met theincreased commercialisation of their virtual spacewith admirable sanguinity so far, but that doesn'tmean they don't have their limits. Kotaku.com isone of the largest gaming blogs on the web, and, infine, Gawker-owned tradition, happens to attractsome of the savviest (and snarkiest) acolytesaround. When it comes to matters of user privacy,editor Brian Crecente cautions that all bets are off.'A number of companies that have done in-gameadvertising also track and pay for ad views, andthat's the biggest thing that turns gamers off,' hesays. 'They don't like the idea of someone trackingtheir game play; there's this sort of outrage [overthat]. Some people even think of it as spyware.'

Privacy

Privacy is, without doubt, the single biggest hotbutton topic among gamers today. Violate it in anyway and users will revolt. 'When EA came out withFight Night for the PSP, the box said nothing aboutyou having to do anything to get access to theonline support,' Crecente recalls. 'But when yougo in to sign on the first time, EA makes you accepttheir user agreement and their user agreementsays that they can use all of your information foradvertising purposes or give it to any 3rd party theywant. So if you accept, you've basically opened the

door for anything.' That news was met withderision by gamers; unfortunately, EA has provenslow to adapt. Upon hearing the news that EA hadspiked the PC title Battlefield 2142 withmonitoring software that recorded and relayedinformation like individual user IP addresses andonline activity patterns, Kotaku's commenter baseonce again deluged the site with bilious rants. 'Itoccurs to me that the EA is actually using theBattlefield series as an experiment to find out howmuch bullshit a customer base will take beforethey finally learn,' wrote one, while anotherdeclared 'EA just reached an all new low.' Whilethe issue was eventually somewhat resolved by astatement from EA claiming that the game onlymonitored advertising exposure and thatdemographic information was collected on acountry-specific rather than personal scale,gamers' messages came through loud and clear:Big Brother has no place in video games.

Quid Pro Quo

When it comes to other aspects of advertising,gamers are mostly open to negotiation. Themajority, says Crecente, are media literate enoughto understand the intrinsic benefit that advertisingbrings to gaming's infrastructure, but alsoappreciate the ability to moderate their own levelsof exposure. 'If you're told you have an option to payfull price and not have any ads, or to get a game forfree or deeply discounted with ads, gamersunderstand,' he says. 'They like being able tochoose between the two and its nice to know youropinion matters.' That's been true of Perkins'

Kotaku /link / www.kotaku.com

link / www.easports.com/fightnightround3

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02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / disruption & resistance to change /

experience as well. 'The night before we went live[with ads], I [stayed up] with several other people inthe company waiting to see what the reactionwould be, and it was great,' she says. 'A year and ahalf later, the total complaints that I've ever hadfrom players has been under five, and some ofthose were upset because they were in a countrythat didn't have any ads and they felt left out.' Evenwith the ad toggle option, Perkins says theoverwhelming majority of Anarchy Onlinesubscribers leave them turned on. 'In ourexperience, players don't turn them off even ifthey're paying,' she says. 'It adds to the game andit makes it more dynamic.' To that end, Perkins saysmost of the ad-related complaints she's receivedhave had to do with anachronisms and continuityissues than anything else.

Tolerance Levels

But advertisers also have to be careful not toexploit this give and take relationship. While Davisis quick to point out that advertising on the Massivenetwork runs about 4-5 minutes an hourcompared to the 12-24 minutes an hour that

accompany television broadcasts, he alsoacknowledges that networks have to be sensitiveto gamers' breaking points. Gilchrist concurs. 'Atthe end of the day it's the experience, not aboutoverwhelming people with messages,' he says.'The Journal of Marketing just released a paper thatsaid if you over message something you cancreate a negative brand halo effect. The idea ofbuying huge reach and huge amounts offrequency - the conventional wisdom of that isstarting to proven to be ineffective and in somecases even detrimental to the brand itself. That initself is another major realization.'

Negative Feedback

Ultimately though, as these communities becomelarger and more segmented, advertisers andbrands need to brace themselves for thepossibility of negative user feedback. Afterorchestrating a serious of bomb attacks againstbranded SL outposts for American Apparel andNissan, a vociferous and well-organised citizensgroup known as the Second Life Liberation Army(SLLA) started offering rewards in Linden dollarsfor taped attacks on the virtual spaces of digitalagencies like Electric Sheep, Millions of Us andRivers Run Red. While such an organization inSecond Life was probably an inevitability, SLLA'sreasoning behind these terrorist measures mightcome as a surprise. Unlike American Apparel andNissan, whose SL efforts SLLA derided on itsblog, those specific agencies weren't targetedbecause they performed poorly in the space, butrather because they'd performed exceedingly well,and assumed too much control. The takeaway?Gamers prefer advertisers to play support - ratherthan leading - roles in social communities.

p.44

Second Life Liberation Army /link / www.slla.blogspot.com

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02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / fact or fantasy / p.45

10.01 / Do advergames actually work? Do

people want to play them?

The good news is that developments in Flash andShockwave have left advergame developersbetter equipped than ever to deliver compellingcontent, a development which in turn has theindustry focused on the raising the bar in a way ithasn't been for games. Better still: the more thestandard for great advergames rises, the less we'llhave to put up with the mediocre stuff. 'It's like theultimate meritocracy,' says Gilchrist of theInternet's natural selection process. 'If you createbad advertising or bad games, no one is ever reallygoing to know about them because they'll justshrivel up and die on their own.'

Others take a more practical outlook: as long asthere's time to be killed, advergaming will maintaina pulse. 'The other day on Digg there was thisChoas Theory game - would it make a difference ifit was [by] Miller?' wonders Bergen. 'Advergameslike that aren't really going to go anywhere.' Withbrand websites changing from informationalresources to content hubs, Bergen saysadvergames are safer than ever. 'Miller doesn'twant you going to their website just for the alcoholcontent and calorie count of their beer; they wantyou going there because maybe they're going tohave a concert series, or give away cars, or giveaway videogames - who knows,' he says. 'But theywant you going there on a regular basis, andthey're going to continue to provide content, so

maybe three times a year they're going to buildsmall little advergames that only cost them 60grand to build, if that. That will keep happening.'

10.02 / Is Second Life a mirage?

Contrary to the received wisdom of one HarryNilsson, there's mounting evidence to suggestthat 3.8m might in fact be the actual loneliestnumber. For the past twelve months or so, LindenLabs' Second Life has coasted on a tidal wave ofnew media hype. With its profile fuelled bybloggers, journalists and marketers, the MMOsurpassed the one million user mark in October2006 and cruised past the two million mark onlythree months later. At press time, it stood at justunder 3.8m. But while believers are hailing it as ahugely significant force in tomorrow's new mediascrum, others are finding cause for skepticism.

At issue is Linden Labs' user reporting tactics;specifically, whether a number like 3.8m (whichspans total registered users, even those who onlytried it once) is at all representative of SecondLife's actual reach. In a recent post to tech gossipblog Valleywag, reporter Clay Shirky delveddeeper into the company's January 2007 metricsand concluded that 'something like 5 out of 6'Second Life users 'bailed in the first month' andthat approximately only 10% of that overall tally'have given Second Life even a cumulative workweek of their time over the history of the platform'.His conclusion? 'As any illusionist will tell you, the

trick is mainly in getting the audience to look at thewrong thing.'

While Fuel Industries’ EVP of strategy BradyGilchrist is skeptical of Second Life's allegedwidespread appeal, he contends there are stillreasons to be interested in its progress. 'The planethat has been successful for Second Life right nowis mainly the media plane - people gettingawareness through articles about it,' he says.'From a technology and intrigue perspective, I'm ahuge fan of virtual reality and it's something that'skind of neat to look at. Will it manifest whereeverybody is on Second Life in the future? I don'tthink so, but I think what you'll see are syntheticplaces and virtual worlds evolving into becomingplaces for people to have experiences online aswell as the existing web.'

10 / page 45FACT OR FANTASY?

Chaos Theory /

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / the future view /

11 / page 46-47 THE FUTURE VIEW

11.01 / Where do we go from here?

There's little doubt that online is the future ofgaming, but with so many offline consoles still inplay, it's important to remember that we're still verymuch in the early stages of the connectivityrevolution. 'The best way to see it is, right now,there are 100m PlayStation 1s and a further 100mPlayStation 2s on the market,' says Townsend.'The PlayStation 3 is going to do the same amountof sales over the next three years and Xbox 360 willprobably go in the same direction. That's going tobe a turning point to the industry as a whole.'

Those numbers bode well for in-game networks,but Shumaker also acknowledges that networksand marketers are going to have to evolve if theywant to stay relevant. 'These billboards will alwayshave a place,' she says. 'Skyscrapers andbillboards are always going to be able to derivesome additive product value from awareness,reach and frequency building. But the reality ofwhere it's going, and why I actually risked mycareer capital to come to Double Fusion is that I dobelieve that technology and the innovation of in-game advertising will ultimately have to keep upwith marketers' interest to evolve.'

It's a sentiment echoed by Book, who has highhopes for how brands might one day interact withusers in social worlds. 'Consumers have personaland valuable relationships with these spaces, withtheir avatars, with their other friends,' she says. 'It'sreally a good opportunity to market to them andforge relationships through their brands. That'smuch more complex than the CPM model where

you just show some branded imagery and gaugehow many eyeballs see it, but I think actuallyforging relationships with consumers could pay offwith much bigger returns in the end.'

More than anything, the brands that will retainrelevance and presence in this space will be theones that learn to think about video games in moresophisticated and evolved ways. 'I think we needto evolve and enhance the advertising modelsmuch more effectively. We need to create goodgames that integrate advertising well, that cangauge the user, and enhance, or optimise thatbrand influence on the consumer much moreeffectively,' says Bunnyfoot's Walton. 'What'shappening right now is going very well with theindustry, and we're making a good start, but that'swhat it is - it's a start.'

11.02 / What does the future hold?

Media Convergence

Forget Halo 3; over the next five years, the videogame landscape will be dominated by a muchlarger war. Media convergence is just around thecorner; soon, consoles and computers will findthemselves competing for control of the singlemost important space in the household: the livingroom. 'What's going to be the dominating mediahub in the living room of the future?' wondersTownsend. 'Is it going to be some kind of PCdevice? Is it going to be some kind of consoledevice?' While it's still too soon to know theanswer, many contend this true convergence oftelevision, the Internet, gaming and virtual space

p.46

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / the future view /

will radically alter the way we receive media and consume advertising.The potential for a major paradigm shift is there. 'When youextrapolate stuff like that into the idea of the far web, which is the hugescreen experience, you can start to see where your imagination cankind of go a little bit wild,' says Gilchrist. 'That's when you start tocreate windows and doorways into what are literally other worlds.'

New Interactions

As graphical capabilities and broadband access improves over thenext decade, Bogost forecasts a fundamental split in the way thatmarketers and developers approach technology. The majority, hesays, will follow in the path laid out by broadcast television and devotetheir time and energy to improving visual fidelity. The more interestingthinkers, he argues, will focus on new and creative interfacingtechnologies. 'Those of us who are trying to splinter and find new waysof talking to people are going to be more interested in abstractedenvironments that provide different kinds of hardware accordances,whether that's [with] gestural controls or better technology forartificial intelligence, where you could really interact with people oragents in a world that would be more credible than it is in the currenttechnology. There will be people who obsess with graphics, and that'sthe path that advertising has been on and will keep going down, butthen there's this other path which is really the interest in new kinds ofinteractions.'

It's a scenario Townsend hints is much closer than we might think.'Exciting times are ahead, there really are,' he smiles. 'I've already hadsome hints of what the next generation of consoles are going to looklike. In about eight to nine years from now, you'll have Britney Spearsin your living room.' How's that for a sobering thought? But on thebright side, we bet you she won't be able to spell 'zap' either…

p.47

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

social networking / contagious point of view / p.48

A / The water's warm

Whether in the realm of consoles, computer games, theInternet, or mobile phones, all indicators point togaming becoming an increasingly potent force withinthe media framework over the next five years. As thegaming demographic expands outwards into older,more affluent and gender-neutral territories, gamingcontent will evolve, thus opening the door for moretypes of brands to get involved. In terms of overalluptake, one could argue that gaming now is where theInternet was five years ago; over the next decade, brandparticipation in these spheres (especially whereclothiers, technology, cars, drinks, foods, andentertainment channels are concerned) will graduallyshift from novel to mandatory.

Concurrently, techniques and approaches to brandintegration in video games is evolving and becomingmore sophisticated - those who get there early andinvest real time and resources in the space stand tobenefit greatly.

B / Gamers have power

Beware. Gamers are welcoming of advertising so longas it adds to the gameplay experience (by heighteningthe realism) or provides them with tangible rewards. But

if you add to the clutter, detract from the overall userexperience, insult the gamer's intelligence or interruptgameplay, you will get bitten. Respect the environmentand the gamer.

C / Don't think in box ticks

Remember: the infrastructure and methods of practicethat currently dominate gaming and advertising are stillin flux, and the success stories in each respective fieldare still relatively few and far between. If you learn thetechnology, respect the gamer and stay true to yourbrand, you could set yourself up to deliver a completelyunique creative applications. There's ground to bebroken here.

12 / page 48CONTAGIOUS POINT OF VIEW

EMBRACE GAMING!Early adopter brands set to benefitProvide experiences, not messagesRespect the environmentInnovate

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / references / p.49

13 / pages 49-51 JARGON / LINKS / REFERENCES /

13.01 / Specialist Gaming Agencies

AKQA / www.akqa.com

ARC Worldwide / www.arcww.com

Barbarian Group / www.barbariangroup.com

Denuo / www.denuo.com

Electric Sheep / www.electricsheepcompany.com

Leo Burnett Worldwide / www.leoburnett.com

Millions Of Us / www.millionsofus.com

R/GA / www.rga.com

Rivers Run Red / www.riversrunred.com

Saatchi & Saatchi, LA / www.saatchila.com

Tribal DDB / www.tribalddb.com

13.02 / Developers

Activision / www.activision.com

Atari / www.atari.com

Blitz Games / www.blitzgames.com

Electronic Arts / www.ea.com

Fuel Industries / www.fuelindustries.com

Funcom / www.funcom.com

Linden Labs / www.lindenlabs.com

Sulake Corporation / www.sulake.com

Ubisoft / www.ubi.com

13.03 / Game Consoles

Nintendo Wii / www.wii.com

Nintendo DS / www.nintendo.com/systemds

Sony PlayStation 3 / uk.playstation.com/ps3

Sony PSP / www.yourpsp.com

Microsoft Xbox 360 / www.xbox.com

13.04 / In-Game Networks

Double Fusion / www.doublefusion.com

Greystripe / www.greystripe.com

IGA Worldwide / www.igaworldwide.com

Massive Incorporated /

www.massiveincorporated.com

13.05 / Media Planners/Research Companies

Bunnyfoot / www.bunnyfoot.com

The Future Laboratory /

www.thefuturelaboratory.com

Juniper Research / www.juniperresearch.com

Mindshare Interaction /

www.mindshareinteraction.com

Nielsen Entertainment / www.neilsenmedia.com

NPD Group / www.npd.com

Yankee Group / www.yankeegroup.com

13.06 / MMORPGS/Social Worlds

Anarchy Online / www.anarchy-online.com

Habbo Hotel / www.haboohotel.com

Second Life / www.secondlife.com

Second Life Liberation Army /

slla.blogspot.com

There / www.there.com

Virtual Worlds Review /

www.virtualworldsreview.com

War Of Warcraft / www.worldofwarcraft.com

Lord of the Rings Online / lotro.turbine.com

13.07 / Blogs & Further Reading

Games Biz / www.gamesbiz.net

Gamasutra / www.gamasutra.com

Game Developers Conference 2007 /

www.gdconf.com

Kotaku / www.kotaku.com

Nexgen Wars / www.nexgenwars.com

Persuasive Games / www.persuasivegames.com

Pocket Gamer / www.pocketgamer.co.uk

Think Geek / www.thinkgeek.com

Watercooler Games /

www.watercoolergames.org

13.08 / Jargon

3G: Third-generation technology. Generallypertains to mobile phone and PDA devices;specifically, the ability to facilitate transfers ofvoice data and other information (such as Internet,email, GPS, etc) simultaneously.

ARG: Alternate reality games. These defytraditional platforms by working across multipleforms of media and utilising direct-reach techniquessuch as email, IM and text messages to blur thelines between fictionalised and real-world realities.

Blu-Ray: A popular standard in the high definitionDVD market. Boasts 10x the data capacity ofregular DVDs, as well as improved audio andvisual fidelity. Blu-Ray's main competitor is knownas HD-DVD.

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / references / p.50

13 / page 50 JARGON / LINKS / REFERENCES /

Consoles: Home-based (ie. non-portable)hardware dedicated exclusively to gaming. Popularconsoles of the past include the Atari 2600,Nintendo Entertainment System and PlayStation 2.

Dynamic advertising: Advertising delivered by agame advertising network to a designated virtualspace in real time over a broadband connection.

Flash: A popular programming language, ownedby Adobe. Frequent applications include graphicalwebsite interfaces, streaming video and gamedesign.

MMO / MMORPG: A Massively Multiplayer OnlineRoleplaying Game; online environments thatdepend on the real time interaction of as many asmillions of players at once.

Seventh-generation: A blanket term used to referto the Nintendo Wii, Xbox 360 and SonyPlayStation 3 consoles.

Shockwave: Another popular programminglanguage, also owned by Adobe. Now usedprimarily to create rich game content.

Spyware: Functioning software with the hiddeneffect of harvesting private information about thehost console/computer without user's consent.

CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION

the gaming industry / credits / p.51

16 / page 51 CREDITSThis report was produced by Contagious

Series Editor / Paul Kemp-Robertson

Written by / Mark Pytlik

Additional Research / Giacomo Bracci, Josh Kemp

Edited by / Jess Greenwood, Emily Hare

Design / Dean Dorat / www.deandorat.com

Contagious 45 Foubert's PlaceLondon, W1F 7QHT:+44 (0)207 575 1981www.contagiousmagazine.comContact / hello@contagiousmagazine.com

Published by Xtreme Information Xtreme Information is the market leader in the provision of mediaIntelligence and competitive advertising monitoring from aroundthe world.

Xtreme works with the majority of FTSE 100 and Fortune 500 multinational companies, and with every major advertising and media agency. The company is backed by leading US media investors, Veronis Suhler Stevenson (www.vss.com).

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CHAPTERS /

02 /INTRO

01 /SUMMARY

03 /TECHNOLOGY

04 /ADVERTISING

05 /LANDSCAPE

06 /CONSUMERS

07 /MARKETING

08 /BUSINESS

09 /DISRUPTION

10 /FACT

13 /REFERENCES

11 /FUTURE

12 /CONCLUSION