Parks Associates Blog

Tuesday, February 26, 2008

Sony's Stance on In-Game Advertising Unconfirmed, But Laudable

Adage published an article regarding Sony's plans to open up its PS3 platform for third-party game advertising companies such as IGA Worldwide, Doublefusion, and Adscape/Google.
Many websites recycled this article shortly after. Clearly the information is leaked out by one of the third-party ad serving companies and Sony has not made any formal announcements yet.

I think if Sony indeed embraces an open approach, it will benefit the overall industry. In a report we published in mid-2007 on game advertising, we commented:

Platform fragmentation is another complaint one frequently hears in the emerging in-game advertising industry. The concern is mainly due to Microsoft’s acquisition of Massive, Inc. and the potential of Microsoft shutting out other ad serving companies from the Xbox platform. If Sony and Nintendo decide to make their platforms proprietary through acquiring technologies and companies, the problem will be compounded, creating a problem for advertisers. For instance, if Nike wants to advertise in Madden 08, now instead of working with one ad serving company, it might need to work with four or five companies in order to advertise on the PC, Xbox 360, Playstation 3, Wii, and mobile versions of the game. Such a scenario will surely hurt the fledging dynamic in-game advertising industry... A more plausible scenario will be for Sony to open up its network to multiple vendors, driving Microsoft to allow other ad serving companies onto its platform. However, there are competitive concerns involved in such a decision. For instance, should Sony allow Microsoft, its competitor, to embed its SDKs into PS3 games and sell ads on its platform?

After that report was published, Sony made an announcement regarding developing their own ad-serving technologies but it has not publicized its plans regarding ad sales and management, leaving room for imagination. From a large game publisher's perspecitve, they do wish the platform fragmentation issues get solved quickly so they don't need to waste time negotiating with multiple ad-serving vendors for the different platforms they sell to. They have incentives to push Sony to open up its platform to their existing ad-serving partners.

Console clearly has the potential to become a viable game advertising platform but because of platform makers' control over their platforms and the delicate power balance between major publishers and console makers, we are likely to see less in-game advertising activities on console than the online PC platform in the next 12-18 months. There are a lot of game advertising innovations and activities around casual games and free-to-play online games. Recent entry of EA, id software, and Garage Games will help grow the inventory. Gamers are also less resistant to seeing ads if the games are free or subsidized.


Anonymous GameAds said...

Interesting game advertising developments. I don't think it will take much longer for sony to confirm this.

5:40 AM  

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