With the cost of game development reaching an all-time high and companies constantly searching for new revenue steams to supplement their development efforts, new analysis from market research group eMarketer is predicting that game advertising will generate almost $2 billion by 2011.
In the latest eMarketer report, "Video Game Advertising: Getting to the Next Level," senior analyst Paul Verna predicts that "in-game advertising will evolve in scope and sophistication, offering new platforms for marketers, new business opportunities for technology providers and vital revenue for game developers, who have struggled with the escalating production costs of increasingly complex games."
The analyst estimates that "over the next five years video game advertising will grow at a compound annual growth rate of nearly 23%, reaching nearly $2 billion by 2011."
According to the report, the bulk of this growth is expected to be driven by a widening gaming demographic to include older gamers and women. In addition, the release of titles more appropriate to include in-game ads, such as online console games and massively multiplayer online games (MMOGs) are also expected to play favorably in this expected growth as well.
Of this total, the report suggests that in-game advertising within the US alone will be responsible for $969 million over the same period of time. A "significant percentage" of this revenue is expected to come as a result of advergames, with spending towards these games anticipated to reach $344 million in the US by 2011, compared to the $164 million currently.
"As the in-game advertising industry evolves," commented Verna, "game developers, console manufacturers, advertisers and technology providers are experimenting with new approaches that leverage the shifting demographics of the gaming population."