iZone International: In-game advertising on the way out, says EA exec

EA Free to Play GM Ben Cousins feels that ad-supported content is not as lucrative as paid content, and to keep the users interested and not get scared off by high costs, a model based on micro-transactions can be much more successful. He cites Zynga’s example as a success story that EA wants to emulate in terms of the revenue model.

e4m by exchange4media Staff
Updated: Dec 22, 2010 7:43 AM
iZone International: In-game advertising on the way out, says EA exec

Electronic Arts (EA), who were originally the pioneers of in-game advertising, displaying billboards by paying advertisers inside their sports videogames, and sometimes, more egregiously, in settings where it wasn’t very appropriate, but today, EA’s General Manager of Free to Play, Ben Cousins, told Edge magazine in an interview that the model was on its way out and that microtransactions were where the money really lay.

Cousins told Edge: “We actually aren’t getting much from ad revenue at all. The in-game advertising business hasn’t grown as fast as people expected it to.”

One of the most successful examples of leveraging microtransactions is the social gaming empire of Zynga, which built a multi-million dollar business from the Facebook game ‘Farmville’, and even today owns seven of the 10 most played games on Facebook. Speaking to exchange4media earlier, Zynga India Country Manager Shan Kadavil had said, “Zynga games are popular with people across multiple platforms, with 320 million people having played Zynga games to date. At any point in the day, four of your friends will be playing a Zynga game.”

While advertising in social media games is an upcoming trend and could help build a lot of attachment to brands and reach out to people in a way that integrates into the overall experience, this is still a reasonably new phenomenon. Zynga’s main revenues still come from people who use real world money to buy in-game money to buy virtual goods. You can do the same things without spending money, but it takes time and effort, while paying costs very little. However, all these microtransactions add up to a very large amount of money.

Though less than 10 per cent of the people playing actually pay anything, the people who pay, in cents instead of dollars, account for millions in revenues, and the total value of virtual goods transactions across different games and platforms for the various companies in the market is now over $7 billion in 2010, according to a study by ResearchandMarkets.com.

Cousins told Edge: “If you think about how fast the virtual goods business has grown in the last year or so, it’s been much quicker and become a much more reliable source of revenue.”


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