Ethics and Law in New Media/Advertising in video games/Financing game development

Sorting games

There are many models of financing development of games. Of course in real there is often used combination of all these types in one time.

according by their financing

• Fee per disc/download
• In-game Product placement.
• In-game Advertising
• Financing from the fan products/merchandise
• financing from premium subscribers fees.
• Indie games
• Open source games

sorting games according main purpose:

• Advaregames - type of games which are just vehicle for advertisement.the practice of using a video game to advertise a product, whole „game“ is focused on branding message.
• Real games – type of games which main purpose is entertainment.
• Edutainment – type of games which main purpose is not entertainment but education.

Why advertise in games? Is it effective?

In-game advertising is not new phenomenon, but it is becoming increasingly important in game business in last few years. Development of games are becoming more and more time and money consuming because of the graphic/painting, there was in last years a big push towards realism, and it cost money. So it become necessary to find some other sources of financing the development. Studios have to create new ways to monetize their content. To keep prizes of game for players low. There is also problem with warez and piracy, which pressure, by the flight of money for selling CDs/downloads, developers to changing the strategy of financing of development new games.

Also with the changing communications patterns, advertisers have to change their strategies, and find new ways how to effectively reach and impact consumers. Game industry is accelerating field, which is each year bigger and bigger, grow of hours spent by gamers during playing games of course attract advertisers.

Off course it is effective - It is the river of cash. And it is main reason why there is so big increase of finance in-game advertisement. According some research specific clusters of people spend even more time per week by gaming, then watching TV. When we compare trends Video game usage has still growing compared to TV - more about. Game advertising has even bigger potential because of grow of market with „intelligent“ mobile phones by which is possible to play everywhere – on bus station, in the bus, everywhere people don´t have to work. In fact it looks like that in few years each moment of human life will be covered by network... people will not have to sign in the „second life“ - because network will invade in their „real“ life. The intelligent phones with Internet connection are just first step. People will be able to be online on their social network sites and play various games constantly. It mean, that contemporary situation still is not flash point. And increase of advertising opportunities will during few next years constantly grow.

It´s the reason, why here is specific academic institutes focusing on this phenomenon. And itś natural, that common busines´s models and advertisement will penetrate also in this part of human life, same as in all others. There is already even google adsense for games.

„In 2006, according to the most recent statistics from Nielsen Media Research, $75 million was spent on this new way to reach potential customers. Nielsen estimates this figure will increase 13-fold by 2010 to $1 billion.„

Video games have many elements that make them ideal platforms for advertisements. The advertisement is possible quite well focus on specific types of target groups. It´s quite well known, that the target group „homemaker“ is playing most of the time before midday and the scholars afternoon..., some games have also localized versions so it give quite good opportunity for focusing the advertisement directly to the right target groups.

The brands which appear in games are registered by players with their subconscious, because main attention of player is focus in storyline of the game. Also when we compare TV and video games, there is just few minutes of advertising or less per gaming/hour. Contrast that with an hour of watching television where consumers are likely to be exposed to at least 12 minutes of interruptive advertising.

Specific type of in-game advertising is product placement - rewarding players with branded items, with improvement of graphic,there appear opportunity for product placement almost at same level as in the movie industry. The characters of games use well portrayed shoes, dress, cars... and consume/ can consume products with brands from real world. Sometimes is even better to use real brands in game environment than “fake brands” for closeness of these simulacrum to „real“ reality. Developers have to well strike a balance in the number of banners/advertisement which they give in a game in order to achieve a sufficient number of exposures and yet not to leave the players with the feeling that they are being spammed.

„In fact, according to Massive's research, gamers like ads. Here's the caveat: they have to add to the gaming experience. He describes a game that takes place in Times Square. With no ads, it's not real at all. With generic ads, it's a little better. "Now imagine Times Square with ads you just saw on television or read in a newspaper—the latest movie release or television show or a new car model," he said. "Imagine further that it is up-to-the-minute, whether you played your game today or six months from now. That is much more realistic." His argument is that gamers consume the experience of ads, not just the ads themselves. "The ads add to and enhance that experience, and our research shows that it is highly effective for both game play as well as advertisers."

Game Advertising Makes Games Better?

& players attitudes toward advertisement in games

The advertisements are accept by players positively when they add realism in games. A very realistic environment can be in specific games acquire just with advertisement, because real life are full of commerce. So it´s natural, that with attempts for realism in games come also the advertisement, like a necessary essence of reality. The qualitative research of discussions on Slashdot.com prove, that the players attitude toward advertising are positive, if the advertisements are placed sensitively, if they help to simulate better the real world and if they fit the game context. But there is also danger, that part of players who are escaping from real-world to game-world don´t want so „real“ game-world. And for this part of players are therefore adds just annoying and disrupting.

„Consumers who abhor advertising also detest product placements. Indeed, some gamers were very negative about product placements in games, especially when the brand usages were overt, saturated, or did not fit the game context. These game-players' comments noted the already commercial-filled real world and expressed hope that their game-world be devoid of such images. For this group of players, embedding brands in games may well result in boycotts of brands or games or both. „

There is similarity with film industry

The situation in this branch is really similar with film industry. The influence of new form´s of distribution and the especially warez and pirates sharing conduce to necessity to find new way how to earn money from games, or at least pay off their development. So this process conduce to aiming the financial purposes in product placement, and different add-ware in games same as product placement in films. The amount of money which is spent by advertising companies in game industry are therefore constantly growing.

Similar as in film industry where exist Hollywood production and films from Sundance festival it leads to different types of games which differ according developer´s attitudes toward financing of the game´s development – independent „indie“ studios make independent games without in-game advertisement. And there are also games which are in first contemplation just vehicles for advertisement – so called advergames. Between two extreme poles are games with product placement and in-game advertisements. But of course the distinction between these categories are not so strict and game with to much advertisement can takes effect as a mere advaregame.

Example of indie studio and it´s financing strategy

Amanita Design is Czech independent game development studio founded in 2003. It creates games, animations, advergames.. etc. In 2007 they had achievement in Independent game festival Independent game festival in California with their second game Samorost 2 in category Best Web Browser Game. Last achievement they success this year at same festival in category Excellence In Visual Art with their last game Machinarium.

How is possible to develop games which are top of the graphic design without advare? The studio started with first game like school project. And they used in Samorost 1 (first game) and Samorost 2 the system of paying for second half of the game. They also create some fan products like T-shirts or soundtracks. Development of latest game Machinarium was also financed by another projects of studio, like flash web sites, edutainment for BBC or advergame for Nike.

Expression by authors: „we just finished another flash game called Questionaut. it was created for BBC and it's meant for 11 years old kids. (….) we needed some money for our main project Machinarium...“

Unfortunately they don´t answer the questions about financing the development of the games more openly. But It´s obvious, that the creating these games was financed from the another projects of the studio. From strictly economic point of view, we can accept these games as a advertisement of skills of studio. Which attract clients to buy some products by this studio... like original advergames, flash animations, flash banners or whole flash websites.

What about the future?

It seems to me, that in future this field of creativity will crystallised similar as film branch. So there will be (or already are) advertisement spots – advergames, huge „Hollywood megafilms“ - the mainstream games replete by product placement and in-game advertisement, „indipendent films from Sundance“ - the indie games from IGA, and for game branch specific open source games creating by community (little similarity i find with YouTube and remixes from you tube spots).

„Before independent film came along, the movie industry was formulaic. People figured out how to finance and distribute independent films and breathed creative life into the film industry. They were exotic and cool--and are now part of the whole film market. I think now the game-industry version of that is enabled by all this young talent out there experimenting [on the Internet].„