Video Game Marketing 2.0

With new gaming models exploding, marketers should learn to play along

This story originally appeared in the Dec. 17 issue of Marketing

With new gaming models exploding, marketers should learn to play along

Don’t know what an Orbital Drop Shock Trooper is? Think Imran Zakhaev must be a Russian doctor? Then it’s time to step up your video game knowledge.

Not only because the Canadian video game market continues to grow at a healthy rate (when caution prevails in most corners of the economy) but also because it’s expected to keep growing into the foreseeable future.

A study called “Video Game Acquisition in Canada” by The NPD Group proves the growth. It’s a snapshot of what happened in the game market in the six months ending Feb. 2012–everything from rentals to digital downloads—and shows game acquisition grew 46% for the period when compared to the same six-month period the previous year.

This momentum also comes across in PwC’s “Global Entertainment and Media Outlook 2012-2016” research, which projected projected the North American video game market will grow by 4.3% compounded annually to $18.6 billion in 2016 from $15.1 billion in 2011. And with more time and money being spent on gaming, PwC says marketers will be dedicating more of their budgets to play in the space. The report predicts spending on this kind of video-game advertising will jump from $1.2 billion in 2011 to $2 billion in 2016–an 11.2% increase compounded annually.

A lot of the game acquisition growth that took place this year was fuelled by free gaming, says Darrel Ryce, director of technology and entertainment at The NPD Group. Free games, he says, are the root of the discrepancy between the substantial game market growth and smaller revenue increase in the market of 4%.

Another major contributor to the market growth over the last couple of years is mobile and tablet gaming. Ryce doesn’t feel it’s taken away from traditional gaming–which involves systems like the Xbox 360, Playstation, Wii or PCs–but instead helped expand the size of the market and bring new gamers into the fold.

A lot of excitement is still brewing around the console space with Nintendo’s Wii U, the much-anticipated HD followup to its ubiquitous Wii. It was released in mid-November in North America and is considered the first of a new generation of video game home consoles. Nintendo said more than 400,000 of the consoles sold in the U.S. in the first week of its release. Not to be outdone, there’s wide speculation that both Microsoft and Sony will come out with their own new systems in 2013.

Between the growing mobile market and these new traditional systems coming into play, Ryce says he’s seen a trend over time that when new systems come to market, the market typically explodes and the growth becomes really strong again. He believes the expansion of the market will only continue.

It’s a far cry from the days when studios making a racing game would get grief from brands whose logos they wanted to put on billboards on the virtual race track because the brands saw it as an infringement on their intellectual property. Now, advertisers pay handsomely for their brand to make an appearance in such games.

To find out where the gaming industry is headed in 2013, we asked gaming industry experts to talk trends and share tips on how marketers can make a splash in the space.

Align With Your Objectives

Geoffrey Greenblatt, North American gaming director at Mindshare, is a big fan of the social gaming space and advises brands to make sure the way they’re integrated into a social game aligns with their objectives. No matter how cool a tactic is, if it doesn’t fulfill the brand’s objective, he says it ultimately isn’t a successful program. Objective first, tactics last, he says. For example, if your objective is to drive engagements on Facebook, try a Facebook driver within a game.

Get In Early

Speak with game studios early in a game’s existence—even before it goes into production, if possible—to take advantage of very affordable prices, says Greenblatt. “In doing so, the studios will come back and say, ‘We have no guarantees against this game. You can give us $100,000 and we’ll do something incredible for you,’” he says. If it winds up being a strong property that takes off quickly, you can end up getting a $600,000 media program for $100,000, says Greenblatt.

Relationship Count

More so than in sectors like TV, digital, print or out-of-home, Greenblatt says relationships with vendors are crucial in the gaming space and need to be formed and leveraged. If your brand has a strong relationship with a game development studio, it will be more likely to come to you first to share opportunities that could be explored with a new game nobody else knows about.

Mobile Movement

While consumers will spend hours playing a traditional game, the time spent on mobile gaming is limited to five to 10 minutes per session. “It’s really changed the way in which consumers think about gaming,” says Ryce.

Greenblatt says he’s particularly excited about mobile games with a social component. He predicts some unexpected social gaming titles and franchises will get into mobile. “It might be more of a gamification play or some sort of gamified play on a content piece, but the accessibility and simplicity of mobile really lends itself to [things like] mobile games that have this element of social tied into them.”

He says it’s still early days when it comes to advertising opportunities within mobile gaming, though. “You can go to studios and get some banners or some video in there, but in a lot of cases it’s really surface level at this point,” says Greenblatt. But he thinks that as brands and studios get more creative and come up with more ways to utilize the gaming space based on the brands’ objectives that “a lot of cool programs around some of the biggest franchises” will roll out.

Second-screen Experience

Nintendo’s Wii U is the first console to offer the second-screen gaming experience, as one controller has a sizeable touchscreen display similar to an iPad. Greenblatt predicts this is an experience that will gain momentum. Microsoft, for example, recently released its SmartGlass app, which allows Xbox 360 owners to use their tablet or smartphone to control their console—including games and movies—remotely.

Greenblatt is excited about the opportunity to use a tablet as a gaming device to play a game and interact with content you’re watching on TV, or extending playing experience from one platform to another if, say, you’re playing a food-focused social game and can get some additional content on your handheld while at the grocery store.

He notes that Wii U doesn’t have any advertising-related opportunities, and says the industry is “very much at the initial baby steps as to what can be done with these platform-extension experiences.” That said, he’s confident that there are countless opportunities to be had with the second-screen experience.

Traditional Gaming Down, Far From Out

While Ryce says growth for traditional gaming has slowed, that’s to be expected since most console systems have already been in-market for five or six years. Still, he says the majority of the revenue in the gaming industry today is being generated by the traditional games. So while current consoles are on downward slide of their sales arc, gamers are still ready to line up and spend big on marquee titles like Halo 4 and Call of Duty: Black Ops 2 (which, when played with Xbox or Playstation, allows players to stream their action live to YouTube for anyone who wants to watch).

Bridge Virtual and Real

Studios and brands are teaming up in inventive ways to target consumers with real-world experiences. Take the recent partnership between Halo 4 and PepsiCo Canada in which players could bank XP (an in-game currency) by starting an account at related websites and take steps to improve their game experience by customizing their armour and selecting their arsenal before the game launched.

Mix Free and Fee Models

These days, the average consumer has the bandwidth to download a video game, and Mike Schmalz, president of London, Ont. game development studio Digital Extremes, says “downloading a video game now is almost becoming analogous to downloading a song a few years ago.” Apple countered illegal downloading by taking the model and monetizing it, using a different format and Schmalz thinks the video game industry is now looking to similar methods of putting out free content—“because people are going to download it for free anyways,” he says—that can be monetized later.

Digital distribution, says Schmalz, often entails worldwide launches in which people can download a game for free and then have the option to buy upgrades or benefits—things like extra missions, weapons or abilities—at various price points to enhance their gaming experience.

Already popular in Asia, Schmalz says this model allows people who don’t want to pay to play. It also creates an ecosystem in which other players can choose to pay to support the further development of those games and allows the developers to monetize the games in a more efficient way than distributing a physical product. “This is a great way to access consumers directly,” he says.

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