Category Archives: Business

More Game Ads, Lower Prices

WSJ (subscription required) says Electronic Arts is joining Microsoft in an ad serving service for video games:

Advertising in games remains a relatively small business, but many game publishers believe there’s a large untapped revenue opportunity in displaying ads to their audiences. Many games are played by 18- to 34-year-old men, a prized demographic for marketers that is spending more time playing games at the expense of traditional ad-supported media like television….In the past, companies like EA have integrated mostly “static” advertisements into their videogames that don’t change throughout the life of the game … EA is currently estimated to earn revenue in the single-digit millions from such ads….Such ads must be integrated into a game six to eight months before the title is released…[vs.] “dynamically” insert advertisements into games on a regular basis…

With hundreds of hours playing a title, ad revenues could hit tens of dollars per player which could be billions of dollars vs. millions. In a competitive industry, this should drive the sticker price of the games down.

There is a chicken and egg problem though. Ad rates for games are too low right now for game producers to make the ads too intrusive. That makes the ads less valuable per viewing.

Look for more freeware titles and 100%-mail-in-rebate deals around late 2008 for Christmas 2007 titles that have ads.

AOL Free Soon

AOL is pushing the nation to broadband by decreasing the gap between broadband AOL and regular AOL by $15/month. This seems like the biggest and last key tipping point toward US broadband. Dialup AOL will stay the same price. They expect to make up the subscriber fee losses in increased advertising revenue. This will be a tricky transition, but if successful, we could be watching Warner content over the web. TV sales and ad sales could indeed make this a good idea.

In the mean time, AOL is about to give millions of people $180/year. According to WSJ:

Of AOL’s 18.6 million domestic subscribers, about six million get their Internet access from a high-speed provider … AOL would let subscribers with a high-speed connection keep their AOL account free.

Between the Bill Gates foreign policy and the AOL fiscal policy, private America is stealing a march on the Federal Government.