Thursday 3 April 2014

In-Game Advertising: the future of free-to-play revenue (spilgames.com)


Audience shift and revenue models in free-to-playIGA Snail Bob
These are two trends that are going to make a big difference for developers, advertisers, and publishers this year. I introduced these topics in my last blog piece; now I have the chance to go into a bit more detail.
Let’s go through each of these and see if you agree with me.

1. Audience shift and receptivity of online gamers

For the first time ever, the online audience has topped the TV audience, which signals a tremendous opportunity for advertisers. There are now 1.2 billion people playing games worldwide. These are highly-engaged consumers, exposed to average play sessions of 40 minutes. This is the kind of long-form content that suits advertisers’ 30-second video ads.
The good news doesn’t stop there: 83% of gamers are open to advertising within free content. A captive, engaged, and responsive audience: great news for advertisers.
So what about developers?

2. Game monetization for all

Let’s not beat around the bush: making money from free-to-play games is proving more and more difficult.
The app store is saturated and user acquisition costs have skyrocketed. By last December there were over 180,000 games in the app store; user acquisition has increased almost 300% while average revenue has increased only 38%.
Developers find it difficult to make quality new games in the face of soaring production costs and falling relative revenues.
The solution is so simple that it seems too good to be true. However, all of our findings point to the contrary: In-Game Advertising (IGA) is a lucrative and scalable way for developers to find decent returns on their games.
With engaged audiences who are open to the ‘ads-for-free-content’ trade-off, this is a win-win-win: developers get paid good money for good games, publishers see engaged audiences returning to quality content, and advertisers get the kind of large-scale, targeted exposure they’re looking for.

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