The In-Game Advertising Industry - Essay Example

The video games industry is expected to “break the $10 million mark this year.” Furthermore, as the sector has succeeded in reaching an audience that the traditional media can’t, advertising investment is anticipated to reach $300 million. PricewaterhouseCoopers estimates that the online gaming industry is set to grow $55 billion in 2009 (Video Games 2006). It should also be noted that the gaming industry grows at an astounding double-digit rate of 25% annually.

            Business organizations have been very quick to realize the potential profit gain from this segment. Massive Incorporated, which is the world’s first video game company, operates with the mission of “aggregating the gaming audience to deliver advertising across a network of premier video titles and providing measured results on consumer interaction with the advertising.” Double Fusion is an Israeli in-game advertising company established in the summer of 2004. The business model of Double Fusion is very much similar to that of Massive. The product line of Double Fusion ranges from dynamic advertisements, integrated advertising, and “around the game” inventory (Double Fusion 2006). Game Advertising (IGA) seeks to provide advertising services with its global computer video game media and advertising network. As opposed to Massive and other aforementioned competitors, IGA’s network encompasses multiple platforms including PC, console, and mobile gaming, and offers both static and dynamic advertising. Together with Massive, Double Fusion and IGA Worldwide captures the largest market shares. Some smaller start-ups and players in the video game industry are also taking the challenge of in-game advertising.

            Despite the rapid growth of the video gaming industry, it also faces numerous challenges. It should be noted that customers now demand the creation of video games that have more sophisticated storylines and graphic improvements. This has resulted in higher production costs as well as longer production times. On the other hand, the average commercial life of a video game has significantly dropped to less than one year. With the increasing competition among industry players, companies are launching new strategies to attract clients. For instance, Double Fusion has launched a new technology that allows them to sell custom programs to advertisers (Hyman, 2006). 

            The in-game advertising market is presently experiencing a trend of rapid growth and development. With the success of the pioneers in the industry like Massive Incorporated, more and more players opt to break into the sector. In the current circle of players, companies are leveraging their different capabilities to provide a differentiated product.