Report from Nordic Game conference: virtual property and in-game advertising

Greetings from the Nordic Game conference in Malmö, Sweden. About 600 delegates from game companies, public bodies and research organisations showed up for two days of talks and workshops on a variety of topics – including virtual economies.

At last year’s conference, I gave an introductory talk on real-money trade of game property, and that was all. This year, Julian Dibbell is giving a keynote speech on the topic, and I understand he will be talking about his experiences with Chinese gold farmers, which I am very much looking forward to. “Masu” Masuyama, a Japanese game designer and author, spoke about “money games” earlier today, and Jørgen Tharaldsen, product director at Funcom (Anarchy Online, Age of Conan), talked about new business models for game developers.

One of the things Funcom’s Tharaldsen was going to talk about was RMT, but thanks to an active audience, he only got as far as in-game advertising. What he said about that was interesting though: that there are more than 150 games with in-game ad technology in development; extra revenue per unit sold is upwards from 1-2 USD; and there is potential for in-game advertisers to reach 18-34 y.o. audiences bigger than US TV networks.

As you probably know, Funcom’s Anarchy Online has been a pioneer in this field. Tharaldsen claimed that thanks to good execution, he has received “tons of positive emails from the players about the ads, but not a single negative one”. Graphical filters and other measures are used to make the content fit better into the game world, and latest experiments involve interactive advertising elements.

Tharaldsen stressed that games are not TV: if the player community doesn’t like the ads, the plan backfires. Final control over what ad content is released is retained at Funcom. It’s not too difficult to find players who don’t like the ads, though, so one suspects the model still boils down to a balance between added revenues and not annoying too many people.

Advertising will obviously not fit in the medieval fantasy world of Age of Conan, but Funcom’s following MMO title will rather craftily be set in present times. Funcom is working together with Massive Inc, but there are also other in-game advertising networks such as Double Fusion and IGA. Last year, Yankee Group estimated that the in-game advertising market exceeds 1 Bn USD in 2010, which is significant but not huge.

CCP, the company behind EVE Online, is sponsoring Nordic Game this year, and I got a chance to interview their CEO and CMO about EVE’s virtual economy. I will be posting up segments of that next.

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