Major game title ad-supported, free-to-play

The increasing acceptance of the in-game channel, especially from those advertisers seeking a young, male audience, is providing the revenue to give major titles, such as Electronic Arts' “Battlefields”, the confidence to distribute the game for free.

Instead of paying approximately $20 for a new, boxed copy of a video game, gamers will be able to download games free via the Internet. All that is asked in return is that gamers tolerate in-game advertising, and perhaps go on regular in-game spending sprees for elements designed to improve their gaming experience.

“Battlefield Heroes”, a specially produced version of an existing popular game series, will be offered free online, but will employ two means of revenue generation for EA – selling advertising and micro-transactions. In-game micro-transactions occur when gamers are offered a selection of items that they can purchase for small amounts, but that will improve their game – either visually or by increasing the players performance, such as speed and agility.

"It is like giving every little girl a Barbie doll that is naked and hoping she will accessorize," said Michael Pachter, a gaming industry research analyst at Wedbush Morgan Securities, in a BusinesWeek article. "While you can still play with a naked Barbie, it is not as much fun as dressing her up."

EA first experimented with micro-transactions with the launch of a free-to-play, online version of soccer game “FIFA” in the game-obsessed country of South Korea. Those particular micro-transactions, which not only could improve user experience but also increase agility, speed and performance, generated over $24 million in the two years since its launch.

eMarketer predicts that in-game advertising revenue will grow 23 percent annually over the next four years, and research firm Yankee Group forecasts the market will grow to $732 million in the same period.

Tags: gamers, in-game advertising, micro-transaction, online advertising, video games