Google's recent announcement of its AdSense for Games program has sparked renewed interest in the video games advert market and, to a degree, validated its very existence. The AdSense for Games program allows publishers to include advert technology specifically developed for games within their browser-based products. So far, publishers such as Konami have signed up to the beta version that is currently being run in the US. While Google has already made acquisitions in the area - such as Adscape Media in early 2007 - Datamonitor believes that the company is just scratching the surface of the market, and the potential for it to reach out to more gamers is largely untapped.
In recent weeks, rumors have arisen indicating that Google is about to announce an intention to buy Valve Software, a Washington-based game developer. So far, Valve Software appears to have denied talks with Google about the acquisition. However, Datamonitor believes that the combination of the two companies could have interesting implications for the gaming advert market and would not be such a wild move as other market watchers have suggested.
Valve would be a valuable acquisition for two main reasons. Firstly, the catalog of games it provides are still some of the most widely played in the global gaming industry. Half-Life, Team Fortress, Counterstrike and Day of Defeat are still highly popular with both casual and competitive gamers and, while the number of users may not compare individually to games such as Blizzard Entertainment's World of Warcraft, the games are still played by a huge amount of loyal fans. Secondly - and most importantly in Datamonitor's opinion - is Valve's online gaming distribution platform, Steam. Steam effectively provides digital rights management, game updates, instant messaging, voice-over-internet protocol, and games-server browsing. There are over 16 million people currently using the platform, with around 450 games offered by Valve and other developers. Users are able to purchase and download games via the Steam platform with an easy-to-use interface. Perhaps most intriguing from Google's perspective is the automatic update feature within the Steam client, which transmits game and platform updates to gamers as a background process.
The opportunities that the Steam platform would provide Google are numerous. Google would be able to incorporate adverts into the Steam client software based on its existing AdSense for Games technology. Because the Steam client is currently displayed in a pseudo-browser fashion, the integration of the adverts could be relatively seamless. Targeting could be based on information from the social networking aspects of Steam, the games played, or the particular demographics of players. Additionally, Google would be able to start tackling the challenge of embedding adverts in games themselves. While this is by no means a new idea, the concept has yet to take off within the games advertising market. Such adverts might include virtual billboards within different environments for various games, adverts on the startup or loading screens of games, or adverts displayed to users while waiting to come back to life after being killed. Because the Steam platform allows Valve (and potentially Google) to send data to users automatically, the included adverts could be updated frequently and read off of a local hard drive. This would negate the requirement for in-game downloading, often the bane of gamers playing online.
The biggest challenge, should Google choose to go down this path, would ultimately be the integration of adverts into the games themselves. Online games are often too fast-paced to leave much time for users to click through to advertised websites, particularly as launching a browser outside the game can be highly disruptive. As such, adverts might be better suited to traditional 'exposure' situations, or have their click-throughs saved on the fly for later browsing. Regardless of the format these adverts might take, Datamonitor believes that Valve would make an intelligent acquisition for current and future game advertising as Google looks to increase its presence in the market.
Adam Jura