The day after I blogged about Massive Inc’s new dynamic in-game advertising program Microsoft purchased the company. And no, I do not see a causal connection (nobody reads my blog anyway). All it means is that there are other people out there who realise just how big in-game advertising is going to be. For Microsoft this is a very good buy. The Wall Street Journal pointed out that it means Microsoft can have its next generation advertising strategy in place before its main rivals –Sony and Nintendo- manage to even bring their competing consoles to market. No doubt Microsoft is planning to have Xbox Live monetized with dynamic advertisements before too long.

I am predicting that by 2010 all current projections of in-game ad spends will seem woefully conservative. There are three key factors that are really going to push the dollars up in this category.

The Holy Grail: Consoles as Home Media Centres
We finally found it. The gaming console is going to provide the hub for the elusive home media centre –the device through which homes will consume the majority of digital media and have the longest duration broadband experiences.

At the moment this type of content experience is restricted largely to early adopters. Has anyone been into a college dorm room of late? If you ignore the rampant content piracy you can observe these early adopters in action: Friends come and sit on ancient couches, the Xbox is permanently on –either playing digital music, movies, DVDs or some game or another. The visitors pick up a handset without even thinking about it and start interacting –with their friends and with whatever content happens to playing at the time. I get excited watching all this. It is like going to the zoo, only slightly stinkier.

This applies to females as well. The gender barrier is all but vanished. In fact, if you include all types of games right down to Windows humble solitaire (why can’t I have my latest magazine cover on the back of those cards?), the demographic is basically an even split between women and men.

According to Todd Board of Ipsos, quoted in a Mediapost article on May 5, what is going to drive the console as media centre is consumers’ persistent preference for the “10 foot” video experience. At the moment it is basically a two-horse race between DVRs and gaming consoles to win the coveted title of dominant set-top media centre. I recommend you back the console. Its popularity is going to be fed from two angles: Broadband content consumers interested in the possibility of gaming and gaming enthusiasts wanting to consume other forms of broadband content. DVRs cannot do both.

Women and Children First: A Surprising Demographic
A recent AP-AOL Games poll showed that four in ten Americans play games on computers or consoles. Compare that to how many read a newspaper five days a week. Of those four in ten, 45% are playing online games.

As I mentioned above, women feature prominently in the most popular gaming category: casual games (backgammon, etc). And these kinds of numbers mean we have moved well away from the world of early adopters.

In the next five years, subscription services like Xbox live will be able to offer marketers unprecedented access to America’s living rooms. Already Xbox live offers movie trailer downloads, demo games and free calls to other subscribers. Plus it can display PC content if your computer is running Windows XP Media Centre Edition.

Consoles not only offer access to the living room, they also offer targeted access to the people in it. Last month Demonware announced that it has developed a ‘new advertising solution’: demographically targeted in-game advertising. Called DNA (Dynamic Network Advertising), it will provide users with context-aware in-game ads based around player profiles, multiplayer connections and any other data made available through the particular game.

This means users now provide data to a subscription service, which is captured, and to a particular game, which is also captured. A more targeted advertising environment could not be created without mass brain scans and the theft of thousands of dream journals.

Reality Bites: The Efficacy of In-Game Advertisements
Are these targeted, context-aware, dynamic, in-game advertisements going to be effective? Let me just come out and say it: They will be more effective than any other advertisements in the history of mankind.

Big claim? Yes. But the unknown quantity in this whole category is the emotional attachment gamers feel to their game of choice. They want it to be real. They want the character they are in the game to have a real world corollary. They befriend, date and marry other gamers they meet online. More than anything they want the reality of the game to bleed through to real life.

Hopefully there are some brave brands out there willing to experiment with this. I want companies like Gillette to launch a line of men’s shavers (incidentally if you were wondering how to reach the elusive male aged 18-34 look no further than in-game advertising) that is only advertised in games like Grand Theft Auto or branded on the side of race cars in Grand Turismo. Make no mention on the packaging of its connection to the games and see what happens. Granted you will need to be slightly more creative when it comes to World of Warcraft or Star Wars Galaxies but the same desire is there. In fact in fantasy worlds the desire seems to be greater. Here is an audience of millions absolutely craving objects and artifacts from their respective fantasy worlds.

And They Lived Happily Ever After: Conclusion
Gaming –as we now know it- is probably the biggest leap forward in storytelling since the invention of fire. Think backwards through history: television, film, radio, the printing press, illuminated manuscripts, carving, painting, singing, speech and dance: each of them has the same didactic relationship with its audience. The storyteller tells, the audience receives. With gaming the narrative evolves as the audience interacts with it –the storylines are co-created. The last couple of years have seen words like ‘Web 2.0’ and ‘interactivity’ leap to the front of marketers’ wish lists.  This is exactly what gaming –and particularly online gaming- actually is. A continuous dialogue between the content creators and the content consumers.

If that was too vague a conclusion then I will leave you with these two concrete questions to ponder over. How can you pirate a Massive Multiplayer Online Roleplaying Game? How can you skip an advertisement when it is a billboard on a street your character lives on?

G Preston White is a New Zealand-based freelance writer. He can be contacted via his website and blog. www.prestonwhite.co.nz