Product placement and the future of gaming

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The barrier to entry for gaming developers, as is the case with much of development today, is diminishing, and this is a positive development. Particularly for lower-end but equally fun 2D games that are playable on Android or iPhones, SDKs are readily available and inexpensive, and there are ready-made venues for selling your product. Granted, there are thousands of apps out there that never make much money for their developers, but there are still enough success stories to make it worth giving it a go.

The fact is, every silver lining has a cloud, and the lower barrier to entry and the huge number of apps out there does have a negative impact on the gaming development community, just in terms of having to deal with a crowded market and low prices, especially when it comes to smartphone apps. The buying public buys plenty of smartphone apps, but they’re not willing to pay much for them, which means you have to sell a lot of apps to actually make a living at it.

Fortunately, the market does tend to find a solution, and there’s a new trend in gaming. It’s not a new trend entirely—it’s something that has been around for decades. Ever since the beginning of TV, in fact. And it’s name is . . . product placement.

I talked to Blake Commagere, who runs a company called Media Spike, and he is bringing the concept to gaming. Blake got started building games in the horror genre called “Vampires” and “Zombies” on Facebook, getting nearly 60 million players. Unfortunately, Blake said, “Traditional advertising was giving me horrible results.” Gamers tend to be naturally focused on the game, and not ads. An early experiment with product placement was the answer, and that was the genesis of MediaSpike.

Game development is a hot industry, but it’s one that is hard to make money with. And any industry, hot or not, that has price margin pressure like that—users want social and smartphone games for a dollar, or for free—just can’t last without degrading quickly. We saw this happen in the ‘90s when everyone was launching dotcoms with no revenue models, and it did indeed collapse on itself. Fortunately for all of us, the social and smartphone game industry isn’t going to degrade any time soon.

What this trend does for gaming is broadens the margin for the developer. “We have lowered the number of users necessary for you to be able to say, ‘This game has been a successful venture and I now have a profitable business and now we can continue to grow.’” With the ability to be successful on a smaller number of end users, not only will more social game developers go into the market, more of them will stay in the market, and that’s what really counts.

For you gamers out there, how do you feel about product placement? What if you had to grab a can of Red Bull, instead of a magic golden goblet of life-restoring nectar to extend your character's life?

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