DFC Intelligence Issues In-Game Advertising Report

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Industry analyst DFC Intelligence has released a new report looking at the burgeoning business of in-game advertising, some of the problems facing it and the difficulties of making accurate predictions in a volatile industry.

Recent forecasts from Parks Associates called for in-game advertising to grow to over $800 million by 2012, from $55 million last year. While DFC did put forth a prediction of 250 percent growth in console game advertising over the same period, this figure is considerably more cautious than many are expecting, based on numerous factors.

The report states that while the PC market is assumed to be nearly entirely online, this is not the case with console systems, which still offers the majority of its value via offline performance. While consoles are increasingly going online, the process is moving at a relatively steady rate, and still represents a minority of owners. The report states that while Microsoft reported over 50 percent of Xbox 360 owners were connecting to the Xbox Live service during the early days of the system’s release, only 10 percent of original Xbox owners had joined. However, the report also points out that while the first Xbox system required the purchase of a subscription, the Xbox 360 offers Silver level access free, tempering the value of the 50 percent figure.

Other factors, including a relatively limited demographic for online console owners and an apparent slip in the fortunes of PC in-game advertising despite its far more ubiquitous online presence are also put forth. Ultimately, DFC claims to be “much more bullish” on the growth for subscription revenue and digital distribution than on advertising; while the company believes advertising revenues will grow, the high rates of growth predicted by the most optimistic analysts seem unlikely.

The full text of the report is available here.

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