in-game advertising in china edward lehman managing director
TRANSCRIPT
China’s Gamers• China’s Internet-using population slated to
surpass that of the United States by early 2008
• Largest market in the world for Massively Multiplayer On-Line Role-Playing Games (MMORPGs)
• Over 45 million people in China play games online– Roughly half of these players pay for them.
• Estimated 85 million online gamers in China by 2012
Business Models•“Pay to Play” Models
– Sale, Subscription, or “Pay as you Go”– Sometimes advertising-supported
•“Tiered” Model– Players pay to improve their character
•“Free to Play” Models– Selling virtual land, items, et cetera– In-game advertising
Types of In-Game Advertising (1)• Static Ads:
– Ads hard-coded into the game, and do not change
– No Internet connection required– No way to easily gauge effectiveness of ads
• Dynamic Ads:– Game contains ‘ad engine’ to retrieve ads
on demand– Requires Internet connection– Can change ad campaigns for a particular
game– Can enable ‘click-through’ and other user
interactivity, monitor ratings, et cetera
Types of In-Game Advertising (2)
Advertisements on Menus and Loading Screens
Advertisements in the “Game World”
Immersive versus Intrusive
• Well-placed ads make games more realistic
• Poorly-judged ads can turn off players
(potential customers)
Market Growth• “Netguide 2008” survey: Gaming market increased
57% year on year to RMB 14.7billion (US$2billion)
• Public gaming companies – market capitalization:– Giant Interactive (NYSE: GA) - US$2.6billion– Shanda (NASDAQ: SNDA) - US$2.13billion– Perfect World (NASDAQ: PWRD) – US$1.31billion
• Growth of local companies specializing in in-game advertising: Captiv8; NGI; In-Game Interactive
• Foreign in-game advertising companies starting to establish presence in China: Aruon Communications (Korea); GameGlance (Thailand)
Regulation• Restrictions on Advertising
– “Real world” restrictions also apply to the “virtual world” (and to on-line ads in general)
• No obscene, false, or disrespectful advertising, or advertising that runs contrary to official ideology
• Restrictions on Online Gaming– Computer game software is a “restricted
area”; foreign game producers may not operate directly in China
– ID registration and restrictions on gamers under 18
• Software must contain time restrictions