Commercial Influence on the Video Game Industry:
Symbiotic Relationships and Their Effects
Thesis
by
Viktoriia Stepanova
Submitted in Partial Fulfillment
Of the Requirements of the Degree of
Bachelor of Art
In
Communication and Mass Media
University of New York in Prague
Empire State College
2016
Reader: Dr. Todd Nesbitt
Acknowledgements
I would like to express my sincere gratitude to the following people:
Dr. Todd Nesbitt, my mentor and teacher, for his lessons, advices and consultation,
which helped me to complete the thesis.
Professors William Pattison and Ciaran Kelly, my teachers, who opened me a new
world of marketing and advertising.
My parents, especially to my grandfather, who offered me an opportunity to study and
finish my education.
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Table of Contents
1. Introduction………………………………………………………………………….1
2. The interactive entertainment industry………………………………………………3
2.1 History…………………………………………………………………………..3
2.2 Defining video games…………………………………………………………..7
2.3 Types of video games …………………………………………………………..8
2.4 Genres of video games………………………………………………………….9
2.5 Motivation to play video games……………………………………………….14
3. The financial context of the video game industry………………………………….19
3.1 The growth of the industry……………………………………………………19
3.2 Demographics of video game players………………………………………...21
3.3 Traditional and new ways of funding...………………………………………..22
4. Advertising in the video game industry……………………………………………...25
4.1 History…………………………………………………………………………25
4.2 Types of advertising………………………………………………………….. 27
4.3 The aim of advertising and how it works……………………………………...30
5. Problems with advertising in the video game industry………………………………34
5.1 Influence on children…………………………………………………………...34
5.2 Influence on consumer buying behavior……………………….………………36
5.3 Ethical issues…………………………………………………………………...38
6. Regulations…………………………………………………………………………..40
5.4 Current legislations……………………………………………………………..40
5.5 Proposed ideas………………………………………………………………….41
7. Conclusion …………………………………………………………………………..43
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Abstract
This paper consists of examining the video game industry and tracing the
development of advertising in video games in order to critically reflect on the nature
of the financing of games. It starts with the overview of historical and financial
backgrounds of the interactive-entertainment industry associated with the
commercialization of video games. Advertising in video games is categorized and
analyzed as a potential power that can influence consumer-buying behavior. The
paper also focuses on the playing public in terms of its demographics, psychology
and motivations to play. Ethical and legislative problems created by advertising in
video games are examined and discussed. The paper concludes with possible
solutions to these issues.
1. Introduction
Marketing makes the world go round. Every-day, new theories, tools and methods are
developed to push brands further to reach potential customers. It started with print,
moved to radio and TV, and now is interacted in the World Wide Web. At this moment,
the Internet is perhaps where most marketing takes place, and it has become a modern
concern for many scholars. There are studies about privacy on social media, direct
advertisement on Google and YouTube, and individualized content on many digital
devices. However, according to the author of The effectiveness of “In-Game”
Advertising, Moonhee Yang (2006), there is little knowledge about marketing in
traditional leisure activities, such as video games, targeted at both adults and children.
Therefore, it is an important topic to study because advertising in video games are a
powerful marketing tools, which can influence consumer-buying behavior.
Computer video games are supposed to be a leisure activity through which an individual
can escape from reality. Bellman (2014) says that for marketers the best time to use
their manipulative tools is when a person believes that he or she is safe and cannot be
influenced by the outside world. This effect is more likely to appear while playing
games. Video games perhaps cannot be considered as a pure leisure activity anymore
because they have become a “gold mine” for marketers.
Computer and video games have become a part of everyday life in the same way as
television. However, it is a completely different type of entertainment tool. For many
years, games were considered a product that could be purchased and used. Later, with
the development of a new model of game play and more players, video games are no
longer products but perhaps can be considered mass media themselves. There are
various reasons why video games are so popular and powerful. Unlike TV, music or
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print media, games are more engaging and require listening, watching and moving.
Most of the senses are busy and the player is going deep into the virtual world.
Video games have been studied from different perspectives, in particular their violent
content. It is still debatable what effect video games have on children’s and adults’
behavior, criminal activity and tendency to commit violent acts. However, it is
important to study how marketers turned video games into a tool to influence consumerbuying behavior. This concept is also not easy to answer due to the different methods
and types of researchers who contributed to this topic.
The term advergaming is designed to describe the combination of advertisement and
computer or video games (Gross, 2010). In other words, advergaming is the process of
including advertising messages by a brand in online or offline video games. There are
three different types of advergaming: in-game advertising, advergames, and through the
line advertising. This industry is based on entertainment that allows for the creation of
the interactive gaming process with a designed advertising message to reach potential
customers (Buckner, 2002).
Both, the industry of video games and the number of players increase dramatically each
year. The video game industry develops and creates new platforms, means, ways to play
and gains more users and potential customers. Since 2009, spending in worldwide video
games advertising increased from 1.42 billion U.S dollars to 4.92 in 2016 (PwC, 2014).
The purpose of this paper is to analyze the role of advertising in contemporary video
games in order to understand the symbiotic nature among the marketing industry, game
creators and the game playing public. This will be done through examining the financial
context of the industry, the playing public and historical background of video games.
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2. The interactive entertainment industry
The influence of advertising in video games cannot be discussed without providing an
overview of the interactive entertainment industry’s main characteristics. This chapter
will specify the historical background of video games by tracing the beginning of the
commercialization of games. It will also define video games and their main elements.
Lastly, a classification of video games will be presented to specify genres for further
analysis from a marketing perspective.
2.1 History
The interactive entertainment industry, also referred to as the video game industry,
originated in the early 1950’s. The creation of early games is associated with the
development of the computer industry as that was the fundamental platform for
development. As Ceruzzi, a historian in computing and aerospace claims, that after the
Second World War researchers were able to program computers with the ability to
process different tasks, which influenced big companies like IBM and Ferranti to sell
computers to households, universities, organizations and corporations (Ceruzzi, 2004,
p.14-47). Because of the spread of early computers, the interactive entertainment
industry started to develop and create new types of games.
However, early computer games were different to present ones because developers did
not create them only for entertainment purposes (Smith, 2014). Most of the early
computer games carried an educational role in the form of trainings, instructions,
research applications and programs. The aim of video games was to make information
more enjoyable and easy to receive. Computers were created to solve problems and help
industries process tasks faster; therefore, scientists did not see them as a “fun” tool.
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Moreover, computers were expensive machines with limited memory and slow working
speed. These obstacles influenced the early game developers to concentrate on useful
aspects of a game rather than the leisure aspect.
In the history of the computer game industry, the earliest and perhaps the most
influential game is called Spacewar! (Graetz, 1981). According to Graets, who was in
the team of Spacewar! developers, the creation of this game is due to university students
who were allowed to create not science related tasks for computers. The story of the
game was based on science fiction and displayed a fight between two spaceships. A
gamer controlled a spaceship with a custom-built control box. It became a very popular
game among MIT students. Many other students started to create simple games such as
puzzles and quests, but they were not commercialized at that moment. However, the
idea of having a computer for gaming purposes started to spread.
The evolution of computers did not stop; on the contrary, even though the price was
high they became more available to the public. In 1970, the coin-operated games
experienced its peak of popularity (Kocurek, 2012: 3-6). The coin-operated games, or
arcades, are special electro mechanical games that can be activated by inserting coins,
tokens or special counters. These games are designed mechanisms that allow a gamer to
use buttons, levers and other tools to play. Some young engineers like Nolan Bushnell
and Ted Dabney had the idea to combine computer and coin-operated games together.
Inspired by Spacewar!, they created ComputerSpace with nearly the same concept. The
market for coin-operated games and new created arcades took its own path and started
to growth.
On the other hand, such interactive medium as televisions attracted Sanders Associates,
which was the early contractor developing and making various electronic systems
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(Langshaw, 2014). After a few years of experience with video games and television
sets, they produced the first video game console named Magnavox Odyssey. This
system included dozens of games: racing, shooting and sport games. Nonetheless, the
poor quality of these games and their limited technologies only inspired other
developers to start similar projects.
Pong is often referred to as being the first commercial success of a video game
(Kocurek, 2012: 6-7). This game was a combination of tennis influenced by video game
console and ComputerSpace influenced by coin-operated machine. The developers
Bushnell and Dabney decided to enter the market with Pong in 1972. Around 70,000
video games were sold in 1973, that was the beginning of video arcade game industry.
The arcades started to spread around cafes, restaurants, shopping malls and other public
places, but the industry itself was not big.
In the same way as the original Pong copied its idea from video game console, Atari
was influenced by Magnavox Odyssey and produced Home Pong with a more modified
version of a console (Ellis, 2004). Other companies started to follow the same path and
the industry grew. In the U.S. the market was able to sell 350,000 systems in 1975 and
5-6 million in 1977.
Regarding mainframe computers, it became easier to transfer information from one
device to another. Programmers and developers were allowed to exchange ideas,
information and even codes. Therefore more video games were produced. However,
mainframe computers were slower than home consoles and arcades because of the lack
of displays, limited graphics and memory (Dreher, 2014). These games were still
orientated on puzzles and strategies, which were also entertainment. Moreover,
mainframe computers had another advantage: the ability to connect with other
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computers around the world. Gamers could connect and interact with each other as part
of the game, and in 1979 the first RPGs were developed, such as Avatar.
Moving forward in the history of interactive entertainment industry, the most innovative
years are surely the 1990s. With the development of technologies and better
characteristics for computers, consoles and mobile devices it became easier to make
games more interactive, interesting and relaxing. New genres of video games were
created and more people enjoyed them.
Because of the growing popularity of home consoles and computers, there was a decline
in the arcade games industry. The gaming industry started to interact with other types of
media and entertainment. Due to criticism over the violence in games, it was necessary
to have legislative control. As a result of this, the Interactive Digital Software
Association was created. This organization categorizes games in terms of violent and
controversial material according to Nonprofit Report. The main feature of games from
1990’s onward was 3D technology that enabled computers and home consoles to
produce colorful content that arcades could not achieve.
The handheld game console became popular due to the advanced technology of
television. In 1989, Nintendo launched GameBoy that was a success and a sign of
progress for game consoles. In 1994, another generation of consoles entered the market:
Sega Saturn, Sony PlayStation and the PC-FX. As a result, in the U.S. market, Sega and
PlayStation consoles started to become competitors of Nintendo and the race for the
widest variety of games and most advanced technologies begun as it mentioned in
Soaring into 1989. For instance, there was a huge progress of 3D games and cartridges
were replaced by CDs that made the gaming process easier and more exciting.
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However, the main improvements happened with PC gaming. Technologically
advanced computers could provide a good quality of sound and visuals for games. In
1990s, the distribution of computer games was different. For example, potential gamers
could purchase a beta or a short version of a game before buying the full version if they
liked it (Shanna, 2004). The programmers even distributed CDs for free to make people
play computer games. When new genres originated, it led to the great variety of types
and styles of PC games.
Besides that, a completely new type of games was launched. The spread of mobile
phones was associated with “time killer games” that were simple and short. They
became popular and each major phone brand included some games in their devices.
(Quandt, 2015).
The first video games could not predict the success of this industry. However, the video
game industry has progressed dramatically. The advancement of technologies that are
able to create completely unique gaming experiences has made it possible for video
games to become one of the main types of leisure activities.
2.2 Defining video games
There is a controversy about how to define video games. Some theorists say that a video
game is a product that provides some activities that use electronic devices and tools
(Ole, 2009). On the other hand, other theorists argue that video games are a form of art.
However, human interaction with an electronic program that generates visual and/or
audio feedback on a device’s monitor or screen is called a video game.
The systems and devices that allow a person to play video games, for instance, handheld
consoles, computers, mobile phones, arcades, smartphones and tablets are called
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platforms (Belanger, 2014). Personal computer (PC) games are played on computers
connected to monitors allowing users to store, use and purchase games online. Console
games also use a monitor to connect with a device usually created by a company for
entertainment purposes. These consoles are special branded electronics.
Handheld
games are devices with small screens, buttons, joysticks or other types of controllers;
they display the game on a device.
In 2000, a completely new gaming platform was created through the World Wide Web
browser that allowed users to play games from different platforms (Belanger, 2014). For
example, online games could be played on a smartphone, a tablet or a computer with
access to the Internet. In order to work, each game requires a controller. These are
keyboards, joystick, buttons, mouse, dance pads and light guns, to name a few.
2.3 Types of video games
Moreover, there are different types of video games varying both in purpose and in
genre. (Raessens, 2005). Casual games are easy to understand, access and play; for
example, card games such as the well-known Solitaire. These games are programmed to
be played on personal computers, small electronic devices and web-browsers.
Serious games transmit and create relatively meaningful information. These games vary
among different demographics and for different purposes such as entertainment. Serious
games may include elements of other genres and carry some social meaning or message.
Also, these games can be used as simulators or lessons for workers and students. For
example, arcade machines can be used to practice driving skills. Besides that, there are
tactical and logical games that are designed to train professionals.
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Finally, there are educational games which are quite different from serious games. In
2009, the U.S. president, Barack Obama, started a campaign: “Educate to Innovate”
(2013). The aim of this program was to create new interactive video games for
technological, mathematical and science students. These video games offered students
new ways of studying. Usually, the orientation of this game is to present difficult
information in a simplistic, entertaining manner so as to make it easier to process.
2.4 Genres of video games
Besides being divided by its purpose, video games can also differ according to their
genre. According to Adams, who is a freelance game designer and has written books on
genres, there are six important video game genres: action, action-adventure, adventure,
role-playing, simulation, and strategy (Adams, 2013). In addition, there are subgenres
which do not have massive production as main video game genres but should be
mentioned nonetheless.
Action games
The first genre is action game that creates a challenge requiring some physical reaction
from a gamer (Adams, 2014). Often, a gamer controls an avatar within a game, but his
or her purpose can vary according to the idea of the game: fighting with enemies,
searching for objects, trying to escape or solving problems. One element of the action
game genre is that the gamer is required to win one level in order to proceed to another.
However, some arcade games do not have a limits for the amount of times a player can
play a level. In fact, a gamer can only improve his or her score during each game
session. Most of the time, a player needs to survive and save lives in order to level up.
The main attribute of the action game is gamer’s the eye-hand coordination and fast
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reaction. The action game can be combined with other game genres, such as puzzles or
racing, but a physical challenge should play the most important role.
The action game can be divided into various subtypes according to the game’s content.
Platform games or platformers require a character to defeat enemies, survive through
obstacles, collect objects and jump to reach the end of a level in a vertical threedimensional setting (Adams, 2014). For example, the very popular game Super Mario
Bros. is a platform action game.
In Shooter games, a player shoots enemies with the help of different tools. The playing
can be made from the first person or the third person perspective. Some of these games
are criticized for involving too much violence, but still, these games are popular, for
instance, Doom and Half-life.
The other type of violent content is presented in fighting games that require gamers to
fight during combats using multiple attacks to defeat enemies. The popularity of these
games declined suddenly in 1990’s, after a few years of being in high demand.
Adventure games
The adventure games differ from action games in types of challenges. The character
should solve puzzles, interact with objects, people and the environment in a non-battling
way. The adventure games are similar to adventure movies because they also have some
storyline or context, therefore they appeal to different types of players. Moreover, these
games do not require any physical challenge or time management.
Text and graphic adventures are the first types of adventure games. They were simple to
play because players could only input text commands. With the text adventures, a player
had to write a command in one sentence to move further in the game plot. In graphic
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adventures, players could input text that had been visualized on the monitor. However,
the development of the point-and-click ability erased this gaming style.
Visual novels are games with non-linear storytelling. A player has to choose between
the different answers and actions that can lead him or her to a variety of plots and
endings. These games are more popular in Japan and most of them contain anime style
visuals. An interactive movie game is a game with an already created full-motion movie
or cartoon with linear sequences. The player is only allowed to make a limited number
of moves and decisions.
The last type of an adventure game is the real-time three-dimensional adventure. These
types of games are similar to the interactive movie because they have a predefined plot.
However, the character has more freedom and different types of physical behaviors
which can lead to the end.
Action-adventure games
Action-adventure games combine both of the previous genres. These games are
designed to allow a player to choose and make several actions, such as fighting with
enemies, solving puzzles, staying alive and survive through obstacles.
Due to combination of genres, there are survival horror games, which are actionadventure games. They combine the idea of horror movies with adventure games with
the aim to scare players and focus on mysterious elements of the storyline.
Role-paying video games (RPG)
Another major game genre is role-playing video game (RPG) or computer role-playing
game (CRPG). The idea of the game is to control the actions of a character in a virtual
world (Rollings & Adams, 2003; p. 248-347). Often, the storyline concentrates on a
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character that uses magic, weapons or other skills to move forward in the game. The
RPG games are more likely to be played online where gamers can interact in a virtual
world to level up and communicate with other characters. Moreover, a gamer can make
his or her independent choices and develop characters in multiple ways. The RPG
games can be tactical, cultural and sandbox meaning that a gamer can have an absolute
freedom in playing and making decisions.
The action RPG games combine action and action-adventure games. They feature
combats and collecting objects. Massively multiplayer online role-playing games
(MMORPG) differ from regular RPGs in the way that they require completing quests
and developing characters with another hundred players online. The most popular
example of such games is World of Warcraft which is also referred to as a pay-to-play
game.
Simulation games
Simulation games are orientated in creating fictional or virtual reality where some
aspects of life are simulated. Most of the time, simulation games do not have any other
goals besides developing a virtual reality according to the player’s choices (Saunders &
Severn, 1999, p. 20-30). There are three attributes of simulation games: strategy,
planning and learning.
There are construction and management simulation games (CMS), which require a
player to build, explore and expend projects or resources in a virtual reality. These
games can simulate business, city life or governments. The life simulation means
controlling the entire life and actions of a virtual character. One example of these types
of games is the social simulation game called The Sims.
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Another type of simulation game is the vehicle simulation, which is often used for
training and dealing with special projects. There can be a fight, a flight, a combat or a
racing simulation with a player pretending any physical actions by using special gaming
tools or a regular mouse and keyboard.
Strategy games
The strategy game genre (Rollings & Adams, 2003; pp. 321-345) simulates situations
where a player has to use his/her thinking and planning skills to achieve goals or to
defeat enemies. There is an interesting type of strategy game called 4X meaning:
eXplore, eXpand, eXploit and eXterminate. These games cover a large period of time
when a player can create his or her own world and play it out. Real time strategies
(RTS) are played online with real or computer created opponents (Geryk, 2011). The
goal of a game is to make decisions and maneuvers that will help defeat an enemy. A
player can control certain positions and objects on a map and lead them to success.
Another type of strategy is the massively multiplayer online real-time strategy games
(MMORTS), which differ from regular strategy games due to the big amount of online
co-players and the ability to choose a character in an imaginary world, usually a
general, a king or a warrior. Finally, the multiplayer online battle arena is a game with
the objective of destroying the opponent’s object by using different tactics and teamingup with other online players. These games became very popular in 2010 with the
launching of Dota, League of Legends and Warcraft III.
These are the main and most popular genres of video games. It should be mentioned
that the development of programming technologies allows different genres to combine
and cooperate making it challenging to identify one single genre. Moreover, there are
video games with small subgenres that can be differentiated depending on the
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researcher such as; sports games, advergames, music and logic games. Finally, the
variety of platforms made it possible to play any genre on any device a player prefers.
2.5 Motivation to play video games
What makes video games so attractive? This question might be answered with the help
of basic communication theories such as the Uses and Gratification theory and the
Social Entity effect theory. There are various psychological reasons that motivate the
public to play video games. The interactive model of a video game makes this media a
powerful tool that can influence not only the individual but also society on multiple
levels.
Uses and Gratifications theory
The Uses and Gratification theory studies why and how the public uses specific media
to satisfy individual needs (Severin & Tankard, 1992, p. 3-20). In their research, Video
Game Uses and Gratifications as Predictors of Use and Game Preference, Sherry,
Lucas, Greenberg, & Lachlan (2006) use empirical research to study the traits of use
and the effect of video games. They identified six dimensions of video game use:
arousal, challenge, competition, diversion, fantasy and social interaction.
Arousal refers to the increased emotional state in response to the fast reaction and eye
movement required in video games. Challenge means playing video games in order to
improve skills and achievements. Competition was the most cited motive for playing,
meaning that a player has a desire to dominate other players and be higher in the
gamers’ hierarchy. Diversion is mentioned as a way to escape from every day’s stress
and problems and lack of other entertainment activities. Fantasy is a trait that helps
people do activities in video games that they cannot do in real life, such as racing, flying
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and using magic. Finally, social interaction was another main motive to play games.
Participants explain that games help them interact with friends and peers and learn more
about them.
The study shows that for college students “among all respondents, the top reason on a
scale from 1 to 7 for playing video games was Challenge followed by the Competition,
Diversion, Arousal, Fantasy, and Social Interaction” (Sherry, Lucas, Greenberg, &
Lachlan, 2006, p. 220). This research tried to examine video games as a part of
communication theory of the Uses and Gratification. However, the reasons for playing
outlined in this research have some similarities with psychological studies on video
game usage.
Social entity effect
According to the famous researcher James Potter, who has a Ph.D. in Communication
Theory and has written various books in the field, “mass media effect is a change in an
outcome within a person or social entity that is due to mass media influence following
exposure to a mass media message or series of messages” (Potter, 2011, p. 904). The
relations between media effects and video games can be explained with the help of
social entity, meaning a set of informal and formal relationships of individuals.
Informal collection is a building of social group with inner relations during the time of a
media exposure. In contrast, formal groups have some structure and history within them
from the past. Massively Multiplayer Online video games are an example of formal and
informal collections. The media effect of video games should be studied at the
individual and at the social level so as to solve problems related to this issue.
Also, Potter studies how video games influence the level of violence in children. Even
though there is a difference between exposure to violence and advertising, the basic
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concept might be similar. Potter researches how video games, as a medium may
influence video game players and how strong is the relationship between a game and the
psychology of an individual.
Cultivation theory
Cultivation theory is a hypothesis created by G. Gerbner and later expanded with Gross
(Shanahan, 2009). Their research was concentrated on television as a medium that can
influence the audiences’ perception of the world and life. The theory claims that people
who are more exposed to television are more likely to believe it and think that the
information displayed there is real and valid. Gross and Gerbner researched how more
frequent television-watching can influence the attitudes of the audience. The cultivation
theory studied two levels: the first level, or order, is a belief that television may create,
the second order is an attitude created by a belief.
This theory was used to study violence caused by video games, but some basic notions
of the cultivation theory might also be applied to advertising in video games. The
hypothesis extrapolated from the cultivation theory often claims that television does not
create a new attitude; instead, it reinforces already established ones. This idea and some
results from the experiments connected to this concept might be applied to advertising
in video games.
In the same way as television reinforces the audience’s attitudes towards crime and
violence, video games are also able to reinforce the player’s consumer buying behavior.
Some researchers found that video game players are better able to recall brands seen in
a game if they knew about it before. That means that the video game just reminded them
about the brand. This leads to the idea that cultivation theory exists in a video game
scale reinforcing attitudes towards advertised brands and products.
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Psychological motivations
From a psychological point of view what makes a game so enjoyable and interesting to
play? According to Ben Revees (2012), researchers started to ask questions about why
games are so attractive to the public. He refers to Scott Rigby, who has a Ph.D. in
clinical and social psychology, who explained three main needs for playing video games
in the book Glued to Games: How Videogames Draw Us in and Hold Us Spellbound
(Gee; 2012). The first need that is satisfied by games is a need for competence, meaning
that a player wants to have control over the situation and be superior. In real life, it can
be difficult to achieve some goals while video games provide an opportunity to defeat
enemies, collect money and level up in a less challenging way.
The second need described by Rigby is autonomy. This is the wish to be independent
and able to control one’s actions. The games that are oriented on this need are so
popular because a character can choose between different actions within a game, for
instance Grant Theft Auto games.
The third need is relatedness. In other words, individuals desire to be related to a
community or feel understood by others. The gamer’s community and online social
games provide an opportunity to relate and be significant in some aspects. The research
showed that people feel related to unreal characters while playing.
These needs have always been required for healthy individuals because they can be
achieved with the help of family, friends, work, sport and hobbies. However, games are
more attractive and enjoyable. Moreover, it is easier to escape into virtual reality where
a player can achieve some goals faster than in to real life.
Another researcher Andrew Przybylski compared gaming to working and came to the
conclusion that playing is very similar to working (Ryan, Rigby and Przybylski, 2006).
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Gamers feel more rewarded by making choices and actions in a video game rather than
being paid in real life. The system of playing allows games to be more enjoyable and
interesting to manage because players are immediately aware of right and wrong actions
and can go back to change them.
Another interesting fact is that games are a progressive tool for studying and learning.
Some video games can be a powerful tool for education and business trainings. Even
some violent games, which often appeal as controversial, for instance The Assassin’s
Creed series, can teach history. In the same way as learning about the past, some video
games improve the present as they can train reaction and other physiological and
psychological aspects.
It is without a doubt that games attract more players because it is an enjoyable and
interesting leisure activity. They are appealing even on a psychological level, offering
people success that cannot be achieved in a real life. Therefore, virtual reality can have
more power than real life on a gamer’s choices as it looks more desirable and less
dangerous. Moreover, the ability to control unconscious while playing is a subject to
study. Therefore, in-game advertising may be a powerful tool, which can influence
consumer-buying behavior.
It is important to define video games from the theoretical point of view. The
classification of video games genres helps to identify the most popular types of games
and what elements attract players. The understanding of communication and
psychological theories looking into what motivates people to play and helps to explain
the popularity of the video game industry. The history of the interactive entertainment
industry provides a full explanation of how video games became a commercial project.
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III. The financial context of the video game industry
After describing video games from a theoretical perspective, an analytical investigation
of the growth of the interactive entertainment industry should be provided. Moreover, it
will answer such question as: “Why video games are popular?” and “Who plays them?’.
Finally, traditional and new ways of funding the industry will be discussed to show the
role of advertisement and provide predictions for the industry.
3.1 The growth of the industry
In the beginning, the interactive entertainment industry or video game industry was not
a commercial project. The growth of this business is associated with the game PONG
produced by ATARI when 12,000 of arcades were sold (Klein; 2009). As PONG became
available at home, because of consoles, the sales went up to 150,000 in 1975. Since
then, the commercialization of “fun” industry started to spread and grow reaching high
numbers. After the success of arcade games and home consoles, the video game
industry started to produce games in response to different demands. With the help of
technologies and three-dimensional system, programmers were able to create games
which satisfy different needs of various types of players (Zackariasson & Wilson, 2012).
In 2008, the video game industry showed that despite the decline in the global economy,
its business could grow in numbers. In comparison with the Hollywood movie
production, the new launched game Grand Theft Auto IV raised more than $500 million
worldwide during its first week, which is higher than Spider-Man 3 and The Pirates of
the Caribbean (Zackariasson; 2010). According to The Entertainment Software
Association (2008) that produced reports about the sales and demographics of the video
game industry, 65% of American households played video games at least ones in their
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life. Moreover, in 2006, computer and video game sales were $7.4 billion, which
increased to $9.5 billion in 2007.
The same research was made in 2016 by the Entertainment Software Association
showing that 63% of American households have on average one person who plays
computer games at least three hours per week. Regarding the sales, $16.5 billion were
earned by the video game industry in 2015 in the U.S. only. The total spending of the
gaming industry was $23.5 billion, including content, hardware and accessories for
games. This dramatic change can also be associated with the production of game
consoles that can be used for other activities besides gaming such as watching TV,
reading and browsing the Internet.
Also, statistics show that the bestselling video game genres were shooters and actions
such as Call of Duty: Black Ops III and Madden NFL. For computer games based on
units, the most sold genres were simulation and casual games like The Sims 4 and
Fallout 4. Finally, there are three top genres, which are played on wireless or mobile
devices.
The PricewaterhouseCoopers (PwC) research center predicts a favorable growth for the
game industry. From 2016 to 2020 the video game industry is expected to grow by 4.5
percent per year worldwide and increase from $71.3 billion to $90.1 billion. In the U.S.,
it is predicted that the video game business sector will grow faster than TV, music,
cinema and book entertainment industries, however, it will grow slower than Internet
ads and out-of-home advertising. This success can be associated with the development
of technologies such as virtual reality and more available computers and mobile
devices. Therefore, the video game industry is an interesting business sector that attracts
marketers and advisers who use this growth for their own purposes.
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3.2 Demographics of video game players
The variety of people who play video games them increased with the development of
different types of video games. A few decades ago, video games were associated with
teenagers’ and children’s activities only, but this stereotype has been broken. According
to Zackariasson, “baby boomers” was the first generation which enjoyed and
contributed to the video game industry. After them, the generation G was even larger
and grew faster including both male and female players.
In reference to The Entertainment Software Association and its report its 2008 report,
the average game player’s age is 35 while 25% of players are under 18, 49% are
between 18-49 and 26% of gamers are 50+. The gender division between video game
players is quite small with 40% females and 60% males. However, the statistics show
that women are more likely to play after turning 18 and older. In 2016, the situation did
not really change. Still, the average age is 35 and the distribution between genders is
41% against 59%. One significant innovation is that games became more social. In fact,
49% of gamers play social games and “53% of the most frequent game players feel
video games help them connect with friends and 42% feel video games help them spend
time with family” (The Entertainment Software Association, 2016, p. 6).
There are more devices which allow players to connect and play anywhere. According
to the statistics, 56% of video game players use a PC for this activity and 53% spend
time with game consoles. Also, the games for smartphones and wireless devices attract
36% and 31% of gamers. While being connected to different devices, video game
players say that 54% of them play with other people, including 40% of friends, 21% of
family members and 17% of parents (The Entertainment Software Association, 2016).
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The connection between parenting and gaming is noteworthy. Nine out of ten parents
require their children to ask their permission or have them present at the time when the
game is purchased. Moreover, 95% of parents sometimes or always pay attention when
their children are playing video game, and 68% of parents have a positive attitude
toward video games. There are five top reasons why parents do not prohibit children
from playing, but instead play with them (The Entertainment Software Association,
2016). They say that it is a “fun” activity for the entire family, because their children ask
and insist on playing, it is a socializing tool with their children, they can control the
content of a game, and lastly some parents simply enjoy playing too.
3.3 Traditional and new ways of funding video games
When video games became a commercial product it started to require publishing,
funding, marketing and professional development. Research sponsored by the World
Intellectual Property Organization reports how the video game industry develops,
produces and publishes video games (Greenspan, 2014).
The key role in funding a video game is played by a publisher who offers services for a
percentage of the revenue or other financial returns. Publisher is required to
manufacture and advertise a product with the usage of marketing tools in the same way
as in the film and the book industry. Large video game publishers often have a
responsibility to distribute games. Referring to large video game publishers, Greenspan
states the top ten major companies in video game production. In 2015, there were Sony
Computer Entertainment, Tencent, Microsoft game Studios, Nintendo, Activision
Blizzard, Electronic Arts, Bandai Namco Games, Kind Digital Entertainment, Nexon
and Ubisoft (Statista, 2015).
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Furthermore, there are independent video game developers who decide to fund and
distribute games individually or privately. These game developers have full control over
a game. In comparison, publishing companies may interact in a game production but do
not have full control. Individual funding allows developers to distribute games digitally
and through the author’s desired channels. Finally, an independent publisher can create
any marketing messages her/she wishes and find alternative ways of funding such as
crowd funding (Jose Planells, 2015).
According to Jose Planells, (2015) crowd funding is a new way of getting money for
projects and manufacturing products. The idea is that money is coming from potential
users, in this case, players. An example of the crowd funding process is a Kickstarter
website where game developers present, explain and share their projects with the public.
Specific websites for the funding of games are Gamesplanet and Gambitious. The
practice of video game crowdsourcing started in 2011 when the Venus Patrol game was
able to collect $100,000.
However, most of game developers use publishers for their games. The main benefit of
working with famous publishing companies is that they are well-known and they will
bring brand recognition to the game. Moreover, these publishing houses are able to
spend more money on funding and marketing games.
Regarding the marketing, top publishers have many advantages. Publishing houses have
teams that create and maintain the advertising message. They also have an established
relationship with the press and research companies. Besides that, they provide
traditional and new ways of distribution, such as Steam, Google Play and Xbox Live. In
the same way, publishers help distribute mobile games, which could simply be lost on
online markets and shops.
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Finally, top publishing companies help reach the worldwide market based on corporate
experience and knowledge. Some games require different approaches depending of the
country. The process of localization is also important for mobile game developers.
The new way of game funding is advertisement in video games. This means that
marketers use video games and insert their advertisement in them. The research by DFC
Intelligence provides information that ads in video games were expected to grow from
$3.1 billion in 2012 to $7.2 billion in 2016 (DFC Intelligence, 2011).
Looking at the industry from the financial point of view we can better understand how
video games became popular and what perspective they will have in the future. It is
important to understand why people play video games and what drives them to buy a
new game. Traditional and new ways of funding video games provide information about
the video game industry as a business sector and how marketing and advertising tools
are used in it.
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IV. Advertising in the video game industry
Advertising in video games is a relatively new way of funding games and marketing
products. By studying this practice in more depth it can provide a space for discussion.
Firstly, the historical background of advertisement in the video game industry will be
given. Providing concrete examples will help better understand the path for
development. Secondly, types of advertising in video games will be discussed and
classified for further understanding. And lastly, the aims and main purposes of such
marketing practice will be analyzed.
4.1 History of advertisement in Video Games
According to Matthew Eastin, who is an Assistant Professor of communication at the
Ohio State University and who has written the Handbook of research on digital media
and advertising, video games have been involved in advertisement since its’ creation. It
is interesting to note that even coin-operated games had advertisements. The author
refers to a Mustang pinball machine that features the new developed Ford car not as an
unrelated product placement but as a part of the game.
However, even products that are wrong for the context of a game can be successfully
included. For example, in 1960, the video game Lunar Lander that presented a textbased simulation with a player as being a pilot typing acceleration values (Eastin, 2011,
p.438). In 1973, the Digital Equipment Corporation sponsored the game to show their
new graphics terminal. Later, the game gained a new feature - a McDonald’s restaurant
appeared if the pilot was able to land on the right spot. After the landing, he would go
and order a Big Mac and continue the space trip. In case the player landed wrong, for
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instance on the McDonalds, the following lines would appear on the screen: “You clod!
You've destroyed the only McDonald's on the Moon!”.
This is an example of how a brand can be involved in the virtual environment, giving
the player the opportunity to experience the product in a unique way. It also gave the
McDonalds’ Corporation the idea of using their logo and name in video games. In 1982,
McDonalds organized a contest where12000 video game consolers to be used at home
for free were given to players. In 1983, Parker Brothers and McDonalds tried to create a
game displaying Ronald feeding aliens with shakes, fries and hamburgers and with the
aliens biting into the Golden Arches. However, they chose the wrong target audience
and only 8-9-year-old players showed an increased interest in McDonalds’ meals
(Eastin, 2011, p.439).
In 1980’s there were many advergames offered to potential customers. For example,
Johnson & Johnson created a game with the Tooth Protector as the main character who
protects and defeats Snack Attackers who hurt teeth (Eastin, 2011, p.439). Other
interesting example are the modern advergames created by the U.S. military in order to
attract boys for recruiting. The American Army is a shooting game that was
professionally made and was distributed at recruiting centers for free.
In 1983, another big corporation, Coca-Cola, contacted Atari to create a new version of
Space Invaders, which was a very popular game during those times. Atari changed the
rows of aliens with the letter P, E, P, S, I and included the Pepsi Logo on the spaceship
(Eastin, 2011, p.438). Moreover, if a player was able to shoot down many enemies then
the message “Coke Wins” appeared on the screen.
There were cases when successful ideas for TV commercials were transformed into
video games. This was a great tool since it was a win-win situation for marketers and
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companies. Chuck Wagon created a commercial where a small wagon was rolling out
from a bag of dog food in the kitchen. Consumers liked this commercial and, as a result,
Chuck Wagon in association with Ralston Purina created a video game based on the
commercial with the title Chase the Chuck Wagon.
In 1983, the game industry was crashed (Ernkvist, n.d.). One of the reasons was that the
media had spread a message - about consumers spending $3 billion on video games in a
year. Corporations received this message and started a massive production of video
games with advertisement in it. The games were in a low quality, most of the time they
had a similar concept and as a consequence they became unpopular. In 1984, the sales
decreased to $2 billion and many companies had to sell their games for free. Therefore,
it makes it harder to analyze the success of the early advergames. The video game
industry took its time to develop and offer new models for marketing.
4.2 Types of advertising in video games
Due to the development of the digital world, games expanded and started developing
their own virtual reality where money still played the most important role. It is difficult
to find someone who have never experienced gaming with a mobile device, a computer
or a game console. However, players are not aware that, in 2008, marketers spent $250
million on advergames, in-game advertising, through the line advertising and
advertising in social network games (eMarketer 2004). But this knowledge is important
because the methods used influence consumer buying behavior, brand loyalty,
preferences and the cognitive psychology of children and adults.
In game advertising (IGA)
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There are a few methods that marketers use in computer and video games. They differ
in their purpose, level of effectiveness and scale of interactivity. In-game advertisement
is used to increase brand awareness and place brands, products and services in a
gameplay (“What Kind of Advergame is it?" 2009). It might not be recognizable or
particularly interactive, nonetheless it can still affect consumer-buying behavior and
how brand is perceived.
There are specific commonly used tools used to advertise in games. Static in game
advertisements in form of billboards, first appeared in the 1980s (Twist, 2004). The
most famous examples are the Marlboro banners in Sega’s game (figure 1), the
McDonalds new meal in the racing game (figure 2) and even Obama’s political
campaign (figure 3).
However, static advertisement can have small impact on the consumer-buying behavior
because it appears as a background and does not demand any specific interaction with
the brand or product. The study by Bunnyfoot (2007) says that players do not spend
enough time on static advertisements because they are emerged by the game process
itself. Also, there is a dynamic in-game advertising tool that allows developers to
change or upgrade their advertisements after the game is launched.
The next tool is an in-game interactive product placement. The concept is similar to
product placement in movies but it is more interactive and, therefore, more recognizable
and memorable. An example of in-game advertisement is logos placed on character’s
clothes, drinks and food which help them to get strength and health (figure 4).
Lastly, there are in-game advertisements that advertise the game itself (Rivello, 2011).
For example, freemium and free-to play games are free to play online, meanwhile
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offering players the option to buy additional elements or items such as virtual coins for
buying additional weapons, skills or items (figure 5).
For example, the racing game Need for Drift which allows players to spend real money
on additional in-game services. The idea is that after putting some effort in the game a
player is ready to buy more advanced elements. Pay-to-play games require players to
pay in order to access further content in the game. This game content may include ingame advertising such as real restaurants, building, hotels and products.
Advergames
The next type of in-game advertisement is advergames. Advergames are created or
sponsored by a particular brand to advertise a service or product. Creators commonly
use a brand’s logo, slogan, and trademark to indicate a brand. Video game consoles
provided by McDonalds and Parker Brothers are an example of advergames (figure 6).
This is a different branch of advertising in which video games are made mainly for
commercial purposes.
Nowadays, there are many different types of advergames, they can be distinguished into
3 categories (Santana and Smith, 2011). The first type is an associative advergame with
a goal to create associations with a certain product or a brand in a game. The second
type is an illustrative advergame meaning that the actual product or service can appear
as itself in a game. Finally, the demonstrative advergame allows using objects created
by a certain brand as a part of a game play
Through The Line
Through the line advertising is a combination of above the line and below the line
advertising where one ad drives a potential customer to another medium with other
marketing tools (Jones, 2008). Above the line (ATL) has no specific targets and may
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use various channels for the same message. Below the line (BTL) marketing targets
specific groups with the help of specific media channels.
The example of Through The Line is a TV ad that promotes a sale in a supermarket. As
a result, it is one marketing tool leading to another. In games, TTL advertising is not
often used but it is important to acknowledge its existence. Advertisers use in-game
URL hyperlinks that lead a player to visit a particular webpage where other ATL or
BTL advertisements are exposed. The usage of these hyperlinks is not compulsory but it
gives a player more details about the game’s story. Also, it is called “link chase” when
one link drives users to another page and so forth. For example, the alternative reality
game I love Bees used viral marketing to advertise another game by the same developer
(figure 7).
Social Network Games
Lastly, advertising in social network games should be mentioned. In these games,
traditional ways of advertising are used in a modern style. For example, banner
advertisements that work as billboards and placed at the bottom of the game’s border
(figure 8). Video advertising and product placement are commonly used in a variety of
methods. The latest and most profitable marketing tool is lead generation offers. As part
of a gameplay, successful companies from different industries ask users to sign up for
more information, buy goods and services in order to win additional recourses in the
game.
4.3 The aim of advertising and how it works
With the development of interactive online games available in different formats,
advertisers can insert a brand or a product immediately in the game. It gives them more
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chances to sell a particular product during sales or holidays. Moreover, it allows
marketers to test and change an advertisement in different geographical regions.
Therefore, advertisement in video games opens the way for new marketing tools and
strategies. This raises other ethical issues connected to the level of vulnerability of game
users, as they are more likely to be affected by advertisements during the video game
session.
The clear connection between in-game advertising and product placement in movies
should be analyzed because they share similar strengths and weaknesses. The first
common aspect is celebrity endorsement. According to ESA, 17, 9% of normal video
game players expect celebrities endorse a game, and that is the reason why they are
playing a game (Moonhee p.144, 2006 ). The success a of product placement on TV is
connected with famous actors interacting with a product or brand. In the same way, if a
famous celebrity or a well-known game’s character uses a particular brand or product
then it might increase the brand’s awareness and even a desire for it.
The second aspect of product placement in video games is that a brand placed in a
movie or a television program has a longer lifetime than a typical advertisement
(Brennan, Dubas, and Babin 1999; d’Astous and Chartier 2000). The lifetime of brands
placed in video games might also be considerable (Nelson 2002), especially in the case
of heavy game players. Sometimes, the process of playing a game is non-liner and a
player can come back and see the same advertisement more times than expected.
Thirdly, there is research claiming that the audience receives product placement in
movies more positively because it increases the realism of the story. The same situation
happens with video games where real products and brands increase the naturalness of a
game. However, the aim of some games is to show unrealistic fantasy worlds where
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products and service from reality cannot fit into the game’s concept. Moreover, video
game players do not see product placement as something negative but as deceptive. The
interactive nature of video games helps the audience to experience a brand or a product.
Also, this fact affects more the player’s memory that is more active and requires more
attention from the potential customer due to manual control of a character in a game.
Regarding the IGA, game publishers have not stated any specifics yet. Some publishers
say that their profits increased by an extra $1-2 per game (Independent, 2011). Some
mobile games became free because they featured IGA. However, Electronic Arts
claimed that IGA does not have the power everyone expects it to have.
According to Ghirvu (2012), who studied the advantages and disadvantages of
advertising in video games, games are perfect resources for marketers. Online video
games have information about demographics, consumer’s names, addresses, and buying
preferences.
The author refers to a study by Massive and Nielsen Entertainment on in-game’s
campaigns that found: “the main familiarity of the brand increases with 64%, brand
rating increases with 37%, purchase intention increases with 37%, reviewing of the
commercial increases with 41%, the commercial notoriety increases with 69%”
(Ghirvu, 2012 p. 117).
Also, advertising in video games is more measurable due to the ability to monitor
players online. These online monitoring programs can provide information on “how
many players, where, for how long and under what angle they perceived the placed
commercial and interacts with it” (Ghirvu, 2012 p. 118).
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Moreover, virtual reality is a space for testing and measuring marketing and advertising
campaigns. Virtual advertisements can be launched online and marketers can collect
information on how fictional campaigns impact players.
On the other hand, there are limitations and disadvantages from advertising in video
games. Firstly, piracy makes it hard to deliver marketing messages to the playing
public. Secondly, the market is heterogeneous so it’s harder to target. Some games
cannot fit commercials because it might look inappropriate in a game concept. Also,
they can be inefficient and useless if the wrong target is chosen.
This chapter illustrated the classification of advertising in video games and listed some
examples. It is still not well researched if IGA, advergames, Through the Line and
Social games ads have a particular influence on players and the public. The concept of
this practice is controversial and raises some ethical questions.
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V. Problems with advertising in the video game industry
Advertising in video games raises some issues that must be discussed. This section
starts with a discussion about its influence on children. Then, it moves on to problems
with adult players and how advertising in video games may impact their consumerbuying behavior. Lastly, there is an ethical discussion on the ethical issues connected
with the original entertainment purpose of video games.
5.1 Influence on children
The issues connected to advertising in video games should start with the analyses of
insecure playing public – children. Still, they represent the target market for advertisers
and advertising in video games can be directed to them. Moreover, advertising may
influence children differently than adult players, therefore they should be examined
individually.
The book by Blades, Advertising to children: New directions, new media, discusses the
problem of advergames connected to the children’s consumer choices and behavior
(Blades, 2014). The author claims that in the U.S. children and youth between the age of
8-10-years spend 46 minutes a day using a computer, 11-14-years spend 1 hour 46
minutes and 15-18-years spend 1 hour 39 minutes.
Moreover, the researchers analyzed 77 popular food websites and found that 73% of
them are orientated on children playing advergames. These advergames use engaging
gaming techniques such as multiple levels of challenges, individual scores, customized
games, a spokesperson and cartoon characters. The food that is marketed contains high
calories and high amounts of sugar., for instance, cereals, candies, gums, soft drinks and
salty snacks. Most of this food is unhealthy in terms of nutrients and is high in sugar.
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Children’s ability to differentiate commercials from non-commercials depends on his or
her cognitive defenses and abilities. One important key is the ability to understand
persuasive content. The success of advergames depends on memory and attitudes about
the brand and the product.
Blades (2014) argues that advergames try to influence memory and increase brand
awareness and recall in an interactive and entertaining way. Even though some
researchers say that the ability to recall a brand decreases in advergames because the
cognitive attention is directed at other activities, another case study shows that
advergames can improve a familiar brand’s impression. Also, advergames may
influence the attitude towards a product. The research found that after playing a video
game where a particular product was used, gamers increased their positive attitude
towards it and were more likely to buy this product in the future.
Moreover, children and youth are pressured to purchase products. Some advergames
require children to buy products and insert its code in order to start a game. There is no
limit of exposure to advergames on the Internet or on the computer, therefore children
are not controlled by any source. Finally, websites collect personal information such as
how many minutes are spent on a website and when visitors are entering a website.
However, the effect of IGA and advergames on children has not been carefully studied.
Often, the subject of research is violence in video games. But advertising in video
games can also affect children and their behavior. The main concern for the past years
was the influence of advertising in video games on food habits and food preferences in
children.
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5.2. The influence on consumer-buying behavior
As mentioned above, video games have been studied from different perspectives,
mainly focusing on violence in children. On the other hand, there are contemporary
research projects that study the effect of advergaming on consumer-buying behavior,
food preferences and brand recognition in adults.
Gross contributed to the field with a study on the ability to recall in-game product. The
author refers to the Lee and Faber’s dimensions of congruity (2007). There are four
different dimensions: functional, lifestyle, image and advertising. Respectively, the first
type is associated with the “extent to which (1) the brand is perceived to be a central
object used in the content of the game (2) the lifestyle associated with the content of the
game matches the lifestyle associated with the product or brand (3) the brand image is
perceived to contribute to the theme of the game and (4) the product category of the
brand seems appropriate to be associated with the theme of the game” (Gross, 2010; p.
1286).
The main question Gross studies is whether a player pays attention to a brand or does he
or she concentrate more on a game. One way to measure the awareness of a brand is to
use explicit memory measures. This type of memory is calculated by the participant’s
ability to consciously recall and recognize the information that appeared. Nelson (2002)
studied gamers’ ability to recall information from billboards in a car-racing game.
Results showed that gamers could recall 25-30% of the brands right after seeing them
and about 10-15% after five months.
On the other hand, some scholars say that implicit memory is more important than
explicit memory because it studies the unconscious memory that is shaped when people
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are completely emerged in the game and don’t consciously recognize the ad. Even the
results of various tests show that implicit memory helps recognize more ads and brands.
It should be noted that individual variables can influence the results of various tests
such as “brand familiarity and relevance, pre-existing brand attitudes, game arousal and
immersion, prior game-playing experience, product placement proximity, and
congruity” (1260).
Congruity is another aspect that creates a conflict between researchers. Some say that if
a product fits with the context of a game, in other words if it is congruent, the process of
confirmation works and the brand’s expectations are fulfilled. Therefore, the
information can be remembered better because it’s a part of the brand’s schemas. In
contrast, researchers say that incongruent ads are more interesting to decode for players
so they are more remarkable and can be recalled easier. The study by Lee and Faber
confirms this theory. Also, the novelty and the level of interactions with a brand can be
a factor that can increase the ability to recall it.
There are also differences between advergames and in-game advertising. The results
show that advergames work better with brand recognition and ability to recall because
they represent one brand, it has a simple game play and it does not require decoding.
In conclusion, Gross argues that advergames are the most effective tool to create brand
awareness. However, there are limitations for marketers because the entertainment part
of a game can disappear due to congruent games. Still, potential customers can
recognize when they are trying to be persuaded instead of entertained.
According to Granquist, Strömberg, & Søilen (2015), who researched the impact of
advertising in video games on players and spectators. The results show that there are no
differences in spectators’ or players’ perception. Nonetheless, they found that are more
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relevant to the game are better recognized. On the other hand, passive advertising,
which is referred to as static IGA, has a higher effect on the spectator and active
advertising is the most recognized by the player.
The authors conclude with thought-provoking claims regarding brand recognition and
video games. They say that even people who are not playing can be influenced by ads
because they are not concentrated on game, therefore they can pay attention to more
detail (Granquist, Strömberg, & Søilen, 2015, p. 59):
“Nelson et al. argue that games provide space for both active gaming but also
passive, that is, the player observes a game sequence. This is something that is
common in racing games, where there often appear replays, which expands
opportunities for the advertising exposure. The occurrence of games involves not
only the player observing advertising actively or passively, but also provides more
bystanders who are not in themselves playing.”.
5.3 Ethical issues
The understanding of how digital advertisement may influence children and consumerbuying behavior leads to the question of ethical issues connected with this topic. Should
there be any specific regulations for advergames that target children? Moreover, to what
extent do video games lose their entertainment purpose and become a commercial tool
for advertisers?
According to Rad, who completed a dissertation on the ethical issues of in-game
advertisement, there are unregulated problems that have to be studied (Rad, 2012).
Regarding children and advertisement, the author argues that children have issues
recognizing advertisement’s commercial purpose. In this case, it might be considered as
unethical if the purpose of the message is not clear. On the contrary, if a message is
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clearly indicated that it’s an advertisement then it does not raise any ethical questions.
Also, Rad refers to the problem of promoting unhealthy food and habits in advergames
(Rad, 2012). Nowadays, parents may have difficulties controlling children and their
exposure to media therefore, they might accept the idea that children can play online
video games that promise to have educational and developmental purposes. The worst
outcome of this might be children potentially demanding their parents to buy them
products.
Two researchers from Louisiana State University, Lewis and Portet (2010), discovered
another negative outcome that can impact both adults and children. They conducted a
study on issues connected with in-game advertisement. They surveyed 100 participants
aged 18-24 years about the effects of advertising in massively multiplayer online roleplaying games. The results show that IGA can annoy players if it is inappropriate,
unrealistic or repeated too often.
Moreover, Lewis and Portet conclude that in-game advertising harms the gaming
process. The idea of games and virtual reality is the fact that a player can escape from
the real world’s problems and switch them off from his or her consciousness. Even
though, the full impact of advertising in video games has not been studied, this practice
can harm players.
This chapter identified the main ethical issues associated with advertising in video
games. The problem with advergames and its impact on children resulted in the idea that
advergames can lead to unhealthy consumer choices regarding food. Moreover,
advertising in video games influences the consumer-buying behavior of adults in both
positive and negative ways. Finally, the lost concept of “fun” in video games was
explained pointing to the topic of regulations and legislative in video game industry.
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VI.
Regulations
As the last chapter proposed, advertising in video games raises ethical questions
connected to its influence on children and consumer-buying behaviour. It is important to
discuss how these issues are approached in legislative terms. Moreover, predictions
about the future of virtual reality and its connection with advertisement will be
explained.
6.1 Current legislations
Regarding to the German law, which has similarities to the legislative systems in other
European countries, advertising in video games has not been examined separately and
each case has an individual approach (Schelinski & Troge, 2012). Generally,
advertising in video games is not an issue if it clearly looks like a commercial on
billboards, posters or objects. This type of advertisements is called concealed
advertising and is protected by the competition law. In this case, a company who
sponsors an advertisement should display it on a game or be named as a sponsor.
On the other hand, the problems may arise if a commercial product or service is not
recognizable as advertising. A product may look like a part of virtual reality similarly to
product placement in films. Moreover, the German law requires browser games to
follow the regulations of the broadcasting provision for telemedia. These regulations
state that product placement is not allowed. Commercial and broadcasting products
should be separated clearly in the Internet.
There is a special legislative norm for advertising aimed at children. In this case,
caution should always be mentioned. Moreover, advertisements must not ask children to
buy products. Nonetheless, the notion of advergames makes it harder to determine a
40
game and its advertising. Some cases held by The Regional Court of Berlin prove that
marketers might be sued if an advertisement is not recognized as a commercial, if
advertising slots are too long, and if pop-ups cannot be clicked to disappear.
Advertising in video games raises another problem concerning the information children
are sometimes obligated to provide in order to play certain video games. The collection
of data allows companies to target certain groups of children according to age and
gender. The American government decided to deal with this problem with the help of
the Do Not Track Kids Act of 2011 (Senator Markey, 2011). This act helps prohibit
people from providing personal information and date to the third parties. However, this
act works only for people who are less than 18 years old.
Most of the time, the legislation systems do not protect adults from the effects of
advertising in video games. However, it is more an ethical issue than legislative
connected with the concept of games and being in a virtual reality. It is questionable if
marketers should be allowed to target video game players while they are escaping from
reality and in a relaxed state of mind.
6.2 Proposed ideas
Various researchers agree with the idea that advertising in video games is a useful tool
for marketers, which can work under the certain conditions. On the other hand, the
power of advertising is a controversial and complicated issue. The main concern of this
area of study is how advertisement in video games influences children and those who
cannot distinguish between commercials and video games.
However, with the development of technologies and new ways of inserting advertising
in video games the power of such phenomena may increase. For example, the origin of
41
virtual reality can change the experience provided by video games. Virtual reality is an
innovative technology that is able to generate images, sounds, environments, smells and
experiences that look and feel real.
Regarding video games, virtual reality creates a fictional setting where the game be
inserted in. Video game players are able to control the environment and experience
things they would not be able to achieve in real life. If this power is given to advertisers,
the way of buying and seeing products can change dramatically (Google Data, 2016).
Poles conducted by Ericsson Consumer Lab show that “hopping was the top reason
worldwide smartphone users were interested in VR”. With the ability to insert products
in video games that use virtual reality, marketers would be able to target potential
customers and allow them to use a product virtually before buying it. This technology
seems alarming.
One proposed idea is to reinforce the regulations in this area. In addition to mentioning
that a certain video game is sponsored by some brand and may include its advertising,
the amount of static and interactive advertisements should be regulated. Moreover, a
commercial should clearly look like an ad or be somehow distinguished from an
original gameplay.
Moreover, it is understandable why games are commercial products. Nonetheless,
gaming is a way to escape reality and switch off the defense mechanisms used during
the day. The original concept of gaming is to have fun, educate or inform in a more
enjoyable way. By inserting multiple advertisements and creating games just to sell
products, marketers damage the purpose of gaming.
42
VII.
Conclusion
The concept of video games differs from other mass media activities due to its
characteristics. Video games are enjoyable tools because of psychological and social
reasons. They can manipulate emotions and desires providing a virtual reality with
constant success. The history of the interactive entertainment industry shows how a tool
for studying and transmitting information may develop into something publically
desired. However, it also shows how entertainment can become a marketing tool used
purely for business.
Marketers and advertisers realized that such an enjoyable tool can benefit businesses
transforming their marketing messages into a game. With the growth of technologies,
success of the industry and the increased popularity of video games, businesses found
new ways of advertising their products and influence consumer-buying behavior. This is
an issue because originally video games were not produced for that purpose. They have
become so commercialized that a person is no longer a player but a target to advertisers.
The video game industry is expected to grow and the spending on advertising in video
games is predicted to increase. The innovation of technologies such as virtual reality,
new game consoles and mobile games will attract more advertisers to use them as a tool
for business.
However, things that are beneficial for businesses may hurt individuals and society.
Advertising in video games is aimed at increasing brand awareness, recall and
interactive experience with the brand. These things may ruin the original concept of
video games, which was to escape in virtual reality and switch off consciousness.
Firstly, it can harm the young playing public because children have difficulties
distinguishing between commercials and games. Advertising in video games may also
43
influence the playing experience by providing too many ads and disturb the game play.
Even though government officials try to regulate the video game industry in terms of
advertisements, it is still not enough because this concept is not well researched and
studied.
This paper shows the symbiotic nature of the industry, the advertisers and the playing
public can no longer be ignored. There should be a point when advertising in video
games have to be more regulated. This decision will help save such an incredible tool
for fun and enjoyment from degradation and commercialization.
44
Appendix
Figure 1. Retrieved from http://www. sega-16.com/2016/09/philip-morris-sued-segaover-unauthorized-malboro-ads/
Figure 2. Retrieved from http://www.rapidfire.com/blog/rapidfire-delivers-in-game-adcampaign-for-mcdonalds-big-mac-hunt-promo/
45
Figure 3. Retrieved from http://www.giantbomb.com/barack-obama/3005-3445/
Figure 4. Retrieved from https://mkf3881marketingbytes.wordpress.com/2014/10/19/ingame-advertising-product-placement-in-video-games/
46
Figure 5. Retrieved from https://www.sellmyapp.com/the-mammoth-guide-to-profitingfrom-in-app-purchases-41-ways-to-stay-on-top-of-your-game/
Figure 6. Retrieved from https://s-media-cacheak0.pinimg.com/736x/c4/b2/30/c4b2301d6674bcef20f52a10d51ceffd.jpg
47
Figure 7. Retrieved from https://upload.wikimedia.org/wikipedia/en/6/6e/ILoveBees__Homepage.png
Figure 8. Retrieved from http://www.adweek.com/files/imagecache/nodedetail/news_article/walgreen-ad-formats-hed-2014.jpg
48
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