Advertising in Video Games

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Halo 3

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Half-Life 2

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Grand Theft Auto: Vice City

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Super Mario Galaxy

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Tetris

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Solitaire

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Agenda

1. Why Advertise in Video Games?

2. Overview of the Video Game Industry

3. Advertising Opportunities in Video Games

4. Next Steps for Havas

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Why Advertise in Video Games?

Immersed audiences

Wide reach: men, women, teens, adults

Find new customers

Reach existing customers in new and imaginative ways

Opportunities for co-branding

Various formats allow reach in different demographics, with different cost structures

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The new face of the gamer

Less this…More this…

The Nintendo Wii has consistently been at the top of the Amazon.com wedding registry

in 2007

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An Uncluttered Opportunity

0,03

8.5

19.1

44.8

66

1:091:03

2:39

0:38

3:20

0,00

10,00

20,00

30,00

40,00

50,00

60,00

70,00

TV Newspaper Radio Internet Games

0:00

0:28

0:57

1:26

1:55

2:24

2:52

3:21

3:50

2003 Advertising

Revenue(In Millions)

AverageMedia TimeSpent/Day(HH:MM)

Source: Arbitron, Television Bureau of Advertising, Entertainment Software Association and Yankee Group, 2005

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Agenda

1. Why Advertise in Video Games?

2. Overview of the Video Game Industry

3. Advertising Opportunities in Video Games

4. Next Steps for Havas

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Video Games in Entertainment

Source: NPD, ESA, RIAA, MPAA, Nielsen

• Video games are now a mainstream entertainment medium• 40% of US households have a video game console system• 120 million people play video or computer games in the US

• 2006 US video game sales reached $12.6 Billion, up 19% from 2005• US Box office was only $9.5 Billion in 2006

• From 2004 to 2006, number of U.S. households with televisions that also have video game consoles rose from 38.6 million to 45.7 million. (18.5% increase) • Total number of U.S. households with televisions rose only 1.6 percent over the same timespan.

VideoGames

vsFILM

vsTV

vsMUSIC

• Video game revenues grew 28.4% from 2006-2007• Music revenues dropped an estimated 10% over the same period

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Who is Playing? – US Gamers

• 69% of American heads of households play computer or video games

• The average game player is 33 years old

• In 2005, 25% of gamers were over the age of 50

• Women age 18 or older represent 30% of the game-playing population, versus 23% boys age 17 or younger

Source: Entertainment Software Association, 2006

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• 66.7 million active gamers (23.2% of the total population)

• Germany the largest core European market* in absolute terms

• 28% of males and 19% of females (over 5 years old) are active gamers

• Female gamers are up 25% year-on-year

Source: GameVision, European Consumer intelligence Report, Spring 07

Sample 11,894 across UK, France, Germany, Italy , Spain; weighted to 2007 population census data)

* European countries included are: UK, France, Germany, Italy , Spain

Who is Playing? – European Gamers

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Two Broad Categories

Casual Games Core Games

Gameplay Length

Method of Play

Main Demographic

Cost to Consumer

Examples

Description• Easy to learn, with simple gameplay, graphics and rules • Fun to play, often addictive

• Typically free to play, though pay-to-play models do exist

• 5 – 20 minutes per session• Can be played in a series of short bursts, during work breaks or on public transportation

• Targeted at mass audience• 60% are women, most age 35+

• Online or downloadable web-based Flash games• May be passed along to other users and spread virally

• Solitaire, Sudoku, Mahjong, Tetris, Extreme Pamplona, Gilette Jetski

• Highly immersive,with deep and extended gameplay and high quality graphics and sound

• Gameplay sessions typically last 90 minutes

•Gamers are typically completely immersed in the world of the game

• Games are purchased either online or at retail • Require powerful, high quality computer or dedicated console

• 80% are male, age 18-34

• $30 - $70 per game at retail

• Electronic Arts, Nintendo, Microsoft, Activision Blizzard, Ubisoft, Take Two

Source: Interactive Advertising Bureau: Game Advertising Platform Status Report, Oct 2007

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A MultiPlatform Marketplace

Console and Handheld Games

PC Core Games

PC Casual Games

Mobile Games

PC Virtual worlds

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A MultiPlatform Marketplace1 - Console and Handheld Games

ConsumerProfiles

KeyMarket

Stats

MajorPlayers

Top TitleCategories

Trends toWatch

PlatformDescription

Console and Handheld Games

Sony: PlayStation PS2 / PS3 / PSPMicrosoft: Xbox / Xbox 360Nintendo: GameCube / Wii / DS / GBA

68% M / 32% FMedian Age – 2638% of most frequent console gamers are under

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70% of software shipments are for TV Based Gaming Consoles, 10% for handheld devices

XBox360 and Wii lead next generation console sales, but Sony´s PS2 continues to have strong sales

Action 30.1 %Sports 17.8 %Shooters 9.6 %Children/Family 9.5 %Racing 9.4 %

Increased presence as center of digital home/entertainment hub

Increased online connectivityXbox Live now close to 8 Million

Game consoles linked to TV sets through audio/video cables, increasingly internet-ready, and dedicated handheld consoles

Source: Entertainment Software Association, NPD

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Fixed Consoles Handheld DevicesConsole Producers

Wii Gamecube DS Gameboy Advance

Playstation 3 Playstation 2 PSP – PlayStation Portable

XBox 360 XBox

A MultiPlatform Marketplace1 - Console and Handheld Games

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A MultiPlatform Marketplace1 - Console and Handheld Games

CONSOLE HARDWARE SALES - 2006

PlatformUnit

Volume

Unit Share

(%)Dollar Volume

Dollar Share

(%)

GameCube 756.656 6,5 $72.910.750 2,5

PlayStation 2 4.713.323 40,8 $628.404.300 21,3

PlayStation 3 687.256 5,9 $396.174.100 13,4

Wii 1.080.310 9,3 $268.850.500 9,1

Xbox 391.876 3,4 $67.778.070 2,3

Xbox 360 3.927.195 34 $1.512.159.000 51,3

All Other 8.700 0,1 $526.823 0

GameCube PS2PS3 WiiXbox Xbox 360Other

Source: NPD, 2006

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A MultiPlatform Marketplace1 - Console and Handheld Games

CONSOLE SOFTWARE SALES - 2006

PlatformUnit

Volume

Unit Share

(%)Dollar Volume

Dollar Share

(%)

GameCube 17.198.750 12,4 $481.843.900 10,1

PlayStation 2 73.477.660 53,1 $2.303.179.000 48,4

PlayStation 3 1.275.378 0,9 $75.171.730 1,6

Wii 2.994.592 2,2 $145.262.500 3,1

Xbox 22.242.080 16,1 $603.749.800 12,7

Xbox 360 20.822.900 15 $1.148.104.000 24,1

All Other 411.703 0,3 $4.783.447 0,1

GameCube PS2PS3 WiiXbox Xbox360Other

Source: NPD, 2006

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Bestselling Video Game Titles of 2007 (US)

MARIO PARTY 8Platform: Nintendo WiiGenre: ArcadePublisher: NintendoDeveloper: NintendoRated "E" forEveryoneReleased: May 2007Copies sold: 1.82 million

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ASSASSIN´S CREEDPlatform: Xbox 360Genre: ActionPublisher: UbisoftDeveloper: UbisoftRated “M” For MatureReleased: November 2007Copies sold: 1.87 million

MADDEN NFL 08Platform: PlayStation 2Genre: SportsPublisher: Electronic ArtsDeveloper: EA SportsRated “E” for EveryoneReleased: August 2007Copies sold: 1.9 million

HALO 3Platform: Xbox 360Genre: ActionPublisher: MicrosoftDeveloper: BungieRated “M” for MatureReleased: September 2007Copies sold: 4.82 million

GUITAR HERO IIIPlatform: PlayStation 2Genre: MusicPublisher: ActivisionDeveloper: HarmonixRated “T” for TeenReleased: October 2007Copies sold: 2.7 million

WII PLAY(WITH REMOTE)Platform: Nintendo WiiGenre: Casual / ArcadePublisher: Nintendo Developer: NintendoRated "E" for EveryoneReleased: February 2007Copies sold: 4.12 million

SUPER MARIO GALAXYPlatform: Nintendo Wii Genre: ActionPublisher: NintendoDeveloper: NintendoRated "E" for EveryoneReleased: November 2007Copies sold: 2.52 million

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54321

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Source: NPD

POKEMON DIAMONDPlatform: Nintendo DSGenre: AdventurePublisher: NintendoDeveloper: NintendoRated “E” for EveryoneReleased: April 2007Copies sold: 2.48 million

CALL OF DUTY 4Platform: Xbox 360Genre: ActionPublisher: ActivisionDeveloper: Infinity WardRated “M” for MatureReleased: November 2007Copies sold: 3 million

GUITAR HERO IIPlatform: PlayStation 2Genre: MusicPublisher: ActivisionDeveloper: HarmonixRated “T" for TeenReleased: November 2006Copies sold: 1.89 million

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66% M / 34% FMedian Age – 3296% of PC gamers buyers are 18+

A MultiPlatform Marketplace2 – PC Core Games

ConsumerProfiles

KeyMarket

Stats

MajorPlayers

Top TitleCategories

Trends toWatch

PlatformDescription

PC Core Games

73.4% of U.S. households now own a personal computer

2007 PC game sales accounted for nearly 10% of total game software sales

Hardware developers: Alienware, DellSoftware developers: NVidia, Electronic Arts,

Blizzard EntertainmentMultimedia companies: Disney, Time Warner now

creating virtual worlds

Strategy 26.9 %Children/Family 20.3 %Shooters 16.3 %Role-Playing 10.0 %Adventure 5.9 %

Rise of massive multi-player online role playing games (MMORPG)

A shift in top title categories as PCs become better equipped to process action / sports games

Played on a computer through a CD-Rom or web download. Allows for internet networked play and / or upgrades.

Source: Entertainment Software Association, NPD, Nielsen

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56% M / 44% FMedian Age – 3644% of casual gamers download games from web

A MultiPlatform Marketplace3 – PC Casual Games

PC Casual Games

43% of most frequent gamers play online games44% of casual gamers download games from game

oriented websites

MSN GamesYahoo! GamesAOLReal Arcade

Puzzle/Board/Trivia/Card 57 %Action/Sport/Strategy 19

%Shockwave/Flash 9 %Persistent Multi-player 9 %Other 6 %Emerging payment plans: ad-supported,

micropayments, subscriptionsGreater integration of marketing communication

channelsNew distribution methods: ie – Burger King stores

distributed BK Xbox 360 games

Played through online web portals that generally require user registration

MiniclipPopCapOberon

ConsumerProfiles

KeyMarket

Stats

MajorPlayers

Top TitleCategories

Trends toWatch

PlatformDescription

Source: Entertainment Software Association, NPD

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PC Virtual Worlds

Some cater to kids, others to teens, and still others to adults age 18-34

Worlds can revolve around realistic alter-life, medieval times, or animal avatars, depending on demographic

80 % of active internet users will have a virtual world existence by the end of 2011

Currently 173.61M registered virtual world users

Disney (Club Penguin, Webkinz) Linden Labs (Second Life) Blizzard Entertainment (World of Warcraft) NCSoft (Guild Wars, Lineage)

Kid WorldsAlternative UniversesMassive Multiplayer Online Games (MMOGs)

Greater customization of virtual worlds to reach target demographics (ie – kids, teens)

Cobranding opportunities: virtual worlds paired with movies, tv shows, and music

Persistent, alternate universes that exist online and are available to users 24 hours a day, 7 days a week

ConsumerProfiles

KeyMarket

Stats

MajorPlayers

Top TitleCategories

Trends toWatch

PlatformDescription

A MultiPlatform Marketplace4 – PC Virtual worlds

Source: Entertainment Software Association, NPD, Gartner Research

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A MultiPlatform Marketplace4 – PC Virtual worlds

Cyworld 1999 20M Teens 14-24 Virtual World / Teens

World of Warcraft 2004 8.5M Adults 15-34 Fantasy / RPG

Habbo Hotel 2000 7.5M Kids 13-18 Virtual World / Kids

RuneScape 2001 5M Teens 14-24 Fantasy / RPG

Club Penguin 2006 4M Kids 8-14 Virtual World / Kids

Webkinz 2005 3.8M Kids 6-12 Virtual World / Kids

Gaia Online 2003 2M Teens Virtual World / Teen

Guild Wars 2005 2M Adults 18-34 Fantasy / RPG

Puzzle Pirates 2003 1.5M Adults 18-34 Puzzle

Lineage I/II 1998 1M Adults 18-34 Fantasy / RPG

Second Life 2003 0.5M Adults 18-45 Virtual World

Top Massive Multiplayer Online Games and Virtual Worlds

Release Date Active UsersName

Source: GigaOm, Gamasutra, TechCrunch

Target Group Genre

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A MultiPlatform Marketplace4 – PC Virtual worlds

• US • 0.5 Million

• Mainly adults

• Linden Dollar currency trades against the US Dollar• Operated by Linden Labs, but everything within is created by the users

• S. Korea • 20 Million

• 90% of Koreans in their 20s

• Now exists in North America and Pacific Rim. Coming soon to EU

• US

• 4 Million

• Boys & girls, age 8-14

• Acquired by Disney for $700 Million• Kids use penguin avatars to chat, play mini games, and build virtual communities

Origin

# Active Users

Target Demographics

Miscellaneous

• Finland

• 8 Million

• Boys & girls, age 13-18

• Localized in 31 countries

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A MultiPlatform Marketplace5 – Mobile Games

Mobile Games

PDAs56% M / 44% FMedian Age – 36

Mobile Phones:36% M / 64% FMedian Age – 27

34% of heads of households play games on these devices

64 M cell phone game downloads in ‘05Cell phone downloads generated $158 Million in

revenue in ‘05

Nokia: N-GagePalm: Handhelds & Operating Systems

Puzzles 45%Arcade Classics 36%Board/Game Show/ Trivia 19%

Convergence of functions (audio/video/gaming/cell phone)

Cell phone quickly emerging as a key platform in the gaming industry

Mobile phone as preferred method of playing casual games

Multi-media devices are used to play games (mobile phone, PDA)

ConsumerProfiles

KeyMarket

Stats

MajorPlayers

Top TitleCategories

Trends toWatch

PlatformDescription

Source: Entertainment Software Association, NPD

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32% of heads of households play

games on mobile devices such as cell phone or PDA,

up from 20% in 2002

Who Plays Online Games?

58% 42%Of online

gamers are male

Of online gamers are

female

70% of US males are gamers

68%

of casual gamers are female,

with an average age of 36

Source: Nielsen, NPD Group, Interactive Advertising Bureau

Online and Mobile Games: Not Just Gameboy Anymore

A MultiPlatform Marketplace5 – Mobile Games

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Agenda

1. Why Advertising in Video Games?

2. Overview of the Video Game Industry

3. Advertising Opportunities in Video Games

4. Next Steps for Havas

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Overview of Advertising Opportunities

In-Game Dynamic

Adver-games

In-Game Static

Product Place-ment

lead timecost

lead timecostLOW HIGH

Around Game

• Web site, banners

• Internet

• €5cpm

• PC / Console

• Connected PCs & Consoles

• €20 - €35cpm

• Console

• Consoles & PCs

• €? – depends on game title and level of brand integration

• Console

• Consoles & PCs

• €? – depends on game title and level of brand integration

• Casual

• Web-based

• €10,000 - €1M+

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Around-Game AdvertisingMiniClip: A Casual Gaming Destination

Display advertising on

homepage

Other advertising options include:• Homepage takeover• Gamepage takeover• Dedicated games• Advertising on newsletter• Pre-game video

New games are featured on

landing page and are rotated over a period of weeks

MiniClip will host pre-developed games but also

have a dedicated team of developers

who can create games to a client´s

specifications

• 30M unique visitors per month• 2.5M users have downloaded the toolbar• 3.5 M users receive the newsletter*

Top 10 games list creates additional

buzz

* Source: MiniClip

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In-Game Dynamic

ComparableVehicles

Measurement

Lead-time

Key Players

15 second commercial in cable TV, genre specific print, out-of-home

3rd-Party audit services track reach and frequency as well as special game metrics such as how long the gamer viewed the ad and at what time of the day.

48 hours to 30 days

Ad serving networks: Massive Inc., IGA Worldwide, Double Fusion.

Budget Range

10€ - 30€ CPM

Description In-Game billboards that are served dynamically (based on gamer location) by 3rd party networks

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Product Placement

ComparableVehicles

Measurement

Lead-time

Key Players

Product placement in films and television

Third-party research needs to be developed to measure brand awareness lift and ROI.

9 to 18 months

Game publishers: EA, Take- Two, Atari, Activision, Konami, Vivendi Universal, Sega.

Budget Range

Flat fee dependent on level of brand or product integration and the popularity of the game

Description Full integration of brands and products, hard-coded into games by the developer

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In-Game Static

ComparableVehicles

Measurement

Lead-time

Key Players

Product integration in TV, cinema, video

Third-party research needs to be developed to measure brand awareness lift and ROI.

1 to 2 years, depending on the game development process

Game publishers: EA, Take- Two, Atari, Activision, Konami, Vivendi Universal, Sega.

Budget Range

Flat fee dependent on brand name recognition of game title and positioning of advertisement

Description In-Game billboards and loading screens that are hard-coded into a game by the developer

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Advergames

ComparableVehicles

Measurement

Lead-time

Key Players

Loyalty programs, experiential marketing, guerrilla marketing

Ad-hoc research needs to be developed based on opt-in rates to measure the marketing program results. Currently measured on page views and click-through.

4 to 6 months for basic games6 to 12 months for advanced games

Game Developers: Oberon Media, Blitz, PopCap; Game Portals: MiniClip, MSN, Yahoo!, RealArcade

Budget Range

€10,000 to €1 Million

Description Bespoke mini-games that are created around a brand or product and are usually free to play

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Fully Integrated Branding Opportunities

Doritos´ Unlock XBox Campaign

• Doritos wanted to “be in games”

• Microsoft invited participants to develop casual game ideas around the Doritos brand

• Five finalists were chosen, one winner will have his / her game produced and distributed online (chosen by online voters)

• Online tie-ins include microsite and documentary videos about the finalists

• Increased brand awarness for Doritos and gamer affinity with Xbox

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Strategic Alliances and Cross-Promotion

• Sold 3.2 Million copies in 8 weeks (that´s $16 Million!!)• Avoided expensive retail channels by selling in-store• Increased awareness of BK´s new Value Meal program, designed to compete with McDonald´s and Wendy´s• All Xbox 360 players registered with Xbox Live, adding to Microsoft´s database of gamer information

• Burger King and Microsoft teamed up to create three brand new casual games for the Xbox and Xbox 360• Sold for $4.99 with Value Meals at Burger King stores

*Source: GameSpot, Reuters

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Agenda

1. Why Advertising in Video Games?

2. Overview of the Video Game Industry

3. Advertising Opportunities in Video Games

4. Next Steps for Havas

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Next Steps

Creation of Video Gaming Unit

• Advise and assist clients with gaming strategy and implementation• Create in-house team devoted to gaming themes• Pool talent and work closely with other Havas units• Develop ideas one client at a time• Create research to monitor ROI and brand lift for clients

• Create strategic agreements with gaming companies for the global Havas network• Work directly with developers and publishers to integrate brands and create bespoke games for clients• Develop Havas as a gaming knowledge center

• Acquire or create an in-house game development team dedicated to handling client needs as well as developing our own new projects• Create a game publishing division capable of competing or teaming with larger, more established publishers.

Strategic Global Partnerships & Alliances

In-House Game Development

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Thank You