Q&A: Exent's Tzuya Talks In-Game Ad Struggles, AdMuse

Since being established in 1992, Exent Technologies have been involved in many areas of video game monetization, including digital distribution and digital rights management, with technology that powers online distribution services such as GameTap. More recently it expanded into the field of in-game advertising, and has touted its AdMuse technology not only as a solution for tradition in-game advertising, but as a way for advertisers and marketers to embed new objects into games during the production cycle or post-installation without changing game code. This was most recently demonstrated in a partnership with online game community Xfire for an in-game treasure hunt tournament around Call of Duty 2, where users who played through CoD2's first five missions and located the secret codes were entered into a drawing to win a copy of Call of Duty 4. Gamasutra talked to Yoav Tzruya, CMO of Exent, about how the company's in-game advertising has evolved since launch, plus his take on the current market, advertising to children, and the future. How have you seen the in-game ad market evolve? YT: I believe that everyone in the industry hoped the market would evolve quicker. Issues associated with the need for specialized ad-sales organization, non-standard creative, inability to bundle with other ad-units, monolithic ad-serving systems, no third party auditing, lack of proven effectiveness and higher-than-expected integration costs and time frames have all contributed to the slower development. We’ve tried to bypass most of these obstacles and have successfully developed our products and launched several implementations overcoming the above. We also take a different position in the market than most other companies. While DoubleFusion, IGA Worldwide and Massive take the approach of an ad-network, relying on inventory created by publishers, leveraging the peak in usage associated with new games, we have taken upon ourselves a publisher-like role, creating the demand and the inventory, rather than tasking ourselves with selling it. In fact, some of the companies mentioned may be a good partner for Exent. We’ve also stayed away from the non-recoupable minimal guarantees that are associated with the new AAA titles. Instead, we continue with our vision to create a second release window for video games, by creating free, ad-supported video-games services. What do you see as the attraction of the advergaming market -- to advertisers, to developers? YT: As mentioned above, we take a somewhat different view on the main opportunity that game ads presents. Exent already powers services like GameTap and Verizon’s Games-on-Demand. These are primarily premium services, which users pay a fee to be able to play the games available on them. We believe that in-game advertising allows for the creation of free, ad-supported services, reaching out to the more than 70 million Americans that are playing games online. We believe this is attractive to advertisers since online gaming is the number one activity for young men, in terms of time spent by users, while online. As for game developers, most of the attention on in-game ads is focused on generating an additional $1-$2 per unit for new titles distributed. We believe that the ad-supported second release window holds a much higher opportunity to generate $0.2-$0.25 per each hour of game-play and $2-$3 per user per month. Do you see it as purely a second market to retail/paid online distribution, or do you think it's a viable way for developers to launch a game? YT: I believe that with time we will see the game industry developing a full release window model like the one for Hollywood movies. There will be games that are developed to be distributed, from day one, in an online, free, ad-supported manner, while other games will go through the different release windows -- first distributed in retail, than moving to premium online, quickly going through multiple business model (buy-and-download, try-and-buy, subscription and pay-per-play) and eventually, after 9-12 months from launch, reaching the free, ad-supported online window. There's a lot of buzz about games built around brands, too. Is that something of interest to Exent, or are you purely interested in ad wrapping on existing titles? YT: We are currently not involved in the advergame business. We take a different approach to achieve similar results. For example, we are leveraging the existing audience of hit games like Call of Duty, and implementing, using our AdMuse product, a branded campaign like the treasure-hunt style promotion for the users of such a game. The impact is essentially the same, but we don’t need to develop or customize a game from scratch, and are guaranteed exposure. Do you see the different forms of advergaming competing? YT: I think that we are far from exploiting the potential of video-game related advertising and different types of efforts are geared to serve different purposes. Advergames, for example, are about the promotion of a single brand, through a gaming experience to a specific demographic. While free, ad-supported gaming services are about reaching masses of users, with an attractive assortment of higher quality games, creating the brand affiliation by the quality and richness of the overall service experience rather than a specific game. Do you work with the advertisers in placing the advertisements? YT: We do, at times. However, since we have the capability to work with standard IAB-sized ads, we also heavily leverage standard ad networks. Do you see any social or ethical issues with advergaming -- with connecting brands to otherwise unconnected play, particularly with children? YT: So far, we have stayed away from targeting children. There are many other demographics groups that the advertisers are interested in targeting and there is no need to go in that direction. We also make sure to work with advertisers that will be acceptable to our audience base, and to put the right filters to make sure both game-play experience, as well as overall user satisfaction is preserved.