Corporate Social Responsibility Term Paper

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Product Placement in Console Games

A growing body of research confirms that one of the best ways to reach male consumers aged 18 to 34 years is to place products in console games. Originally, game developers paid advertisers to include their products in games to lend them authenticity and realism, but advertisers are now paying game developers to have their products placed in popular console games. The introduction of online gaming series has created additional opportunities for product placement and current trends indicate that advertisers will be exploiting this marketing tool even more in the future. This paper provides a review of the relevant peer-reviewed and scholarly literature concerning product placement in console games, followed by a summary of the research and important findings in the conclusion.

Review and Discussion

The introduction of video games such as "Pong" as home entertainment systems more than 30 years ago created an entire generation of video game enthusiasts. From the humble "Pong" origins, the home video game industry has transformed into a multi-billion-dollar global enterprise. For instance, Clavio and Kraft (2009) report that, "While early home video games were rather basic in design and execution, the genre has since evolved in terms of technology, interactivity and popularity. Today, there are 132 million teen and adult gamers in the United States alone, where nearly half of all households have a games console" (p. 143). As a result of the rapid growth of the video game industry, video games currently represent a major competitor to traditional forms of entertainment, as well as discretionary income and consumer leisure time (Walsh & Kim, 2008). Indeed, by 2004, sales of video game items overtook movie theater box office receipts in the United States (Walsh & Kim, 2008). Revenues from entertainment software sales totaled $8.2 billion in 2004, and nearly doubled to $15 billion in 2009 (Clavio & Kraft, 2009).

The proliferation of video gaming systems for the home has attracted the attention of marketers seeking to reach a large market in a cost-effective fashion. According to Clavio and Kraft, "The potential reach for advertisers and corporate entities is enormous, as video games have provided another medium through which marketers utilize brand development and brand awareness" (p. 143). Current video game genres golf (PGA Tour/Tiger Woods), baseball (MVP Baseball, Triple Play), football (NCAA College Football), basketball (NBA Live, College Hoops) and boxing (Fight Night) (Clavio & Kraft, 2009). One of the industry leaders in the entertainment software industry with a 25% market share is EA Sports, a subsidiary of Electronic Arts (Clavio & Kraft, 2009). The EA Sports division generates 33% of Electronic Art's $3.1 billion revenues each year (Clavio & Kraft, 2009).

These video game series also represent an innovative platform for product placement. In this regard, Clavio and Kraft advise that, "Video sports games not only provide EA and other gaming companies with billions of dollars in revenues, but they also provide a unique 'outside the box' method of marketing and advertising for the corporate world" (p. 143). There is a growing recognition among marketers that product placement in console games represents a viable method of reaching a target market in ways that might not be otherwise possible. As Clavio and Kraft point out, "In today's marketplace, it is the marketer's job to relate the brand to its target consumer in a very personal and relevant way. Experts indicate that major advertising agencies are expanding client services to include all forms of sports marketing and sponsorship opportunities, including video games" (p. 144).

The explosive growth of the video game industry has attracted the attention of advertisers seeking to leverage console games as a method for reaching their target market, which is typically males 18 to 34 years old, representing the primary users of video games today (Christensen, 2009). This point is also made by Clavio and Kraft (2009) who report, "Chief among the demographic groups that purchase sports video games is Generation Y, a highly desirable target market for advertisers that comprise consumers aged 18-34" (p. 143). Innovations in video gaming technologies have attracted the attention of advertisers seeking to reach this target market, and industry-wide expenditure on in-game product placement has increased from $50 million in 2004 to more than $120 million in 2006 (Clavio & Kraft, 2009). According to Clavio and Kraft (2009), "The increasing popularity of the sports video game genre has provided advertisers with new avenues for marketing and product placement. Video games, once seen as kids' games and strictly recreational tools, have transformed into vivid, life-like representations of a wide variety of situations" (p. 143).

The product placement business model has grown along with the popularity of the video game industry, but some changes have been made over the years. For instance, Christensen reports that, "Originally, game developers would pay advertisers for the opportunity of having products placed in their games in order to give them a more realistic feeling" (p. 292). Over time, advertisers and game developers reached a consensus that including products at no charge in games was mutually advantageous for cross promotional purposes (Christensen, 2009). Some industry analysts place the advent of product placement in console games to around 2005. For instance, in 2006, Gruszkowska reported that, "Videogame makers began putting real products in their games about a year ago, mostly as fixed advertisements -- products featured on billboards or as props in the game -- and advertisers have embraced the new medium" (p. 37). At present, the product placement business model most prevalent has advertisers paying game developers to have their products included in games that appeal to their target demographic (Christensen, 2009).

The introduction of online games created a new advertising model that provides the opportunity for product ads to be easily changed in ways that allow advertising to be specifically targeted at specific demographic or geographic targets. One company, Massive Inc., has been in the vanguard of this advertising method. According to Christensen, "Its Video Game Advertising Network enables advertisers to place their ads by using the Internet, and it can update the ads every time the player goes online" (p. 292). In addition, the advertising network provides the ability to count the number of players that see an ad (Christensen, 2009). In this regard, Christensen concludes that, "The use of in-game advertising is growing significantly with the introduction of the new generation of console games and provides an incremental revenue stream for video game developers" (p. 292).

An analysis of the PGA Tour/Tiger Woods golf games for the Playstation and Playstation 2 consoles from 1997-2006 conducted by Clavio and Kraft (2009) concerning brand and product placement determined that there were 2,100 identifiable brand images contained in the series, and all of these brands with the exception of one were introduced during the final 3 years of the game series production (Clavio & Kraft, 2009). In addition, during the period from 2004 to 2006, the number of incidences of branding in PGA Tour/Tiger Woods games more than doubled, and the number of brands contained in the game series almost doubled during that time period (Clavio & Kraft, 2009). According to Clavio and Kraft, some brands enjoyed a significantly larger presence compared to others, with Adidas, the Nike family and Oakley representing more than 66% of the total brands identified. All told, there were 24 distinct brands identified during the course of the game series, including companies such as Cobra, Precept and Under Armour; however, the most frequently appearing brands were Oakley, Nike, Adidas, TW Nike and Tag Heuer (Clavio & Kraft, 2009).

Within product categories, Nike was the most prominent advertiser for equipment (36%) and Oakley was the most prominent for apparel (31%) (Clavio & Kraft, 2009). The results of the study by Clavio and Kraft confirm that console games are being increasingly regarded as viable marketing methods. In this regard, Clavio and Kraft add that, "The growing number of visible company brands, coupled with the increasing number of available products, indicates a desire by these companies to have their brands seen and utilized by users of this game series" (2009, p. 144).

In many cases, sports video games in particular remain the genre of choice for advertisers seeking to place their product where they will be seen by their target demographic. For instance, a study by Walsh and Kim (2008) confirmed that video games in general and sport video games in particular represent a viable media platform for brand management with a growing number of companies engaging in brand placement within sport video games in an effort to reach their target markets in innovative ways. According to Walsh and Kim, "This growth has also led many professional and collegiate properties to consider sport video games as an innovative tool to reach existing sport consumers, attract new customers, and access younger market segments by incorporating their brands into interactive games" (p. 201).

Besides league video game licenses, corporate marketers are also using this new medium to engage in brand placement within video games (Walsh & Kim,…[continue]

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