Corporate Social Responibility

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, 2008). Indeed, it appears that product placement in video games is set to take off in the near future in a major way, due in large part to its cost effectiveness. For instance, Andrews (2009) reports that, "As advertisers seek more targeted and global ad solutions, computer games provide an opportunity that has not been exploited nearly enough" (p. 19). Although there have been a number of major product placement campaigns by Massive and others, it would seem reasonable to suggest that advertisers and game developers are still learning the ropes but as experience is gained, additional opportunities for innovation will emerge. In this regard, Andrews (2009) points out that:

Only a few years ago, many brands and agencies were snubbing games as a marketing platform, rightly concerned that they appealed only to a football and car race-loving male demographic. Only certain brands, for example Nike or McDonald's, would have suited the popular Grand Theft Auto and Championship Manager series. (p. 19)

More recently, though, video games have been developed that appeal to a much wider range of interests, especially with the growing popularity of the Nintendo Wii system. In fact, Andrews (2009) reports that "worldwide sales of the Nintendo Wii have topped 50 million, making it the fastest-selling games console in history" (p. 19). Clearly, console games are becoming the home entertainment alternative of choice for growing numbers of consumers that may transcend the traditional target demographic of 18 to 34-year-olds and Nintendo has published more than 150 Wii games to date (Andrews, 2009).

Notwithstanding its growing popularity, there remains a paucity of relevant research concerning the effectiveness of product placement in console games compared to product placement within more traditional media (Walsh & Kim, 2008). In order for product placement in video games to be effective, consumers must be aware that a product exists in the first place. Product placement in video games, though, can help raise awareness of a brand. In this regard, Walsh and Kim note that, "Brand placement within sport video games provides an opportunity to create this awareness in order for the organization's product to move into an evoked set" (p. 202).

A pioneer in the study of the effectiveness of brand placement in video games was Nelson (2002) who measured recall and recognition of brands immediately following participants' game play and subsequently following a 5-month period. The findings from the Nelson (2002) study showed that between 25-30% of brands appearing in the video game were recalled over the short-term, and 10-15% were recalled following the 5-month period (Nelson, 2002).

A follow-up study Nelson, Keum, and Yaros (2004) examined consumer attitudes concerning product placement within video games as well as determining respondents' purchase intentions toward brands appearing in the game compared to television advertisements. The findings from follow-up study by Nelson et al. (2004) indicated that a majority of consumers had positive feelings about in-game advertising to the extent that it added realism to the game. According to Walsh and Kim, "Therefore, having advertisements around the dasher boards of an arena in a NHL-themed hockey game would invoke positive reactions as these types of advertisements are very common at an actual hockey arena" (p. 202).

Moreover, product placement in video games offers the opportunity to link to other events in ways that improve brand awareness. For instance, Gruszkowska (2006) reports that, "The rise of online games means that game makers can change product-placement ads to cater to different consumers at different times -- more like ads in that other video medium, television" (p. 37). A video game advertising company headquartered in New York, Massive, coordinated a product placement event for Warner Brothers wherein online players of Ubisoft's Splinter Cell were presented with advertisements for "Batman Begins" that were timed to when the movie was being released in local markets (Gruszkowska, 2006). In 2005, Funcom's game Anarchy Online contained audio advertisements that were launched by players' avatars. According to Gruszkowska (2006), "Walking past a billboard ad for a movie, for instance, triggers an audio promotion for the film. Similar ads appear in Sony Online Entertainment games Matrix and PlanetSide" (p. 37).

Although sports remains a popular genre for many advertisers, it is clear that product placement in video games can reach a wider demographic range. The target market of 18 to 34-year-old Generation Y males represents an enormous demographic range that includes teenagers as well as middle- to upper-management types in their mid-30s. In this regard, Gruszkowska (2006) emphasizes that, "Driving the trend is a change in the demographics of video-game players. The average gamer is not so much a teenager as a young investment banker with above-average education and income" (p. 37). Furthermore, there are some clear trends involved in which types of media are preferred by this target market, and television is being watched less and video game consoles are being used more than in the past (Gruszkowska, 2006). In this regard, Gruszkowska (2006) reports that, "Whereas men 18 to 34 watched 12% less TV last year than the year before, they spent 20% more time with the videogame console. Games today are more mature and are catering to an older audience. Industry executives are excited at the prospect of reaching these consumers" (p. 37).

The company, Massive, has modeled the way for others in video game product placement. The company's founder and CEO, Mitch Davis, was inspired by the opportunity for product placement in video games while he was playing "Grand Theft Auto: Vice City." The game developers had included billboards along the avenues for realism, but they contained fabricated advertising for fake companies. A superior method, Davis felt, would be to use real companies on the billboards. In recent years, Massive has completed product placement initiatives for Sony Online Entertainment, Ubisoft and THQ (Gruszkowska, 2006).