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Somewhere inside two gleaming buildings in a complex in
Redwood City, CA, video game publisher Electronic Arts
may be plotting your online marketing future.
markeUngmedlum.
Armed with some of tile most recognizable brands in all
YOurallleswUlbegame media, including Harry Potter, NASCAR, Madden NFL
giants like Electronic Football, FIFA Soccer and The Sims, Electronic Arts is
Arts andMlcros01t.
embracing the internet in a big way. And while a good
Choose your weapons portion of its online ambitions revolve around subscriptions
and e-commerce, the company is also banking on the fact
from sponsorships,
that it has content that can connect sponsors and
advergamlng and
advertisers with a mass market.
product placements.
Since its founding in 1982, Electronic Arts, or EA, has
Dav dWard Wiliguide been the 800 pound gorilla of interactive entertainment.
The company currently generates $1.3 billion in annual
you roughtheterraln revenue, and while it has never manufactured hardware, it
has emerged as a kingmaker in the video game business.
Its extensive support of the PlayStation and PlayStation 2
has been partly responsible for Sony's emergence as the
pre-eminent game system maker over the past seven years.
In 1999, EA formed EA,com which soon established itself
as a leading online content provider by signing a deal to
generate the content for AOL's game channel. This year, it
solidified its position, buying casual-gaming site Pogo.com
for $42 million and launching the EA Sports Service, its first
subscription-based service for web-only games
EA.com's online strategy is simple: provide something for
everyone and don't worry if some of the games don't appeal
to the entire audience. "I think TV networks offer a good
model for how we address a mass audience with online
gaming, " says EA.com president and COO John
Riccitiello. "Networks offer a full menu of shows aimed
at different audiences. Similarly, EA's online offering will
mix quick-access family content with subscriptions to
more complex offerings. There may be some overlap but
our business strategy doesn't depend on it."
But why would a company that has achieved success in
John Riccitiel/o looks to the difficult offline software sector make the jump to the
steer fA.com to online
much more treacherous world of online content delivery?
success - and steer big For one thing the timing seems right. Several factors are
brands to the internet
coming together to make video games an ideal platform
IlHolullU l1 IU llerl u ly 2001
for traditional offline brands that are looking for a better
online marketing experience.
Indeed , major brancls such as Nike, Toyota, Radio Shack,
First tJSA bank, Jack Daniel's, TiVo and General Mills have
either already sponsored online games or are taking a good
hard look at the space (see chart below).
Long dismissed as a toy for teenage boys, the video game
industry has come of age during the last five years, and its
$7 billion in annual US revenues now equals total receipts
from movie theater box offices. Astudy by Hart Research ,
cited by industry trade group the Interactive Digital Software
Association (IDSA), found that 145 million Americans now
regularly play some form of interactive video game.
But despite this rapidly growing acceptance, for many
companies it is still a difficult business in which to make
money, especially for firms focusing on games designed to
be played on PCs. In the mid-1990s, games played on
home computers were thought to be the future of
interactive entertainment as increasing numbers of fans
armed with powerful PCs regularly plucked down $50-buy
hot titles such as Quake, Duke Nukem and SimCity. As the
internet grew, online connectivity was predicted to be the
value-added missing link that combined community
building around content, with the opportunity for additional
revenues through either subscriptions, tournaments or
sales of add-on packs and sequels.
But instead of growing the market, the internet ended up
being partly responsible for the leveling off of the PC games
business. While consoles such as the PlayStation lured an
increasing number of younger gamers, the PC games
audience had not changed, only aged a few years. But
instead of buying a game a month, these hard-core
consumers are using the internet to get deeply imrnersed in
games such as Age of Empires, Command & Conquer and
Diablo 2, often for six months at a time. As a result, they
now spend just as much , if not more, time playing games
on their computers, but buy far fewer titles each year.
At the same time, a new type of game fan emerged that
was not interested in wielding a virtual sword or working as
a virtual tailor for eight hours a night. These casual gamers
want their entertainment fast and familiar. They flock to
sites like Pogo, Uproar, Flipside and GameZone to play
chess, backgammon , bridge and otller simple games.
The good news is that the rise of these casual players has
finally enabled the video games industry to overcome the
perception that its audience consists exclusively of teenage
boys or men seemingly locked in perpetual adolescence.
According to the IDSA, 72 percent of PC game players are
above the age of 18, with 42 percent above 35. In addition,
the number of women playing interactive games reached a
new high of 43 percent in 2000. The bad news is that most
of these casual game fans are pretty much like everyone
else looking for content on the internet. ''They want
everything for free, " notes Jupiter analyst Billy Pidgeon .
The obvious answer is to mimic the television model and
rely on advertising and sponsorships. In many ways ads
have long been a part of games based on car raCing and
other sports where billboards
from real-world stadiums are
replicated virtually to make
the experience seem more
life-like. "Sponsorships and
banners are as natural in
virtual stadiums as they are
in the real thing," notes
Riccitiello, adding that
these product placements
MattllewRlng I
may be just the beginning.
<kpe>
"Interstitial advertising,
which runs like commercials on TV, is also a possibility.
Online players might see streaming video of a soft drink
commercial between round s of a boxing match, or as the
sides change between innings of a baseball game. "
The move couldn 't come at a better time for many online
marketers. "Everyone is frustrated with banners, and
they're looking for what's next," says Matthew Ringel , VP of
strategy at interactive studio <kpe>. Ringel recently
co-authored a study touting the benefits of "advergaming."
"Advergaming is an entertainment experience and a
content experience," he says. ''The best consumer brand
Playing with brands: online gamesas advertising vehicles
8 anr'
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Ill/mat
MSN Zone.com
Dodge Speedway
Arst USA
MSN Zone,com
General MIlls
Nick. com
Jack Daniel's
Shockwave. com
Wingspan Bank
Virtual Golf Association
Cinnamon Toast Crunch
Advertoys
Jack Daniel's Virtual Pool Hall
Radio Shack
MSN Zone. com
Radio Shack RC Riot
Racing game, part of a campaign celebrating Dodge's return to NASCAR; allows ,alayers to
race a Dodge Intrepid around a track (see case study. page 28)
Sponsorship of video gam e golf tour that ran fOr se ven months and offered
$200,000 in prizes (see case slJJdy, page 28)
Adventure game where character tries to collect all his wind-scattered Cinnamon Toast
Crunch cereal before school
Sponsored 3-D virtual pool game featuring Ja ck Daniel's logos within th e game as \Veil as
hot-linked banners and buttons outside of the game screen
Consumers build, then race. Radio Shack radio-controlled toy cars
Sony Pictures
www.ak nlghts tale.Gom
A Knight's Tale Tournament
nvo
EA.com
Pro 3-Point basketball
Toyota
MSN Zone.co m
TundraMa dness 2.0
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Digital EIIl
Enables players to create a knight, then enter him in on online joust. based on Ihe
movie "A Knight's Tale "
TiVo interstitials and billboards appear before and during this "coffee break" game
featuring a three-point shooting basketball contest (see case study, page 30)
Consumers "test drive " a Tundra truck. Third .game Toyota has sponsored on lone. com,
Previous efforts Include Toyola Adrenaline lor the Tacoma truck (see case study, page 28)
Icomputer gam es L,________________________~R~e~~~O~IU~II~O~n~J~tln~.~/~IU~I~r~2~O~OI
28
Case study MSN's Zone.conl puts the nanles in the games Microsoft and its Zone,com
web site have a simple
message for brands still
debating whether video
games can be an effective
platform for advertising and
promotions: it's been done
and it works,
"Our primary revenue stream
is advertising, either through
sponsorships or banners,"
Ch
Dicesare
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HartResearch
says Chris Di Cesare,
Zone,com.'s group product
manager for online games
Like EA,com's deal to be the
games channel for AOL,
Zone,com has an exclusive
deal with its parent company's
major portal, MSN Network,
With the Zone , consumers can
choose from 130 games,
ranging from complex strategy
titles such as Age of Empires,
which require the purchase of
a disk at retail , to simple card
and board games
While the Zone has its share
of banners, it has found that
the opportunity to exclusively
sponsor games has proven far
more appealing to advertisers,
Di Cesare says 80 percent of
the Zone's current advertising
comes through sponsorships
1r:li'F.£='l1of individual games or longterm tournaments,
For Toyota, the Zone worked
with Seattle-based developer
WildTangent and the truck
maker's ad agency Saatchi &
Saatchi to design a game that
mirrored the 1V campaign for
the Tacoma truck, The result
was Toyota Adrenaline,
"It baSically allowed people
to test-drive the truck as they
raced around this track
Dodge reached a new audience with the Speedway game
collecting adrenaline bags,"
marketers are getting behind it in a big way,"
Ch ris Di Cesare, group product manager for on Ii ne games
at Microsoft's GamingZone, adds, "Casual games is where
advertisers really want to be, rather than core games,"
One early proponent of gaming as an online marketing
tool is Brown-Forman, maker of Jack Daniel's and other
spirits, Last year it sponsored a Virtual Pool Hall on
Shockwave,com as part of its campaign celebrating the
150th birthday of Jack Daniel's, Charles Zug, VP of
interactive marketing, says Brown-Forman views game
sponsorships on sites like
Shockwave as a chance to
spread the Jack Daniel's
brand to places you
wouldn't expect it to be,
More importantly, Zug
says, the real selling point
of game-related advertising
IS time, "The opportunity to
really make sure your
message oryour brand sinks
in - as a result of the
consumer being in front of
your screen for an extended
period of time - is priceless, "
WildTangent is a Seattle-
says Di Cesare, "It fitted in
well with the commercial and
turned out to be a win-win-win,
We got sponsorship dollars,
users got a fun interactive
experience in the Zone, and
Toyota got strong brand
awareness for the truck,"
Despite initial fears that
consumers might be turned off
by such an obviously branded
game, Toyota Adrenaline was
in the Zone's top 10 games
during its run, "We've actually
had great feedback," notes Di
Cesare, "When the product or
sponsor is very relevant to the
game itself, it works ideally, "
The success of Adrenaline
has enticed other brands like
Radio Shack, Driveway,com
and Dodge to create games
around their specific products,
Dodge NASCAR marketing
specialist Bo Puffer says the
Dodge Speedway game on the
based developer which has created games around
products for TBS, Dodge, Toyota and Sony Pictures' First
Knight. CEO Alex SI. John believes that games built around
brands and products also end the dilemma many
marketers have about whether or not their messages are
actually being received, "You can go to a marketer and say,
'Look, I know this consumer stayed with this the whole way
through because here are the keystrokes he or she needed
to complete the game," he says,
Although they can cost more than other online marketing
platforms, Ringel says advergames have the advantage of
serving as large-scale focus groups, "In an advergame
you're forcing natural consumer choices," he says, "For
Nike, it's what color shoes you want Vince Carter to wear, or
what color jersey, You can get fairly granular."
Given this seeming enthusiasm from the marketing
community , it's s'Urprising how cautious game publishers
are with ad-based models, Robert Regular, VP of sales and
marketing at Conducent, says game creators have been
fearful of alienating their core fan base by integrating ads
into play, Conducent's technology allows advertisers to
integrate messages into both online and offline
entertainment software, and then swap out those ads for
newer ones as the marketing evolves, It's a sad sign of the
current state of ttle advertising market that, after years of
development, Conducent recently had to close its doors,
Re (llut.on June !llll y 2001
played during the seven month tour as virtual golfers
competed for a $100,000
prize. Wingspan largely used
the sponsorship to attract new
credit card applicants. But Di
Cesare says, "They were
pleasantly surprised because
we had the sponsor front and
center so it also drove a lot of
8 brand awareness."
Zone.com's latest online
event, a celebrity-oriented
game show called OutSmart,
has attracted sponsorship
from AT&T Wireless. With the
tag line "Beat 'em at their own
fame," the bi-weekly game
pits consumers against major
stars to find out who knows
more about the celebrity 's own
career. The first guest star was
Jessica Alba from the
television series Dark Angel.
Di Cesare says the game
combines consumer interest
in celebrity news with a
Wingspan Bank VGA Golf attracted 4.5 million unique users OutSmart: an attractive proposition for a sponsorship deal game-sholV format.
Zone is just part of a larger
campaign celebrating the
auto maker's return to the
NASCAR racing circuit.
''We want to try to talk to
people we may never have
reached in other media," he
says. "We know how to reach
the people who read USA
Today and who watch Friends.
But the people who are
playing these games are
younger and tech-savvy. We
felt that doing a racing game
would expose Dodge to
people who have nelJer before
been exposed to the brand. "
In addition to games
designed around products,
the Zone is also pushing
For the most part, companies like EA seem content with
making firm, but small, strides toward building marketing
messages into games. True, EA does have the ad-supported
Pogo casual-gaming network. And Tom Nichols, EA.com's
director of marketing, says the company also works with
AOL's sales teams to sell advertising on the ISP's games
channel, and has its own dedicated sales force working for
EA.com. The company has already signed TiVo to sponsor
the free basketball game, Pro 3-Point, and indicates that
interest from other major brancls is higll. "As for potential
sponsors, we get several calls a day - many of them with
terrific ideas," says Riccitiello. "We need to give these a lot
of thought before they get woven into the content."
But instead of rushing toward a marketing-based solution,
EA.com is focused more on proving the thus far mythical
proposition that the mass market will pay, and pay
regularly, for online entertainment. In late February, EA.com
launched its EA Sports Service, where consumers pay
$4.S'9 a month for unlimited access to three online-only
games: NASCAR Web Racing, Tiger Woods PGA Tour Web
Golf and Knockout Kings Web Boxing. EA will eventually
boost the price to $9.99 per month as it expands the
service to include other sports such as football and soccer.
Long term, EA .com will eventually be divided into three
sections: the Sports Service; Pogo.com, which will retain its
name and brand identity; and a Worlds Channel, where
aggressively into sponsored
online game events. The effort
began in 1999 with Kasparov
vs. the World, in which chess
champion Gary Kasparov
played against a Zone.com
audience that chose the
World's every move from a
choice of three offered up by
grand masters. The match ,
sponsored by First USA bank
and its online division
Wingspan , attracted over
three million unique users.
First USA and the Zone
followed that up with an
ongoing virtual golf tour, the
Wingspan Bank VGA Tour. A
total of 4,5 million unique
visitors either watched or
consumers can experience the persistent worlds of Ultima,
The Sims and also Hogwarts of Harry Potter fame.
While not ruling out that some of these paid services
could also carry some advertising, Riccitiello insists, "From
a business standpoint, our most important relationship is
with the subscriber. Before we build sponsorships deep
into the game, we need to ensure that it won't erode the
quality of the player's experience."
Although not without risk , EA's online subscription strategy
is already proven, albeit on a far smaller scale, with Ultima
Online. Launched in 1997, the persistent-world online-only
game, which is set in a medieval environment, has more
than 230,000 users who not only spent $50 at retail to buy
the game, but now pay $10 a month to carry on playing it.
But unlike Ultima Online, which has a fanatical, but niche,
audience and requires weeks of regular play to master,
Nichols says that most of the EA.com fare will have much
broader appeal and little or no learning curve. Some of the
games, such as NASCAR Web Racing, can be played in
under 10 minutes, making it ideal for both busy parents or
office workers looking for a quick break during the work day.
Afar more ambitious take on this philosophy is EA.com's
Majestic. Set to launch in late spring, Majestic is described
as a combination of The X-Files and the Michael Douglas
movie The Game. Players who pay the $9.99 monthly fee
will be dropped into a conspiracy: fictional characters will
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Re vo lut, o n lune ,ll uty 2001
30
Case stu yTiVo exploits the game-playing demographic One of Electronic Arts' key
long-term goals is to expand
its appeal to include men and
women of all ages. But for
digital vid eo recorder
manufacturerTiVo, it was th e
chance to reach EA's core
audience of young adult men
and sports fans that
prompted it to sign up as the
sponsor of EA .com's free
basketball game, Pro 3-Point.
"It's an audience that loves
new technology and is looking
for new stuff," says ROlinda
Day, promotions manager for
TiVo. "We fall into that
category of new stuff, so it's
certainl y a good fit for us in
terms of demographic."
Pro 3-Point is designed as a
"coffee break" game ­ it has
no leaming curve and can be
accessed and played in only a
few minutes. EA.com director
of marketing Tom Nichols
says that by combining
different online ad form ats, a
company can deliver its
message in a short period
while not intruding on game
play. 'There are 15-second
targeted ads whil e the game
is loading, and then you get
ads alongside the court while
you play," he says.
The interstitial ad offers a
brief description ofTiVo
features like fast-forward and
rewind. "It has all the things
that are relevant to sports
fans," says Day. "It gives them
enough to pique their curiosity
so they'll go visit TiVo.com. "
While Day acknowledges
that sponsorships and
product placements are more
expensive than traditional
banners, she thinks the cost is
Justified . "It's aimed right at
this special ized group that
falls into our demographic,
and it's a ca ptive audience,
much like the people who go
to movies and watch ads and
trailers before a film starts. So
it's worth the money. "
TiVo is considering further
game sponsorships, but Day
says one thing won't do, at
least in the short term, is bring
games to its own site. "If you
look at Tivo.com , it's certainly
entertaining," she says. "But
we want people who come to
our site to get thebest
possible replication of the
TiVo experience, " adding that
a game on its own site might
confuse that message.
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Sponsoring fA. com 's Pro 3-Point free basketball game is a smart play for TiVo
contact them by email, fax and cell phone, dropping hints
and clues and directing them to web sites that will enable
them to solve the mystery. The game, designed to be
played in 20- to 40-minute bursts, Will be episodic with a
new story every month so users can jump in at any time .
"Th e thing we think will make Maj estic mass market is that
it reaches you in way that is already familiar, " says Nichols.
"Everybody uses a cell phone , the y know email arid they
know how to use a fax, so it's instantly accessibl e to a huge
audience ." EA.com is looking at ways to build some
advertising into Majesti c, although the company says it will
only be placed where it is appropriate, such as with
banners on web sites used in the game.
It al so plan s an e-commerce segment where consumers
can bu y console and PC di sc-ba sed gam es. EA says online
service subscribers will get coupons and other discounts to
be used in th e online store that will , in essen ce, make the
monthly service free, provided consumers spend enough.
With a huge and growing audience of both AOL and ot~ e r
web visitors, and an intriguin g mix offree ad-supported
content and subscription-based premium content, EA.com
appears to have a strong game plan.
But no one thinks this win be a slam-d unk. Other big
offline content creators have found the infrastructure costs
associated with creating and mainta ining an online content
service to be the proverbial "bridge too far." And just
because you have a big entertainment brand doesn't mean
consumers or advertisers will love your online offering, as
the likes of Disney and NBC Ihave discovered.
EA.com is also taking a chance in reaching out to an
audience far from the core conSlJmers who made the parent
company such a offline success in the first place. "I'd say
it's a necessary step [for EA] but it's also risky, " notes
Jupiter's Pidgeon. "This is experimental and it's never been
done with this audience. They're trying to sell content to an
audience that's not used to paying for content."
Finally, it's worth noting that EA.com will face stiff
comp etition in this space going forward . Currently the top
onlin e-only series is not an EA.com product, but rather
Sony's EverQuest. Sony partnered with AOL in May amid
rumors that the AOLjEA relationship was floundering. Also
in the background are players such as RealNetworks, which
recently anr:Jounced its RealArcade technology to allow
downloads of free and paid-for games through its network.
Still , in the current environment where many content
creators and advertisers are stuck repeating the mantra,
"Wait until broadband, " EA is taking gutsy strides toward
proving that subscriptions and advertising can work right
now as a business model. "We're building a relationstt ip
with consumers in a narrowband environment, " says
Riccitiello . "When broadband rea ches critical mass, we can
migrate that relationship onto the new technology. " 0