Commentary

Game Changers: The Next Generation

Where ITV, WebTV, and countless Internet-to-home-theater schemes have failed, monstrously popular video game consoles may yet be the slam-dunk convergence game that media honchos have been waiting for.

More than 132 million next-generation game consoles, like Microsoft's Xbox 360 and Sony's forthcoming PlayStation 3, will hog screen time by 2010, according to DFC Intelligence, a market research firm. Better yet, 40 million of those will be plugged into broadband. That's better penetration than most cable networks offer, and marketers are starting to notice.

"Everyone is realizing that the device that will be most appealing in a convergent household will be a console," says Alex Kakoyiannis, managing partner, Navigame, an agency specializing in marketing in and around video game environments. Beyond multiplayer gaming, broadband-connected consoles can serve as a conduit for DVD playback, movie and music downloading, games distribution, social networking, and, yes, for marketing messages. "It truly changes the distribution model as we know it," Kakoyiannis says.

The Xbox 360 shipped with sample movie trailers, a marketplace, and a micro-payment system for buying more media and games. A media team at Microsoft is shopping packages that put major brands into this new entertainment channel, and most analysts expect Sony's upcoming PS3 to follow suit.

Tim Harris, vice president and partner at Starcom's SMG Play, says connected consoles are genuine game changers because they feed into a huge installed base of consoles with active media programming. "We will see hit games and sponsors underwrite episodic content," Harris projects. Broadband-connected lobbies and marketplaces will eventually enable gamers to find movies, music, or opponents, or engage in online chat. These settings will ultimately offer marketers a lean-in environment for TV.

Many marketers maintain that sponsoring downloads and live gaming events is a winning ad strategy for connected consoles because it feeds players what they want without intruding on play. But connectivity may open the console world to dynamically served in-game spots via ad networks like Massive. In addition to static product placements already baked into many games, billboards for weekend movie releases could appear on a Friday afternoon as gamers drive a "Need for Speed" course.

But will Microsoft and Sony allow in-game ad networks like Massive, DoubleFusion, and IGA Worldwide to play in their walled gardens? These providers see a huge opportunity to feed live and trackable multimedia campaigns into the console gaming base that dwarfs the connected PC arena. "We're not just putting billboards in games. You can run TV spots, live radio streams," says Justin Townsend, CEO of IGA Networks.

Microsoft and Sony's plans for connected consoles remain unclear. But even if the platform reaches half of the 40 million living rooms analysts project, that still means "you have a cable network on your hand," as Harris puts it. Even better, a cable network users don't zap away from so quickly.

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