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Why brands are not just embracing video games – they’re funding them

By on December 9, 2009
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This is a guest post from Matt Willifer

Earlier this year, in an act of uncharacteristic bravery, I gave up my job as Head of Planning at M&C Saatchi, and threw in my lot with a group of some of the world’s finest games developers, writes Matt Willifer. Our mission is to create better games for brands. The CEO, Patrick O’Luanaigh, has creative directed fourteen worldwide number one games – so I figured he knew what he was talking about.

The Brand division of nDreams launched in the very depths of the recession.

Bizarrely enough, the time felt right. Recessions tend to be times of change; they are times when the best companies look ever closer for unexploited opportunities, and new ways of making money. Video gaming fits this well.

First, it is a relatively untapped opportunity. In its various guides, it is now properly mainstream, but only rarely exploited well by brands.

Second, for the right brands, the financial arguments can be extraordinarily strong.

If you create something people value, you make money from it. It has been the model than marketers have always applied to their products, but only rarely to their communications.

Our aim is to be financially as well as creatively cutting edge.

The Rise and Rise of Gaming

Over the last five years, gaming has completely hit the mainstream. In its varying guises it is popular with both men and women, and young and old.

It is an industry that is now worth $34bn worldwide (the same as the worldwide box office for films). It is one of the few industries growing in the recession.

In the UK alone, 22m million people play games on console, 19m on the PC, and 14m on handhelds.

Games look and play better than they have ever done. There are more ways of accessing them, both in and out of home. And there are now more types of game – literally, something for everyone.

Traditional games (the kinds of games that cost £30 – £50) are not just confined to first person shooters like Halo 3, but have extended to more emotive franchises such as The Sims, opening up a new female demographic.

Casual gaming, the kind of game you can pick up and put down easily, has grown exponentially: Wii games, puzzle games such as Bejewelled, even Solitaire. Casual gaming web-sites attract 125 million unique users each month – and skew female and older.

Over the last few years, the internet has added a whole new dimension to gaming, by making it more inter-connected and social. These are typified by virtual worlds (such as Second Life, Home and Club Penguin) and massively multi-player games (such as World of Warcraft), in which you hang out with real rather than computer-generated people.

And there is also a wonderful new form of gaming called Alternate Reality Gaming (ARGs): the gaming equivalent of a multi-media campaign: a gripping story that unfolds in real time, and in which traditional gaming elements mix with other forms of media and entertainment. In March this year we launched an international and multi-language Alternate Reality Game (ARG) in the heart of Sony PlayStation’s new virtual world Home, called Xi. The ARG encompassed not only virtual worlds and casual games, but also real world events, videos planted on You Tube, the commissioning of a song with clues held in the lyrics, real life advertising, the creation of an entirely fictional company replete with web-site, corporate identity and recruitment campaign, and much more. Multiple touchpoints, which people seek out rather than try to avoid.

Gaming is even big amongst non-gamers. Question a non-gamer a bit further, and the chances are they will admit to a periodic addiction to their PC’s Solitaire, an application downloaded on Facebook or iPhone, or a heady afternoon spent on their nephew’s Wii.

Gaming is wonderful and diverse and immersive and interactive. It is not just the future, it is the present. And we think it is time that brands better exploited this opportunity.

An Untapped Opportunity

The Brand division of nDreams has two aims, which can be stated perfectly simply. First, to make our games amazing. And, second, to create them around a brand.

We believe this is the way that gaming will most benefit brands – but is also a model that is strangely under-exploited. Existing models have been half-hearted (although certainly not without their merits.)

For simplicity’s sake, we might divide advergaming into four, defined by their quality and way the brand is integrated.

nDreams quadrant

In the top left, brands are sold space in existing and often very high quality games, such as a fleeting hoarding in a football game or around an F1 track. The game is not about the brand in any way: the brand is peripheral, tacked on purely as an afterthought, and is hence easily missed (if it is seen and internalised, it probably works best purely as a form of brand salience.)

In the bottom right, a brand creates a bespoke game, but of low quality – both in terms of appearance and playability. Typically these games are churned out cheaply, often by digital generalists rather than gaming specialists. Further, even though they are bespoke, it often seems that little thought has been given to the exact role of the game within the brand’s fuller marketing mix.

Which leads us to the top right – creating great quality content, and making the brand absolutely central to the creative idea.

To date the really good examples have been few and far between (and predominantly in America). However, when done well, the results have been astonishing.

The American Army famously created an exciting video game to recruit soldiers. It taught potential recruits about what army life was really like, exciting those who were best suited, and frightening off those that weren’t. Furthermore, it wasn’t just about potential recruits self-selecting – the army was able to track every bullet fired and every manoeuvre in the game, so that it knew which players were the most promising. This game had more impact on recruits than all other forms of Army advertising combined, but cost just 0.25% of the total comms budget.

Another good and famous example is Burger King in the States a couple of years ago, who worked with a proper games developer, and created and sold a console game featuring the BK King from their advertising. This raised sales an amazing 40%.

So, when done well, the results can be amazing. Which leads us nicely to the financial case for creating fantastic bespoke gaming experiences.

We believe that if a game is great and built around a brand it will benefit both the brand and its balance sheet. Compared with more traditional elements of the marketing mix, a great game can generate higher revenue at a lower cost. We will take each in turn.

High Revenue

Simply speaking, there are three (mutually compatible) ways gaming can create revenue:

(i) The Advertising Model

A good game has the potential to be an extraordinarily potent form of brand advertising. It is the most immersive form of brand communications, bar none. It is the ultimate example of a sit-forward activity and can hook people in like no other.

It is a form of communications that people want to engage with, not avoid: it doesn’t interrupt what people want to do like most conventional communications. It hangs around living rooms and hard drives. It is something people will play for lengthy periods of time, and which they will return to of their own accord.

It is still a novel approach, and will stand out a mile from what the competition are doing. And it is cutting edge, something many brands yearn to be.

(ii) The Promotional Model

Because the game is valued, it can be given away or subsidised in exchange for brand purchase. This purchase might enable customers to access the game in its entirety, or to unlock areas or features in a game that was originally given away with no strings attached.

Further, the promotion might be ongoing rather than a one-ff hit, with customers incentivized over time to upgrade to a series of further levels.

This model would typically add to the advertising model. So, here, the game would be both a direct promotional incentive, and also a brilliant form of brand advertising – a fairly unusual combination.

(iii) The Retail Model

In this model, the game itself is retailed, and hence opens up a whole new revenue stream for the brand. It is unlikely that the brand game will be able to compete in price point with the next generation console games, but a price point of anywhere between £5 to £20 could generate very significant revenue.

Furthermore, because the brand puts the money up front and often provides a route to market, we will normally be able to cut out games publishers and games retailers. This shortened supply chain means that we will be able to offer the game at a competitive price from the consumer’s point of view, whilst still generating significant margin.

Low Cost

On the other side of the equation, a good game can be created and distributed extraordinarily cost effectively.

The level of production cost clearly depends. However, perhaps surprisingly, a good game can be created at costs not incomparable with the production costs of a single TV ad. For example, using an engine such as Unity, we can create games very cost effectively, that open straight into the browser of a PC or an iPhone, and which look every bit as good as this:

Screengrabs from Unity

However, the real savings are not that a good game costs less to make (it doesn’t), but that it costs less to distribute. The main costs associated with traditional communications are involved with getting it out there – and, crucially, we can get a good game out there, into people’s hands, extraordinarily cheaply.

Good games are valued, sought out, recommended, hosted and passed on in a way that most brand communications are not. And because they are digital, the marginal costs of distribution are effectively zero. These cost-effective ways of getting it out there can, for simplicity’s sake, be split into three.

(i) Distribution using Gaming Channels

These are the routes to market used by the games industry. If the game is retailed, we might sell it via games stores such as Game (or indeed Tesco). Or on-line games retailers. Or casual games sites which retail games as opposed to give them away for free. It is now possible to have great games that open in the browser of the world’s biggest social networking sites such as Facebook, Bebo, or MySpace. We can distribute the game as an iPhone app, or as apps for other mobiles or handhelds. We can make the brand an amazing part of an existing virtual world that people already play, such as PS3 Home. We might be able to use the hugely popular free gaming web-sites, such as MiniClip. We can seed the game on opinion former influential blogs and web-sites.

(ii) Distribution Using Brand Channels

Branded games have a big advantage over non-branded games in that they can use a brand’s communication channels and routes to market to publicise and distribute the game. The game might be played or purchased via the brand’s web-site. It could be emailed to all existing or potential customers as an exclusive present. The game, or a code unlocking it on-line, could be included in DM. The game might be advertised on packaging, pointing people towards the web, or physically attached as a disk, or be sent away for with coupons. We might distribute the game via the brand’s network of stores, or the stores of a retail partner. We might team up with an appropriate media partner to give the game, or a taster of the game, for free.

(iii) Viral Distribution

Last but very much not least is the viral effect. The above methods are ways of seeding the games. From here, the hope is that the game takes on a life of its own. Good games are valued, and so are far more likely than most communications to be talked about and recommended. And, given games exist via computers or phones or consoles, the game can spread particularly quickly on-line. This is not just about hoping people will forward a free version of the game, it’s about building in community aspects to the game experience, challenging friends, leader boards, multi-player options, and so on.

Conclusion

A few points, by way of conclusion.

  • First, gaming is exploding. Over the last five years, gaming has become properly mainstream across a much broader demographic, and is delivered across a larger number of platforms and game types. It is amazing what is now possible.
  • Second, with a few notable exceptions, brands have yet to fully exploit this opportunity. On the occasions when brands have used games, they tend to either be of poor quality, or to render the brand peripheral. Our model is to make our games amazing. And to create them from scratch around a brand.
  • Third, gaming can create significant revenue and be delivered at low cost. If done right, gaming has the potential to be at worst an incredibly cost effective and immersive form of advertising, and at best a whole new revenue stream for a brand.
  • Finally (I almost forgot), more than any other company we can offer both world-class games development expertise and world-class understanding of branding and brand communications. If you are an ambitious and forward-looking brand or agency, we would love to speak with you further.

This article originally appeared in Admap.

About Matt Willifer

Matt Willifer is a director of nDreams.
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  • David Edery made this the central point of his speech on “MMO Games 5 Years From Today” at LOGIN earlier this year.

    He pointed out that the entire cost of a top level MMO is less than the annual spending budget of some of the largest brands.