Analysts predict massive surge in in-game advertising

US analysts at the Yankee Group are predicting a massive surge in in-game advertising over the next few years, as publishers begin to catch on to the huge potential for an additional revenue channel to help offset spiralling development costs.

According to a new report from the research firm, in-game advertising could rise to USD 732 million by 2010, climbing sharply from just USD 22 million in 2004 and approximately USD 56 million in 2005.

As companies such as Massive Incorporated, Double Fusion and IGA Partners push the market forward, the Yankee Group estimates that almost 200 games will include static and video advertising by the end of the year, with huge increases in the following months.

Michael Goodman, senior analyst at the Yankee Group, commented: "Although the in-game advertising market is still relatively untapped, its promising business model will lead to swift market development. Effectively competing in the interactive gaming market for the video game and advertising communities requires careful attention to the intricacies of the industry."

Standard advertising channels such as television and print are beginning to lose their effectiveness amongst certain target audiences, and with the increase in time spent playing games - boosted by an impressive growth in online gaming on PC and next-generation consoles, advertisers are actively seeking a new way to reach consumers, with in-game ad campaigns at the top of their list.