When punk-popsters Green Day roll out their new single this
month, it won't be on the radio or MTV. It will appear as part of
the soundtrack on the "Madden NFL 2005" video game.
The move is just the latest example of how video games, more and
more, are setting the pop-culture agenda. As sales of video games
approach $14 billion - and push advertisers' coveted audience of
young males to spend more time gaming rather than watching TV - the
ailing music industry and the major advertisers of consumer products
are both eyeing Joystick Nation for relief. It's a trend that is of
concern to some parents and consumer watchdogs.
"You're interacting with fewer people [than with TV advertising],
but in a much deeper way," says Aaron Carpenter, director of
presence marketing and publicity at Levi, Strauss & Co., which has
negotiated a deal to be featured in a new NASCAR video game. "These
games live for so long; in some cases, four or five years in
Video game makers, who once begged to include the occasional
everyday product in an attempt at verisimilitude, now often
entertain pitches from major automakers and fast-food companies.
That explains why artists ranging from hip-hoppers Jermaine
Dupri, Ludacris, and Snoop Dogg to rockers Good Charlotte,
Pennywise, and Blink 182 have all licensed songs for games once
dominated by bleeps and blips.
"The record industry has realized it's not such a bad idea to
bring music to where the consumer is," says Steve Schnur, executive
of music and audio at Electronic Arts, a $3 billion video game
company. Mr. Schnur, who spent 18 years working at major record
labels before arriving at EA, says music executives now consider
video games a primary part of marketing campaigns. The cachet and
cross-promotion benefit both parties, further evidence of video
games' enviable imprimatur.
Like the movie industry, video-game companies have come to rely
on blockbusters more and more. At the same time, development costs
for new games have increased to $5 million to $10 million per title,
up from $1 million to $2 million five years ago.
"When you realize that 80 percent of those games don't make their
development costs back, you can see the importance of [advertising]
revenue," says Douglas Lowenstein, president of the Entertainment
Software Association, an industry trade group.
There's room for growth. EA, for example, will increase its in-
game ad revenue by 60 percent this year, according to a recent Wall
Street Journal report. Overall, video games generated $10 million in
ad revenue last year.
Video games boast an enviable audience of young males (40 percent
of their audience) and, by nature, elicit extended, more
concentrated interaction than TV does. …