SBJ/May 15 - 21, 2006/This Weeks News

ESPN hits ‘restart’ in gaming

Any lingering doubts on the future of video gaming as a key part of mainstream sports culture were erased last week, as ESPN and DirecTV both announced major initiatives in the industry.

Measuring and marketing video game
advertising were topics last week in L.A.
The ESPN Video Games Channel, set to debut in September as part of ESPN.com, marks a return to the space following an unsuccessful stint for ESPN Gamer. The new effort is a partnership with Ziff Davis Game Group, which will supply much of the editorial content. Specific features will include game demos, news and reviews, weekly podcasts and message boards.

“We were perhaps a little ahead of our time before, but there’s no doubting the impact and relevance of the video game market now,” said Marc Horine, ESPN.com general manager of business development. “We’ve been looking to get back into this, and it really sort of got to the point where it was, ‘How could we not be part of this?’”

ESPN Gamer launched in August 2003 but failed to establish traction. The new venture will differ particularly with its emphasis on multimedia content, such as the podcasts, game demos and video features.

ESPN executives declined to specify its investment in the effort, but the company will handle ad sales for the Video Games Channel. Most of the content will remain free, linked off of ESPN.com and not within the Insider Service.

While some industry observers were surprised the Video Games Channel does not call for any companion TV programming, DirecTV aims to fill that gap with the creation of the Championship Gaming Series. Moving beyond the current landscape of individual, unconnected game tournaments, the CGS will start next year with organized league play that will aim to mirror the platform of established stick-and-ball sports and be televised on the satellite service.

DirecTV’s announcement last week of the CGS arrived with several key sponsors in tow, including Best Buy and Mountain Dew, which has secured naming rights for the league’s championship trophy.

The trophy’s name, the Dew Cup, is the same as what the Dew Action Sports Tour awards at the end of its season.

The video game league still has more questions than answers, though. Nothing has been disclosed yet as to how players will be organized, selected and retained, which games will be played, and whether head-to-head play will be in person or online, a distinction that can alter results greatly.

DirecTV executives said the total monetary investment in the startup, including sponsorships and infrastructure for the telecasts, will reach the low eight figures.

Eric Shanks, DirecTV Entertainment executive vice presidentlikened the CGS to big industry splashes made by sister company Fox Sports, whose chairman, David Hill, will lead the CGS effort.

“We really think this could be the next big thing,” Shanks said, describing Hill as a “huge believer, very passionate” about video gaming. “This could be along the lines of what Fox has done for NASCAR, or what they did there for a while in the mid-’90s with hockey. Nobody has treated this as a sport instead of just a lifestyle element, and that’s about to change.”

FOCUS ON IN-GAME AD MARKET: Advertising within video games is poised for exponential growth, with the Yankee Group projecting last year’s $56 million in activity to grow to $732 million by 2010 and sports acting as a key driver of that growth. To that end, Microsoft earlier this month purchased Massive Inc., a New York-based company that specializes in developing platforms for video game advertising. The deal was valued at more than $200 million.

Industry conversation at last week’s E3 show, however, centered strongly on developing more standardized sales models and measurement tools to market video game advertising. Companies such as Nielsen Media Research are showing increased interest in tracking consumer impressions within video games, but the video game industry currently has no uniform standard to measure the effectiveness and reach of inserted ads. Without such a standard, selling video game ads to number-centric ad buyers remains an uphill fight.

“We have to make the 50-year-old white guy in Cincinnati understand why this is important to their marketing budget,” said Julie Shumaker, Electronic Arts director of video game advertising. “We really haven’t built an ad business yet.”

The increase in in-game advertising will no doubt create pushback from some hard-core gamers, but industry executives said the rising cost of creating games necessitate more video game advertising. In key sports titles such as “Madden NFL,” ads placed within virtual stadiums are also designed as a way to make the games more lifelike.

“Advertising has to be part of our ecosystem,” said Kevin Browne, general manager of new media and franchise development for Xbox Live.

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