There have been reports of Netflix looking for ways to make more money from its gaming service and of course in-game advertising is one of the options mentioned. The Wall Street Journal reported earlier this month that internal discussions are taking place to pivot by charging extra for games and/or including advertising and in-game purchases.
This has not, however, been acknowledged by Netflix and access to games remains part of a Netflix subscription. The latest update from the streamer’s VP, games Mike Verdu in his December blog is that by the end of 2023, Netflix would have 86 games available – all included with every Netflix membership without ads, in-app purchases or extra fees. Netflix also has nearly 90 more games in development.
Netflix began its gaming journey in 2021 with the addition of mobile games to its service. Last August it began a beta test in Canada and the U.K. to make games available on other devices – TVs, computers and mobile – and added the U.S. to the beta test in October 2023. To play on TV, gamers use their phones as the controller and subscribers wanting to play on PCs and Macs can play on Netflix.com with a keyboard and mouse.
In-game advertising would be a lucrative option for Netflix, one that would be welcomed by brands and media buyers. Caroline Bergeron, SVP data solutions and digital for Horizon Media, says it is a trend she’s observed for a few years as in-game advertising becomes more accessible.
“In-game advertising is a great vehicle for brands to connect with their audience. In my opinion, there is a false perception that it’s a niche product, but video games appeal to a much broader range of people than one might think. Not only is there a high percentage of the population playing video games, whether on consoles, PC or mobile, but it reaches a lot of different types of audience profiles,” she says.
Bergeron adds that it’s important for brands to identify the right opportunity for them, selecting games and content alignments that don’t appear forced or out of place and that will complement the user experience without disrupting the play. “Static in-game placements used to be harder to execute, but recent technology developments and the rise of dynamic in-game advertising placements are providing more opportunities to deliver scale to this type of campaign.”
In-game ad sales on mobile alone will hit $177.4 billion USD by the end of 2024, says Robin LeGassicke, managing director digital for Cairns Oneil, who got her figures from eMarketer. She adds that a study by Newzoo shows that, in North America, gaming is number three on the list of how people spend their spare time.
“That makes it a booming platform and opportunity… A lot of in-game advertising right now is mobile app focused. You watch a video or take an action on behalf of the brand in exchange for something of value to the game. Does it work? Sure. But does it provide a connection to the brand, recall, or lift in perception? That’s hit or miss.”
LeGassicke says the big opportunity for brands will be in-console advertising, but it will need to be intrinsic and feel natural to the end user, especially when they’re buying a game at a significant price point. As for Netflix, she says it will depend on the user experience, the type of ads offered and what the gamer gets out of it.
Ryan Van Dongen, head of communications design and gaming at Initiative Media, says gaming is a rich territory for advertisers and sees it emerging as an area of specialization for media agencies, akin to the evolution of search and social media over the past two decades. “We believe this is more than just a trend and have invested in talent and resources as part of a dedicated gaming practice. If we look at what’s happening with audiences, especially Gen Z and Millennials, we see a significant amount of time devoted to gaming on a weekly basis. So much so that we now refer to gaming as the new TV.”
What is exciting about gaming advertising, says Van Dongen, is that players are really focused on the game, with attention levels arguably higher than in any other medium. When thinking about gamer audiences, he says it’s important to consider the entire gaming ecosystem. That’s because the amount of dynamic in-game ad space is still somewhat limited, and in-game integrations can be a heavy lift for advertisers just getting started in this space. In addition, there’s a plethora of platforms, influencers, gaming content sites, and cultural moments, all of which are great opportunities to drive affinity with the gaming audience, he says.
“We’ve seen the efficacy of both in-game and broader gaming activations with our own clients, including significant audience involvement, notable increases in association between brands and gaming, and measurable sales lift,” says Van Dongen. “And, industry case studies from the past two years corroborate that success we’re seeing. Having said that, it’s important to get it right, given how passionate the gaming audience is; missteps in how advertisers activate can spell big trouble for brands.”