In 2018, survival-shooter game Fortnite made $2.4 billion.
It was the highest annual revenue of any game in history, despite being free-to-play. The key to this is the ‘microtransaction’ model, in which players can make in-game purchases of custom weapons, outfits (termed ‘skins’), and dance moves. Free-to-play games based on this model made up 80% of digital gaming revenue in 2018, and with revenue reaching $120 billion in 2019, the microtransaction market has become one of the most influential means for brands to engage their audiences.
This business model gives a platform for brands to develop items for in-game purchases, and 2019 saw an explosion of brand collaborations with video games. Fashion companies in particular have invested in this area, alongside the automobile and music industry.
However, in-game advertising predates microtransactions. In 1983, Coke paid Atari to create Pepsi Invaders, where players fought off letters spelling out their competitors.
In 1999, Pepsi released Pepsiman, where players tried to collect as much Pepsi as possible. These ‘advergames’ focused entirely on promoting the brand, but the 21st century has seen brands shift to attempting to integrate themselves into pre-existing games. Since then everyone from Subway to Barack Obama’s re-election campaign have utilised in-game advertising.
Women x Fashion x Gaming
As of 2018, women are 79% more likely to make in-game purchases, which means that the vast majority of brands entering the microtransaction market are clothing brands, particularly luxury fashion outlets, which have traditionally been more popular with women.
As far back as 2012, Prada launched a campaign using Final Fantasy characters as models, and this link between heritage fashion brands and gaming has only grown in the last few years. Notably, the collaboration between Louis Vuitton and Lightning, the Final Fantasy character. Moschino previously formed a partnership with The Sims, with purchasable in-game Moschino items alongside a real-life Sims inspired collection, and Gucci have created a sneaker inspired by SEGA iconography. Additionally, Dior, Guerlain and Hermes have launched apps focused on the gamification of their brand.
However, whilst players are happy to purchase designer brands in video games at a fraction of the price, many younger players simply won’t be able to afford the real-life product. There is therefore an opportunity for high-street brands to tap into this market.
Uniqlo was ahead of the curve with a long-running collaboration with the game Monster Hunter, featuring both in-game and in-store items. Fortnite has also featured purchasable Nike Jordans, but there is still a gap in the market for other lower-price fashion brands.
Cars x Music x Gaming
Outside of the fashion industry, racing games provide a platform for car and motorbike brands. As one digital marketing manager for Ford declares, unlike a car dealership, video games offer ‘an un-intimidating environment’ where players ‘can do things on their own terms’, browsing without having to ‘speak to a salesman and talk numbers’.
These games also give smaller car brands a chance to reach a huge audience. Polestar, the lesser-known electric high performance car division of Volvo, is the flagship vehicle in the new Need for Speed game, featuring heavily in the trailer.
Just as interesting, though, is the surge in collaborations between the music and gaming industry.
Grand Theft Auto V gave different artists including Frank Ocean, Danny Brown, and Soulwax the chance to curate a radio station within the game, and in 2019, Fortnite hosted the largest concert in history, with 10 million watching a set from the DJ Marshmello.
These collaborations are noteworthy for being mutually beneficial. Games featuring music by popular artists or live performances will draw in more players, whilst also providing exposure and a potential paycheck for the artist.
Despite this, there have been only a few major collaborations of this kind. What we could easily see in the future is the release of an album through a video game, perhaps as part of achieving some sort of in-game objective or purchasing downloadable content. With physical album sales declining and streaming services often providing music artists with a raw deal, alternative markets such as video games should be something music artists look to capitalise on in the future.
A few pointers on what to be mindful of when contemplating brand collaboration as a strategy.
- Product placement in-game only works when it fits the game’s aesthetic, and has produced some disastrous collaborations.
- Additionally, though investing heavily in microtransaction content can work, a 2019 Superdata report on microtransactions claims that: ‘In-game spending as we know it has reached a saturation point’. Players are bombarded with ‘loot boxes, battle passes, one-time booster packs and individual cosmetic purchases’, meaning developers have lost ‘player trust’ through overuse of these methods.
- In Q3 2019, 51% of gamers did not purchase ‘additional in-game content ... despite major releases among microtransaction-heavy games such as FIFA 20 and NBA 2K20’. Fortnite transactions in particular are declining, but some other games are bucking the trend. Brands need to investigate which microtransaction models are currently successful, such the reticle and weapon skin based model in Call of Duty: Black Ops 4, before investing.
- In light of falling microtransaction sales, the same report claims more games may ‘adopt advertising and product placement as their primary method of monetization’. While this has proven success in the mobile gaming world, it has been poorly received amongst console gamers. For example, a recurring advert for the Need for Speed film on Battlefield 4 was met with widespread annoyance. Brands need to ensure they are not utilising intrusive advertising mechanisms which take away from gamers’ experience, as these will likely inspire resentment towards the brand.
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