Can Ad-Supported Games Replace Lost TV Ratings?
At virtually every NewFront presentation this year, networks talked about the fact that linear TV has lost 40% of its 18-49 rating points over the past four years. And, naturally, that their CTV and streaming media platforms were perfectly positioned as replacements in budgets of TV advertisers wanting to reach those younger-skewing audiences' premium, high-engagement video environments.
There's no question that connected TV generally, and ad-supported video streaming services specifically, are perfectly positioned to help advertisers fill that void. Same audiences; same kinds of content; viewed on same devices.
The short-term challenge with CTV today, as we all know, is that premium, fraud-free inventory is very scarce. Advertiser demand exceeds supply. The vast majority of streaming video time is on services like Netflix and Amazon Prime that carry no ads.
Fortunately, the media industry is working hard to fix that. Recent ad-supported streaming launches include Peacock, The Roku Channel, Discovery+ and an ad-supported tier of HBO Max.
But another branch of the media industry is also moving fast to fill this void. Keep a close eye on developments in the console-driven video game industry.
In parallel with video companies’ efforts to build ad-supported streaming platforms, video game publishers are beginning to introduce TV-like ads into console-driven gameplay to tap already massive audiences.
According to Morgan Stanley research, 310 million people globally play console-driven video games on their TVs and PCs every month and 124 million of them play daily for an average of two and a half hours per day -- and almost one-half of that group is in the U.S.
It makes sense: Fortnite regularly delivers movies, movie trailers and sponsored concerts to its players. Why shouldn’t other games offer their players permissioned, skippable 15- and 30-second TV ads that give them reward points they would normally have to pay for?
Late last year, Brian Nowak of Morgan Stanley wrote that console advertising on premium games could reach $2 billion per year in a few years, even if only 45% of gamers opt in.
For sure, linear TV is losing audience share among younger viewers, and for sure, ad-supported streaming services are going to capture a significant portion of those ad budgets over time.
But watch video games, too. They don’t just reach audiences under 40; they absolutely own them. As TV ads become mainstream within video game environments, the TV dollars will follow.
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An earlier version of this blog was originally published by MediaPost.