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MTV: EA could ‘struggle’ to monetise online
May 14th 2008 at 15:46 by Tim Ingham
The global president of MTV Networks’ digital division has predicted that EA and other established boxed video games publishers face a "huge challenge" in making serious money from free-to-play casual titles.
Speaking to CasualGaming.biz, Salmi said that MTV had a “huge advantage” over companies such as EA, Midway, Take Two and Activision because it had secure relationships with advertisers familiar with the medium – many of whom work with MTV in other fields.
MTV Networks owns leading casual portals such as Shockwave.com – a free-to-play database of casual games that contains in-game advertising from the likes of Paramount and Nokia.
In August, 2006, it acquired Atom Entertainment for a cool $200 million - picking up Shockwave and Addictinggames.com and a combined casual games audience of 50 million.
The following year, the firm announced its intention to invest $500 million in video games, following its acquisition of Guitar Hero and Rock Band developer Harmonix.
Salmi told CasualGaming.biz:
“EA, Take Two, Activision; our history gives us an absolute advantage on these guys in this space. These guys never sold [in-game] ads. For them to set up advertising connections is a huge challenge, and even if they manage to get past that struggle, we have a huge advantage that we sell across platforms.
“If a company wants to buy a certain number of advertising, they’ll buy across television, internet, causal games and mobile. We have an interesting offer to make – and we have a very large, established sales force. We all know that working in the US, Japan, UK and more, we have a sales force that is highly respected and seen as a leader. For those companies trying to do that from scratch? Good luck, basically.”
However, Salmi added that EA, Activision et al would be likely to “push all of us to produce better and attractive games”.
To read the full interview with Salmi, visit CasualGaming.biz tomorrow.
Publisher PR
May 14th 2008 | 16:09
He's got a good point. EA is used to all of its revenue coming from the consumer – but that's a difficult model to sustain in the online space. In-game ads, subscriptions, micro-transactions... they're going to have to do something new and different. Have they got the non-games links to advertisers to do it? I think they might - and Mr. Salmi might have underestimated them here. Don't forget the companies (and in-game ad connections) EA has just through its sports games. Then again, they're a splash in the ocean compared to the beast that is MTVN - and I doubt they're going ot be able to dominate in the way they're used to...
Justin Reynolds
May 14th 2008 | 16:15
EA certainly seems to be doing okay with the model they use for Pogo ($100m FY revenues announced yesterday) – but they haven't actually revealed any profit/loss. Maybe Mr. Salmi's right...
Retail333
May 14th 2008 | 16:27
I'm looking forward to the rest of the interview. This guy said something about possibly moving into boxed publishing recently.
William D. Volk
May 14th 2008 | 20:41
The issue with ad-supported online games is efficient production. You can't have $million$ budgets (or even $100k budgets) and make a profit on all your casual games.
MTV probabily has a decent process, the issue for EA et. al. is producing casual games on a low cost basis. They have a lot of G&A to cover, can they even produce a game for $20k?
Not so fast
May 15th 2008 | 02:19
I don't buy the argument that expertise in online ad sales is what will dictate success in online gaming. Online ads are monetizing worse over time after all. In fact they're down 23% in March alone according to this report:
http://www.pubmati....html
The model to watch is virtual item sales, not ads. Companies like Nexon and Three Rings have got a much more compelling secret sauce against the EA crowd than MTV does. Their average user revenues are going up whereas ads are declining.
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