The video game industry is faced with a grave threat. No, it is not piracy. The new threat to the gaming industry is in-game advertising. In-game advertising is the by product of rising game development costs. These costs have led to the search for alternate revenue. In this search, in-game advertising seems to be the answer.

Sony says dynamic in-game advertising is to be soon introduced in it’s titles. The in-game advertising revenue is touted to grow 1,150 percent in 5 years (between 2006 and 2011). It seems that the future will see every video game title incorporating advertising in it. This is not a good idea from the gamers POV but video game companies think it is a good idea.
According to Phil Rosenberg, Senior VP, SCEA, the PS3 is well set to tap the growth in the in-game advertising market. Sony CEO, Howard Stringer had said that in-game advertising is not the solution to the monetary issues of gaming.

Stringer added that advertising is not amenable to young people. Now there is a sudden change in the tone of Sony. What is the reason behind it? Cash, some would say, but it is still unclear. In game advertising, the kind found in Guitar Hero III is definitely annoying.

The question is what if in-game advertising does not work. That is a big what if and many millions of dollars hinge on that one question. I’m putting my money on the side that says in-game advertising will not be good for the gaming industry.