A few years ago, IGA Worldwide looked like it was on fire. The in-game advertising company had scored a coup - inserting ads into the hotly anticipated Battlefield 2142 game - and the future looked amazing.
In-game advertising was going to solve a lot of cash problems for games developers. Using the commonly flogged argument that pitch-averse gamers wouldn't mind ads in-game as it added to the experience, companies like Microsoft-owned Massive have raked in dollars and big name clients like Activision Blizzard - and the headlines have all been rosy.
We're getting a glimpse of the downside now however. IGA - whose tech is integrated with the likes of Quake Live - is hustling for a third cash injection to stay afloat - and according to one news report in VentureBeat, will even entertain the idea of a buyout if the price is right. According to the report, the company so far has burned through $US46 million in its first two rounds of funding.
The villain: the recession. IGA lopped off a quarter of it's staff in November as the company accepted that businesses fighting for survival wouldn't be rushing to put ads into videogames just yet.
When it comes to dollars and cents, things get interesting. Along with the quoted figures indicating the company seemed to be losing a lot more money comes this little tidbit quoting chairman Justin Townsend:
Townsend acknowledged today that the company had previously guaranteed payments to the publishers in exchange for the right to insert games into their games. Those guarantees no longer made sense after the economic collapse made the revenue projections unrealistic, Townsend said.
“We had to sit at the table and come up with a new business model that worked for all parties,” Townsend said.
Ouch. So if we're reading that right: IGA promised cash to publishers in return for the right to host ads in their games...and then went back on that promise when the economy went kaput. Don't try that one at home, mortgage owners.
Sony must be particularly glum - it had worked with IGA presumably as a bulwark against giving
too much love to the likes of Microsoft's Massive. If IGA goes under - or worse, gets bought out by the big M - it's one less option if the company wants to get its cut of the in-game ad biz.
Aside from all the company-specific scuttlebutt - does anyone else wonder just how effective in-game advertising is? Just because a van drives past you in-game with a Lynx deodorant ad on it - do you think there's any potential for it to sway you? 46 million $US down the drain seems to indicate otherwise, at least for now.
Struggling in-game ad firm IGA Worldwide seeks investments or possible sale [VentureBeat]
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