Since being established in 1992, Exent Technologies have been involved in many areas of video game monetization, including digital distribution and digital rights management. The company’s technology powers online distribution services like GameTap, and similar services from Verizon, Comcast, Bell Canada, Deutsche Telekom, and France Telecom – amongst others. They have recently announced their expansion into the field of in-game advertising, and have signed on to provide the service for Enlight and Merscom. Yoav Tzruya is the COO of Exent, which places him in charge of in charge of managing the company’s global operations and activities. Gamasutra contacted Tzruya via email to discuss Exent’s plans for the advertising service, which is specific to 'games on demand'-style technology, and its implications for publishers, gamers and advertisers alike. What kinds of in-game advertising does Exent offer? Exent's In-Game advertising product line enables the embedding of advertising into new and existing games, without the need to access the games' source code, and without the need for implementing integration or ad-spot designation at the development stage. All advertisements can be implemented at any stage – during production, post-production, after the game has already been purchased, and even after the game has been installed on users' machines. In addition, Exent’s technology allows advertisements to be placed on essentially every object of the game. Advertisements can be put on billboards, walls, clothes, or any 2D or 3D objects. Exent’s technology further allows embedding new objects inside the game. For example, one can put an object, such as a branded soda can, inside the game as an advertisement. We can then create a community event around that soda can, offering the first user that finds it a prize. Our technology further supports audio advertisements, meaning we can augment the game with sound tracks promoting brands, correlated to the user’s activity in the game. For example – as the user approaches a certain advertisement, we can play an audio commercial for that brand in the background. Can you explain a little more about how this is technologically possible? One can understand how this is possible by looking at Exent's existing technologies and products. Exent started by creating a digital distribution technology, based on streaming games. For streaming games, we needed to develop technology to allow running the game on a user's machine without the game being actually there. We accomplished this by understanding the manner in which a game tries to access its data and anticipating that in real-time, providing the game with the data it needs in a just-in-time manner and emulating various file-system and device capabilities. To enable subscription services, we needed to make sure, among other things, that there is no need to install and uninstall games on a user's machine to prevent dll-hell and registry related issues, so we worked on emulating additional operating system capabilities. We then teamed up with Intel to enable games for their Viiv platform, creating technologies allowing users to play games with human-interface devices that the games were not originally designed to support (e.g., playing a video game with a controller instead of keyboard) and to control the output to the screen to fit the games to 10' viewing experiences. Taking advantage of this capability to control output to the screen and audio systems, we are now able to control the 2D and 3D objects a game attempts to render and to apply business logic associated with in-game advertising. How does Exent's service differ from that of your competitors? It is important to note that we are not positioned as competitors to other in-game advertising companies in this space. We view ourselves as a complementary partner that adds value to what they offer. While there are solutions in the market that offer SDK integration for new games, there are no existing solutions in the market for enabling in-game advertising for the thousands of titles that are already developed and in the market and the hundreds of millions of game units already sold and installed. Enabling all games, including catalog games, is our focus – that is, bringing additional inventory to the market. Exent focuses on ad-insertion technology, essentially “lighting” the advertising inventory that is dormant within the media (games), which exist out there. We then partner with the in-game advertising ad networks, as well as third party ad-serving organizations and large portals, for them to serve and sell that inventory (“avails”). Exent’s ability to insert advertising into back catalog games extends advertisers’ reach to include popular games that are already on the market. And publishers can generate new and continual revenue streams from older assets that otherwise ceased to generate income. Is in-game advertising proven as a strategy for advertisers? Video games are an ideal platform for advertisers to engage audiences in a totally immersive and interactive environment, in a completely non-intrusive and contextual manner. With more and more video games reflecting real life situations, such as urban environments, the opportunity to mimic real world ads into virtual ads increases. Figure that a typical game play experience averages around 60 hours – with such a long game play experience, advertisers can communicate with their audience now more than any other medium in the past, utilizing the game's immersive nature to achieve higher recall rates and better ROI for ad spending. Independent tests by companies such as Nielsen Entertainment show that recall of ads in games is as high as 60 percent thanks to the immersive and interactive game environments they are placed in. Furthermore, Exent’s unique technology also enables the introduction of new campaigns and community oriented features in the games, thus dramatically lengthening the amount of time users spend on playing the games. As such, users generate more eye-balls and are more exposed to the advertised brands. Is in-game advertising proven as a source of profit for publishers? The introduction of in-game advertising technology is too large an opportunity for publishers to ignore. It is no secret that game development costs are reaching blockbuster movie levels, and in-game advertising offers a substantial new revenue source to help ease the pain of development costs. It is already an industry standard that good technology, coupled with proven ad-serving and ad-sales organization, can generate $1-$2 per unit for the publishers. With Exent’s in-game advertising technology, we take it even further. By enabling the embedding of in-game advertising at any point in the game life cycle, we are able to generate new release windows for video games, similar to how cable-TV has generated a release window for movies. We believe that the coupling of in-game advertising supported distribution models, coupled with digital distribution, has the potential to double related games revenues for publishers. In addition, publishers can use demo games as a new revenue source, recoup revenues from pirated games, leverage older assets in the form of advergames and monetize units already sold in retail and even used/installed on users' machines. How can in-game advertising be correctly and effectively targeted at the right market? Effective targeting of in-game advertising in certain markets depends on a variety of factors. For example, which game should be enabled and integrated for in-game advertising? What games are more relevant per geography? What types of rights exist that can enable in-game advertising for each game? What media type is relevant for each game and for each audience? What are some of the connectivity issues that may impact types of ads to be displayed? Should product placement be used or dynamic advertising? What level of interactivity would we like to achieve? There are many more questions, but this is a good sample. The key to creating a targeted campaign that serves the needs of advertisers without alienating users is to have a flexible technology that enables rapid changes to campaigns, maximal usage of inventory without significant development efforts and targeting users according to various demographics and geographic parameters. Currently, how many publishers and developers are using Exent's technology, and why do you think they've chosen Exent? Exent has its roots in games-on-demand and over the past few years established itself as the market leader in the field of digital distribution of games. We power nearly every major games-on-demand service such as Turner’s GameTap, Verizon, Comcast, Bell Canada, Deutsche Telekom, France Telecom and others. Our services include content from every major publisher including the likes of Electronic Arts, Activision, Microsoft Game Studios, Vivendi Games, Take2, THQ, Atari, Eidos, Ubisoft and Oberon. This past April, we announced our expansion into the in-game advertising space. Enlight is one of the first companies to come on board with our new in-game advertising technology. Several of their titles, including Capitalism 2, Zoo Empire, and Joan of Arc will now feature in-game ads. In addition, we also recently announced that Merscom has chosen our technology, with titles such as Buku Sudoku, Bode Miller Alpine Skiing, eXtinction, and Space Interceptor. You can be sure that there will be more announcements coming up in the next few weeks. Where does Exent aim to take this service in the future? We learned from our experience with digital distribution that the market mirrors that of the early cable-TV model and the impact it had on Hollywood studios. Cable-TV presented itself as creating a whole new release window for movies. Seventy percent of that release window revenue is based on advertising, while only 30 percent is based on premium fees. Furthermore, what would have happened if you tried to sell a channel like HBO in the early 70s without educating the market about the availability of a movie channel beforehand? Probably the results would have been poor. With digital distribution of games, we went the other way around. We first came out with premium offerings, trying to establish new consumption patterns, without first educating the market about this use model. Now, with the ability to have in-game advertising enabled for all games, we believe that digital distribution can truly be developed as a new release window for video games, doubling the industry revenues for publishers. Basically, in order for users to adopt games-on-demand there needs to be a subsidized model that allows them to experience the offering, get them hooked, and only from there be able to sell them the premium offerings. This is exactly what Exent’s in-game advertising technology enables. Adapting video games to a cable-TV like model creates a “long tail” of monetization opportunities post-initial release. This monetization roadmap results in substantial value for the fast growing catalog of existing content. The long-tail further allows for the creation of highly targeted offerings, extending reach to all niches of the mass-market. The potential to significantly increase revenues from the first release window and enable the creation of a movie-like “long tail” monetization pattern for video games is where Exent believes the future opportunity for games-on-demand and the success of in-game advertising lies. Do you feel that gamers are accepting of in-game advertising? The major misconception about in-game advertising is that it refers to intrusive, pop-up type ads. These may indeed interfere with the flow of the game. However in-game advertising as we define it deals with non-intrusive and realistic ads that only enhance the value of the gaming experience. Ads are always placed in consideration of the type of the game being played – for example, you would never see a Nike ad in a game based in the medieval times. In fact, most research points to the fact that gamers don’t find in-game advertising as a nuisance at all as long as they are contextually relevant – some even say it adds a more realistic feel to the game. A recent report by Parks’ Associates addressed this issue and found some interesting results. While there are some gamers strongly opposed to in-game advertising, a significant percentage is strongly in favor of it – as long as it enhances game-play or provides an opportunity to win prizes. As part of Exent’s offering, community building incentives can be integrated, such as personalization tools, tournaments, prizes and instant messaging from within the game. How can in-game advertising be balanced to make sure that it's not considered "intrusive" by gamers? As discussed, all ads must be contextually relevant. In addition, while making sure the ads are relevant sometimes isn’t enough – you always have to maintain that balance of not going overboard and plastering the game with too many ads. This would not only turn the gamer off, but it is also has a negative effect on brand recall – if a user is exposed to too many ads there is a point where the chances of him/recalling a certain ad is less likely. It’s a matter of being sensitive to the gamers needs and constantly maintaining that balance. Additionally, seeing as Exent's technology can enable existing titles, how can publishers be sure that gamers will not be put off by advertising appearing where it previously wasn't? Firstly, Exent works directly with the publishers to secure the rights to place ads within games and would never embed ads within games without their consent. Therefore the publishers maintain full control over what “advertising enhancements” will be made to the game, and to what spots. In general users are more likely to accept in-game advertising as long as it doesn’t interfere with the game-play, makes the game more realistic and can benefit from incentive offerings. Obviously, in a case where the user receives the game for free or for a discount, there may be no additional need to request the user for their permission, as they received a dramatic cost decreases from in-game advertising. In cases where a game is purchased for a full fee, we realize that users may be hesitant to accept ads in their games; after all, they own the property so why should they be bothered with ads? This is where incentives come into play, where the user can enjoy an added benefit by accepting the ads. We offer community building tools such as game personalization options, multiplayer tournaments, prizes, and instant messaging to help encourage acceptance. How does Exent's technology identify pirated copies of games work, and how is it possible to salvage revenue from them? It is estimated that more than 40 percent of the total game units in the field are pirated copies. Piracy cannibalizes sales in many markets, to the point that publishers actually avoid certain geographies. With Exent’s in-game advertising solution allowing for the identification of pirated copies, a publisher can designate advertising campaigns directly at such lost units pool, and generate significant revenues from these otherwise lost units.