There isn't a single digital space that hasn't been invaded by advertisers, including gaming. Though it has historically confined itself to the mobile gaming space, there have been isolated outbursts of publishers attempting to blend them into our favorite AAA games. The idea still hasn't been persuaded much by most video game makers, as it is, rightfully, frowned upon by everyone. Microsoft—who had a fair share in finding innovative revenue streams—is, however, committing resources to explore possibilities to include them back into games

Microsoft were the ones with the ingenious idea of microtransactions, with Bethesda later chiming in to create the industry's first major in-game purchases. They're also responsible for multiplayer being locked behind subscriptions on consoles. So it only seems logical for them to keep innovating, and, if Microsoft is dipping their toe into advertising, Sony wouldn't want to be left behind either. Both of them have suggested, and possibly already engineered methods, to integrate ads in free-to-play games. It could very well be the backdoor to full-fledged advertising in all games. The question is, can these giants strike a balance and make ads acceptable? 

Ads aren't exactly new to AAA games, there have been multiple cases of product placements, like The Final Fantasy Cup Noodles, or the Obama campaign in Burnout. Fortnite and other games have done crossovers for years, which is also a form of advertisement but generally accepted and less annoying. Microsoft already has ads in the menu dashboard. In-game Billboard ads have been tried in the past as well—which is what Sony and Microsoft are leaning towards.

Cyberpunk 2077 Night City at night with billboard

Most games have mock-up brands to make the game more realistic while still retaining the "escapism" factor or creative liberty. Replacing them with real-life brands under the guise of extra immersion is easy money, albeit it could undermine a few things. Games like Cyberpunk or Watch_Dogs, which have plenty of these billboard spaces available, are dystopian and the running political commentary, often a parody of capitalism and authoritarianism, is not something most ad companies would like to associate themselves with. 

Advertisers will be reluctant to run ads in such games. So publishers may "appropriate" their games to make them ad-friendly, stripping away the creative liberty. Other light-hearted games, however, like Spider-Man will have both publishers and advertisers drool over revenue potential as there is no negativity associated. Colorful and flamboyant games will become potential homes for such campaigns. Since these games are thematically friendly for ads, they're not losing anything and only gaining revenue from advertisements.

Ads can provide an opportunity for developers to raise additional capital and fund the game, even before its release. Publishers can sell spaces within games to companies for advertisements before launch, and recoup partial investment or use them to increase the scope of the game. This could benefit indie developers, enabling them to increase ambition. Though most creators may be disinclined to integrate them as the idea is antithetical to any artistic vision.

For advertisers, there is a large segment of demography they can target, often remote from any type of ad exposure. Genshin Impact once collaborated with KFC, where purchasing a KFC would offer you an in-game cosmetic. The result? Fans lined up stores the day before, creating a long queue of people ready to devour KFC.

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The increase in the footfall for KFC during the event was overwhelming, much higher than they anticipated. The unprecedented visitors quickly triggered COVID concerns and subsequent events were cancelled. Most popular games similar to Genshin Impact will likely draw the same level of response. This is due to the fact that video games can provide better incentives than any other medium in the form of in-game rewards, which are already prevalent in mobile gaming but relegated to video ads instead of visiting stores or purchasing real-world items.

Gaming has a userbase larger than any other contemporary entertainment medium, which means there's a huge market to tap into. Placing ads is also much easier with games, as they span 20–30 hours on average with massive open worlds. Things like embedded marketing are already widespread in movies. But with them, you don't watch a single scene more than maybe twice. Some landmarks or replayable missions—in grindy or looter shooter games like The Division - are visited countless times.

Cyberpunk 2077 Night City at night with billboard

For all their merits, even the sight of them has no positive precedent for the future. Microtransactions began as a mere additional content or trivial part of games. Now we have single-player games with them, like Assassin's Creed Valhalla, where the amount of armor in the game available was once less than the in-game store premium ones. Games are often forced into certain designs, such as live-service, excusing them to add lucrative stores.

For our daring publishers, there is not much holding them back from including interstitial or unskippable ads later on once when they're normalized. Multiplayer games already give you plenty of menu reminders about the latest battle pass or events. The only thing missing here is ads.  For those who weren't shy about including NFTs in games—and while the endeavor has largely failed, some still haven't given up—no shame in taking it one step further.

Yes, implementing ads isn't inherently bad, but it all depends on how exactly they are implemented. Unfortunately, they now seem inevitable and all we can do is be optimistic that they won't be similar to their mobile counterparts. Normal billboards that mind their own business are fine, but further integration, like audio ads on in-game radios or unskippable ones, has no place in gaming.