Executives from McDonald's Corp., DaimlerChrysler, General Motors Corp., Coca-Cola Co., Kraft Foods and Pepsi-Cola Co. joined the raft of talent agents, movie producers, trend watchers and scantily clad live versions of video game characters strolling the three-day show.
"For us, it's all about trends," said Scott Tannen, Kraft Foods' senior manager e-marketing in the confections and snacks division. "I'm like a sponge here, trying to soak up everything that's new and relevant."
The fast-growing video game industry is a $16 billion business worldwide. In the U.S., it's estimated to be an $11 billion industry, with about $7 billion of that coming from game sales, according to the Entertainment Software Association. About 36 million people in the U.S. play games, on PCs or consoles, at least five hours a week, according to Jupiter Research, which expects that figure to grow to 63 million by 2009. About 40% of gamers are 18-to-34-year-old men, though women gamers are growing as a consumer segment.
Kraft is steeped in advertainment, or original online games that meld brands with video-game play. One such site is the heavily trafficked candystand.com, on which Mr. Tannen, an avid gamer, was a consultant with game creator Skyworks. Another, launching today, uses licensed characters from Vivendi Universal Games in an online game that spreads to an on-pack cross-promotion at retail. Kraft will launch TV ads in coming weeks to promote the online game and accompanying promotion, in which consumers who buy Kraft products will get collector cards inside with code numbers. Plugged into the site, the codes unlock games featuring popular characters Crash Bandicoot and Spyro the Dragon. These games, unlike others in the arsenal, do not have embedded Kraft product.
"It's vital to create a great entertainment experience," said Garry Kitchen, president-CEO of Skyworks, Hackensack, N.J. "The content builds the relationship with the consumer."
Rough estimates put the crowd at more than 65,000 people for the Electronic Entertainment Expo, in its 10th year, which showcases the latest in video gaming software, hardware and related gadgets. And marketers were literally reaching out to gamers in attendance. DaimlerChrysler, which has been aggressive in embedding its products into video games and partnering with gaming networks and game publishers, displayed tricked-out Jeeps, while Pepsi doled out an endless stream of Mountain Dew. Puma sponsored uniforms of the roving G4techTV crews.
With more advertisers participating in gaming, measurement tracking systems for games are being developed. New York-based Massive took advantage of the show to announce a system it's developing for inserting and tracking ads in video games. Earlier this spring, game publisher Activision and Nielsen Entertainment broke similar ground with its in-the-works tools that aim to help advertisers evaluate the reach and effectiveness of ads in video games.
Activision and Nielsen Entertainment are working toward accounting systems similar to TV that will give measurements on which to base ad rates. "Advertisers paid $8 billion last year on television, and $10 million in games," Mr. Kotick said. "And people played games as many hours as they watched TV. We know there's opportunity here."
Statistics released during E3 show 52% of gamers who are spending more time playing games report watching less TV, according to the Entertainment Software Association. Mr. Kotick said studies with gamers show that they are comfortable with products embedded in games and, in some cases, said they would be motivated to buy the brand after seeing it in a video game.