Indie Devs Turn To In-Game Ads After Piracy Strike

Nearly 24 hours after it went out in mid-April, John Warner checked on the numbers for Raycatcher - a game he and a partner designed and distributed over Steam. The first day, it sold 1,000 copies for $5. But pirates had also made 35,000 copies for free.

Warner, 25, an environmental artist who had worked at Relic Games on Dawn of War II, expected to lose copies to piracy. He'd already begun pondering what might be a third option in the ongoing zero-sum struggle between keeping gamers happy and ensuring they give you money for your work. But if nothing else, the torrenting of Raycatcher provided a good argument that someone in the indie sector should try building a game supported by product placements and in-game advertising. And after this experience he figured, why not him?

"I think people are voting - they're just not interested in paying for games any more," Warner said. "The DRM is getting cumbersome, and everyone hates it. I think we're at a point where indies have to consider a new revenue model. Because it takes a long time to make a game."

Warner and another partner, Mitch Lagran, 22, formed Vancouver-based Greener Grass Games to explore just that - a free, browser-based and ad-supported game. The thought of in-game advertising may make the skin crawl for the gaming cognoscenti who form the most evangelical constituency of independent development. The practice may be, on the AAA retail level, a disappointment so far, with slender prospects until a terrible economy rebounds. And browser-based games may have yet to catch on in North America the way they have elsewhere. But games are not built for free, and these two developers- and others - think it can be done at this smaller scale.

"I don't want to do anything The Man-ish," Warner said, acknowledging the stereotypical disconnect between an indie developer, who's supposed to be making better games because he's freed from corporate trappings, and product placements, a nakedly capitalist practice.

Indie Devs Turn To In-Game Ads After Piracy Strike

"But in order to make games consistently, we need to make money," said Lagran (left). "Otherwise, we can't pay the rent. And if people pirate a lot, advertisements make sense."

Warner had no illusions that Raycatcher (built with another partner) was going to make him rich. Just getting it onto Steam was a learning experience and an accomplishment, he said, akin to a writer getting one's first novel published. But the aftermath - from piracy to patching - poses disincentives to the independent developer, who began wanting to make the cool game he always dreamed of making, and finds that he's inherited a lot of problems and obligations he hadn't imagined.

"The money we're making off Raycatcher, it doesn't justify working on a project for a long period of time; I can't support myself on it," Warner said. Especially when you release a game, and it has bugs, and you have to fix them. In a certain sense, when you release something for money, it's almost like you create a liability for yourself."

Indie Devs Turn To In-Game Ads After Piracy Strike

The way Warner (right) sees it, the game he and Lagran really wanted to make - a narrative, 3D first person adventure set in an alternate reality - can be done quicker, more cheaply, and with fewer of the headaches that come from a commercial downloadable release like Raycatcher.

In their development histories, Warner as an artist, and Lagran as a programmer, shared the same zeal for the immense back story that is created during a game's design, and only partially revealed during its play. The game they are building, untitled as of now, opens that faucet of creativity. Through exploration and observation, players uncover how they got where they are, what they're supposed to do, and advance the story to its conclusion in a game reminiscent of the Sierra and LucasArts adventures of those companies' 1990s heyday, with elements of Myst.

Such a dependence on observation lends itself to advertising. What kind will players see? Their game, still untitled, will be a 3D, first person adventure, so everything you might see in the real world is on the table, Lagran says. Unity 3D, the engine they're using, supports video texture mapping, so a television displaying a video ad is one example. Outdoors, billboards are a given. Product and brand placement could show up as a poster in a character's bedroom.

"If there's going to be a poster on the wall, and a brand on that poster, you might as well make it a real one," said Lagran, a programmer whose experience includes work as an artist on PowerUp's Night of a Million Billion Zombies. Other possibilities include getting a link to a magazine article, targeted to their player demographics. Or opening up a laptop in a university setting in the game, and getting directed to the web site of that university, in real life.

For all of these, however, Lagran and Warner have to make separate and sometimes competing sales pitches, to gamers as well as advertisers. For advertisers, they're hawking a new and effective way to reach a targeted audience's eyeballs. For gamers, they're saying in effect, don't worry, if the advertising is done well, you'll barely notice.

"I've definitely played games with (in-game advertising) and it's never bothered me," Lagran said. "The only time it does is when it's out of context, the random logo that doesn't fit, like you're in a sci-fi world and you see the Apple logo."

So it's clear that the sponsors are going to have to fit organically into this story, somehow, says Warner, who offhandedly confesses a "seething hatred" for pushy, repeated or conspicuous advertising, probably because he's studied hypnosis. "I don't hate products or people making me more aware of products - I buy my clothes the same places as everybody else. But people getting leverage on me emotionally - Axe (body spray) makes people insecure about their sexuality for example - it's very manipulative and a form of bombardment. There are more tactful ways."

And that's where his and Lagran's sensibilities as artists will help an indie developer do it better.

"I could be delusional, but I haven't seen anybody else, really, doing it at this level," Warner says - meaning advertising within fully-rendered 3D games played online.

That points to another condition of the gaming market they hope to exploit: Low expectations. Casual flash games with advertising, while showing an audience increase (67 million in 2007 to 86 million in 2008, with a 28 percent bump in ad views, isn't looked to as any kind of a memorable gaming experience. "They're almost so casual that they're not considered real games," Lagran said. "We want to capitalize on the idea that these browser games are nothing, and make one that feels like a full-fledged game that you'd download…. I think that's where the industry is going to go."

Of course, it already has, notably in Asia, with North America lagging behind. One portal under development, also based in Vancouver, is Dimerocker, and it too envisions enough potential for in-game indie advertising that it has secured venture capital and is building an API to serve ads to developers that list games there.

J. Joly (he goes by his first initial), Dimerocker's founder and VP of content, considers his venture very much borne of the indie-scene aesthetic, envisioning a portal where users and developers communicate with no middlemen, in a give-and-take of release, adoption, feedback, revision and re-release. The portal is also geared toward distributing games built with the Unity 3D engine, which Greener Grass Games is using. Both studios consider it the fastest way to get a professional quality game into production.

"A great Unity game can be done with a 2 or 3 man team and $100,000," Joly said. That translates to considerable development agility and, by using the advantages of browser-based games, can target them to specific emerging markets such as, say, Brazil, skipping the overhead of traditional retail or downloadable releases, while making money back using Joly's API. Lagran and Warner contend they don't need eye-popping numbers to do well. "I think we're looking at between 50,000 and 100,000 impressions in a month, and we should be pretty good."

That's the concept, anyway. It's not something so ahead of the cutting edge that everyone's shooting it down, but it's not to say in-game indie advertising is unqualifiedly the next great thing.

Indie Devs Turn To In-Game Ads After Piracy Strike

"I'm a venture capitalist; I support the little guy," said Jeremy Liew, managing director of Lightspeed Venture Partners, with an expertise in social media and casual gaming. "The short story here is in-game advertising has been a little bit of a disappointment. It's not lived up to expectations as a major driver of revenue. That was true even when the ad market was strong, and obviously there's an advertising recession going on right now."

Even though recent (and not exactly disinterested) research projects a $2 billion in-game ad market by 2012, the company releasing that sort of figure, IGA Worldwide, is itself in trouble, trying to secure additional funding but also exploring selling itself off, after losses of $11 million in 2007 and $26 million in 2008. Microsoft also just laid off a quarter of the workforce at Massive, its advertising service.

Sure, the scale of the ad sales operation undertaken by an indie game house might not be so large that it needs to hit the kind of numbers larger publishers want to see. But "I guess it depends on what you define as a success," Liew said. "The challenge still is one of demand. And if you're smaller and more targeted, you do have fewer things to offer."

Liew understands Lagran and Warner's instinct to shift to web-based games, but wonders if the in-game advertising is even necessary. "Piracy is what led people in Asia to shift to free-to-play games with digital distribution models," Liew said. "This is a solved problem. Perhaps we can consider using the solutions that are out there."

Dimerocker would be one of those solutions, with plans for a traditional model of free play leading to premium content, with some microtransaction capabilities. But that doesn't particularly differentiate that portal from the others in that space, which is part of the reason why Joly's pushed into it.

This of course is the business plan; what it may meet in reality bears watching.

"Most marketers characterize in-game advertising as experimental," Liew said. "Given the major budget cuts people are seeing, they're not feeling super experimental. And given the context that this has not lived up to expectations, in a recessionary environment, it's going to be a tough challenge for them."

Perhaps, but at least the price of failure, if it comes to that, will be comparatively low. The episodic nature of their project allows them to either continue a successful IP, or cut their losses without having wasted time and development on a full game nobody really preferred.

"Right now, we're 10 grand in the hole, and it's all borrowed money, friends and family," Warner said. "Even if the first episode is a bomb, my mom isn't gonna get the repo man after us."

And they're banking on the goodwill of gamers who will give a game a chance and understand the tradeoff - that free content has to be supported some way. It's true that their exploration of advertising came about, in a sense, because gamers would not support a previous effort with their own money, and worse, pirates stole it. But gamers shouldn't feel that in-game ads are some form of punishment.

"DRM," said Lagran, "would be a punishment."