Market Opportunity

The global gaming audience is a lucrative opportunity for advertisers

The number of global gamers will exceed 3.8 billion by 2027 which will represent 40% of the world’s population. Gaming is now the largest entertainment channel as free-to-play and gaming-as-a-service have gained traction, resulting in developers and publishers looking for alternative monetisation avenues.

The US is the world’s largest ad market and there is an opportunity for advertisers to follow consumer attention and increase ad spend in gaming channels. The demise of the cookie and Apple’s removal of IDFA, plus the surge in usage of ad-blockers creates challenges for targeted web advertising; tapping into gaming presents a compelling opportunity to bypass these concerns.

Intrinsic in-game ad formats are new, innovative and immersive whereas rewarded video is a proven and more mature format. Advertiser spend has historically followed eyeballs, and as consumer engagement rises, in-game ad revenue is predicted to surpass other major channels.

In-game advertising revenue is underpenetrated in PC & console platforms with a growing opportunity to monetise cross-platform. Mobile is a large player contributing to over 50% of global gaming revenue. This is expected to continue as we see increased smartphone penetration and the greater adoption of 5G technology.

The industry is at an inflection point as through standardisation and advancements in technology, enables programmatic transaction of in-game ads at scale. Omdia predicts if games monetised through ads on the big screens at the rate of traditional media channels, it would unlock an incremental $25bn in ad revenue.

Currently, only 5% of console developers are monetising with ad-supported business models. Both Sony and Microsoft announced plans to allow in-game advertising in free-to-play games on their consoles.

The world’s largest publishers are investing in mobile games. Activision Blizzard, Electronic Arts, Take-Two and Ubisoft are growing their portfolios to capitalise on this trend. The recent mergers of Unity and Ironsource and Vungle and Liftoff is evidence of the importance of serving the growing developer community with monetisation tools.

Agencies and ad-tech are going all in on gaming

Advertising agencies are waking up to the potential of in-game advertising and are establishing gaming divisions and recruiting executives from gaming powerhouses to drive growth as awareness rises.