In-game advertising company adopts TV ad model

Visitors play at an exhibition stand at the Games Convention 2007 fair in the eastern German city of Leipzig August 23, 2007. Double Fusion, a private company that connects advertisers and video game publishers, rolls out new technology on Tuesday to allow advertisers to mount last-minute ad campaigns in games the same way they use spot TV ads.

AUSTIN, Texas (Reuters) - Double Fusion, a private company that connects advertisers and video game publishers, rolls out new technology on Tuesday to allow advertisers to mount last-minute ad campaigns in games the same way they use spot TV ads.

The technology will be shown to developers at the Austin Game Developers Conference starting on Wednesday.

Game designers now designate and hard-code locations for in-game advertising during the development process. After the coding is completed, advertising content can be changed via an Internet connection, but locations for ads cannot be changed or added.

Double Fusion's new program, called fusion.runtime, separates in-game advertising from the development process, allowing developers to create new placements in completed games, including back catalog titles.

"With the fusion.runtime, you can get the code in the game, and figure out the ad-spaces later," Jonathan Epstein, Double Fusion's president and chief executive, told Reuters.

The new program adds almost unlimited flexibility to what was once a fixed constellation of advertising slots within a game, Epstein said.

"This allows advertisers to dynamically run campaigns," he said.

The potential for new advertising inventory may also fund a re-release of back catalog titles -- completely free of charge to gamers, in some cases -- and longer lives for hit titles.

Games typically have a short window at retail. Once they sell out, they remain out-of-print, or transition into a cheaper digital download form.

"There has been no long tail of gaming," Epstein said. "No one wants to open up those games, get into code, and make extensive tests."

Michael Cai, director of broadband and gaming at Parks Associates, said the new program "is going to open up a lot of potential inventory for advertisers who are interested in the gaming medium."

Cai said gamers are likely to protest a noticeable rise in in-game ads, but he added that major publishers are smart enough to guard their main revenue source -- retail sales.

"It's in their every incentive to make sure the way they integrate advertisements will not turn off the consumers who buy their games for fifty bucks, or sixty bucks, at retail," he said

Double Fusion shares the marketplace with Microsoft Corp.'s (MSFT.O) Massive, Google Inc-owned (GOOG.O) Adscape and other smaller, independent companies.

In-game advertising is now a $514 million market and in-game dynamic advertising, which advertisers can renew or change at will, is expected to reach $675 million by 2012 in the United States, according to Parks Associates, a consumer and technology research and forecasting company.

The first companies to incorporate fusion.runtime are the French game publisher Ubisoft Entertainment (UBIP.PA), Korean online game publisher NCsoft Corp (036570.KS), and American casual game publisher Oberon Media.