In 2024, major game publishers have not fully embraced in-game advertising, but the topic is becoming unavoidable. Electronic Arts (EA) CEO Andrew Wilson highlighted this during an earnings call earlier this month, expressing optimism about advertising as a growth driver.
“We see advertising as a significant growth opportunity,” Wilson remarked. “We’ll be very thoughtful as we move forward, and we have teams exploring how to integrate ads thoughtfully within our game experiences.”
Wilson’s comment, made during EA’s May 8 Q4 2024 earnings call in response to a question from Goldman Sachs analyst Eric Sheridan, was impromptu rather than part of a detailed strategy presentation. Consequently, an EA representative declined further comment. Nevertheless, Wilson’s remarks underscore the increasing importance of in-game advertising as traditional business models in the gaming industry struggle.
Wilson’s interest in in-game ads doesn’t indicate that EA is fully committing to this revenue stream yet. Currently, EA’s advertising is mainly within its sports titles, such as the popular football game EA FC, and its mobile games. Although the earnings call led to speculation about expanding ads into premium console titles, EA has not confirmed this.
Kristan Rivers, CEO of the in-game advertising company AdInMo, noted, “It’s unfortunate that EA’s comments sparked so much speculation without further context. Free-to-play games are the sweet spot for ads as players understand the value proposition of trading time for a free game experience.”
The curiosity spurred by Wilson’s answer suggests EA’s entry into the premium in-game advertising market is imminent. Following layoffs of 6 percent of its staff in March, EA is pivoting its core business. Expanding advertising is a straightforward way to reduce dependence on premium game sales as the industry leans towards free-to-play models. With shrinking profit margins, the low overhead of advertising makes it an attractive revenue source for game publishers.
Enhancing its advertising business could also make EA more appealing to potential buyers, as the company considers future opportunities. Tech and entertainment giants like Microsoft and Disney have shown interest in acquiring or investing in game publishers, and EA explored a deal with NBCUniversal in 2022.
“EA’s focus on advertising reflects its intent to be acquired by a major media company, showcasing its revenue flexibility,” said Gareth Sutcliffe, head analyst for games at Enders Analysis. “Though advertising might not significantly boost revenue, EA’s audience is valuable, and this enhances its appeal as a comprehensive operation across various platforms and revenue models.”
Should EA expand its advertising, it has an advantage over other publishers due to its experience with programmatic ads in sports games. However, EA must carefully integrate ads into its premium console titles, which lack natural advertising spaces like billboards. While ads could offer a new revenue stream, they risk alienating core gamers.
“If you disrupt gameplay, it’s not ‘pro-gamer,’ which leads to backlash,” said Dentsu EVP and global gaming lead Brent Koning. “The gaming community is vocal and influential. Disruptive ads are bad for brands, and I’d advise clients against such strategies.
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