(In)Game Advertising:The European Perspective

Felix HoferHofer Lösch Torricelli

Florencefhofer@hltlaw.it

www.hltlaw.it

Talking about a niche area?

• Parks Association Industry Report (US data)– Game Ad Spend 2006: USD 370 million– Forecast 2012: USD 2,051 million

• EU Commission on-line content sales by 2010 global value (=4 x 2005 value): 8,3 bln euro

Who’s out there?

• Mediascope Europe for EIAA:– Internet most popular communication

tool among 16-24,– 82% on-line 5 days/week (entertainment

& information),– 46% prefer Internet over (and uses it

more than) TV

Where does (and will) consumers’ money go?• Game consoles 2007 Xmas: 80 million

worldwide (= 9.8 billion Euro)

• France: Gaming Sector surpassed Entertainment Industry in revenues

• Digital platforms come-back for popular past-time games

• New playing venues (e.g. sports arenas, shopping centers),

• New events (“disc burn” sessions) attractive for gamers

Sexy to the Ad Industry, ‘cause:

• Gaming is no longer just for kids

• Gamers are NOT bothered by ads, they are perceived as contextual and realistic, in the UK for 86% OK, when determining price

• Rise of dynamic in-game vs. static ads – 2006 - 40% of global spending – 2007 - approx. 55%

• German forecast: dynamic ad spending soon to double static ad investment (USD 122 per 1,000 views likely)

Also appealing ‘cause:• Game Play Metrics = better idea on effectiveness & details

(angle/distance of ad views, game pauses, position changes),

• Demographic targeting (different dynamic ads for different audiences) + real time placement & consumer engagement,

• Great product placement/cross marketing opportunity (Smartphone in “Splinter Cell: Double Agent”),

• Games within on-line ads (Vigorsol chewing gum advergame)

• Profiling potential for SEs (in-game behaviour evaluation/categorizing: “dishonest/unfair”, “brave/daring”, “non-competitive/confrontational”)

What’s the law(yer)’s play in this exciting game?

(i) Promoting/advertising the game?• Beware of:

– Misleading/comparative advertising (Dir. 114 of 2006),

– Unfair commercial practices (Dir. 29 of 2005),– New provisions on Audiovisual Services (Dir.

65 of 2007, to be implemented by 2009) setting ad regulations for all media,

– Countries' rules on State Monopoly (re: games of chance + entry fees & money prizes).

(ii) Selling the game through on-line order system?• RECALL:

– Rules on Distance Sales• Dir. 7 of 1997

(iii) Selling the game by on-line downloads?• THINK OF:

– E-commerce regulations• Dir. 31 of 2000

– obligations as to sales promotions,– (unsolicited) commercial communication restricted.

(iv) Side thoughts about product placement / cross

marketing? Or even Reverse Product

Placement!

Those Europeans!

• Until now NOT specifically regulated in the EU

• TVWF Directive (552/1989):– All advertising: readily recognizable &

separated from other program parts,– Surreptitious advertising: strictly

banned.

Some examples:

• Austrian Administrative Court finds unacceptable product placement in headlines crediting fashion houses for clothing supply of TV hosts/moderators.

• Independent Ad Watchdog nails Swiss Public TV & Broadcast for showing one of its moderators commenting on America's Cup victory with winner’s logo on the mike.

AVMS Directive, while...• Allows product placement (MS may rule

differently):– in movies & TV films/serials, sports &

entertainment, or– when resulting in free supply of products/services,

• Provided it does not:– exercise undue influence on content /

programming,– directly push products/services’ purchase,– excessively high lighten product/service,– lack of appropriate identification (beginning &

end).

What’s a poor ad guy to expect from such a legal masterpiece?• AVMS Directive:

– originally meant (UK pressure) to ease product placement as crucial financial resource,

– final text “watered down” (Germany & other countries),

– likely to loose further effectiveness within national implementation (German Journalists' Association strongly objected to PP in TV programs)

Any clues about who was involved in this?

Official statements: no money changed hands, only “cross marketing” occurred.

Don’t worry too much!

• PQ Media Research:– PP on constant rise in ad spending– 37% increase in 2006 (up to 3.6 bln.

USD)– Steady rise of PP spending (2008-2010)

predicted.

(v) Are you by chance thinking of a little profiling?• Did new platforms & tech

tools/applications (revealed at CES 2008) steer your imagination?

Don’t even dream of it!The b----y Europeans again!• Rules on 'personal data handling' (Dir. 46

of 1995):– Data subjects' informed consent & rights,– In-advance notification (sometimes) with PDC.

• Provisions on electronic communication (Dir. 58 of 2002):– Opt-in system for unsolicited commercial

communication,– Location data's use: consent/anonymity,– Easy opt-out mechanism (“killer bottom”).

What about the game industry targeting Europe?• Cons:

– No easy task,– As in US, to consider

• Federal ( = EU Directives), • State Law (= national implementing

provisions), • Local Regulations (at Regional or Municipal

level),

What about the game industry targeting Europe?• Pros:

– 500+ mln. consumers market,– EU Commission:

• aware of the sector’s economic importance,• heading towards “single market” for on-line

content,• planning harmonized regulation, aimed at:

– facilitating broad consumer on-line access,– increasing offer of on-line content,– granting authors' appropriate

protection/remuneration.

When and How?

• Issue to be addressed in 2008,

• Action plan focused on:– Incentives for content creators,– Multi national content licensing,– Harmonized on-line DRM system,– Ethic Codes involving all stakeholders

(authors/creators - providers/retailers - consumers)

(In)Game Advertising:The European Perspective

Felix HoferHofer Lösch Torricelli

Florencefhofer@hltlaw.it

www.hltlaw.it