In-game ads – a sustainable business model?

So EA are to launch their first free online game with integrated ads.

But is this a sustainable business model? With games that make it big now costing several tens of millions (normally dollars), can a game contain so many ads and the advertiser achieve so much appropriate gamer engagement as to create value for each other?

TV learned very quickly that there is only so much you can cram into a small 1m 30sec ad break. As a result, there is only a finite level of revenue you can generate from any one show. Whilst technology (TiVo et al.) was a big driver for show sponsorship, this again shows that conventional ad revenue alone is not enough.

So how can games provide sufficient APPROPRIATE ad opportunities so as to ensure it does not a) interfere with the game itself and b) provide value to the advertiser?

I can totally see how product placement could work. Cans of drink and foodstuffs would be visible within domestic environments. Billboard ads would be nothing more than digitised versions of their printed big brothers when outside, but how many billboards exist in space? How can a fee-paying model be carried across so many different scenarios?

Is the target market for WW2 shoot-’em up Brothers in Arms likely to appreciate an in-game ad for deodorant? Don’t think so.

What about Halo? What earthly brands would fit into that environment…come with me on a journey…

Over the speaker: "Master Chief…this is a warning message brought to you in association with Ford Motors – Driving you to Halo and back. You are surrounded by aliens, why not use your Rentokill rocket launcher which kills so much more than weeds".

…suddenly…

Marine: Master Chief, Sgt. Honda Civic has been hit in the shoulder. We have tried using standard military issue bandages to heal the wound but nothing beats the soothing effects of Elastoplast with its new thermal strip to keep injuries warm.

Master Chief: Soldiers, be brave, be men…be. Try the new fragrance by Tom Ford – Be Man.

Marine 2: But Master Chief, working in such difficult conditions does not call for an avantgarde, masculine, yet sensitive fragrance. You need Axe for men. Apparently it keeps you cool under all sorts of pressure.

OK, so this is just a bit of fun, but if nothing else, it makes one wonder how it is going to be possible to transfer over this ad-based model to all games.

This has got to be a niche market unless someone can shed some light on it for me?