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Wednesday, March 08, 2006

In-Game Ad Making Big News in China with the Coke-T2CN announcement

I apologize for the lack of new entries for the past week. I’ve been traveling in the Bay area, attending the Intel Developer’s Forum and speaking at the Game Marketing Conference. GMC was actually a very cozy and interesting event, with a lot of good people to network and exchange opinion with. Also, there were a couple of questions about hot international gaming markets like China.

I want to report one interesting development in the Chinese gaming market. At the end of February, Coca Cola made a significant announcement with a Chinese gaming company, T2CN (天联世纪); the two parties will launch a collaborative advertising and promotion effort surrounding Free Style Street Basketball, a multiplayer sport game was developed in South Korea and distributed by FSJOY in China. The deal is valued at more than $10 million and will last for one year. The agreement includes several elements:
  • In-game advertisements for Coke;

  • Co-promotion campaign-print the logo for the game on every can or bottle;

  • Co-promotion through TV-advertisements; and

  • Co-sponsor offline basketball tournaments.

The CEO of T2CN said that the five courts in the game commands different prices for in-game ads, ranging from $120,000 to $250,000 per month. It seems the in-game ad piece alone is worth between $1 and 2 million. In the meantime, the company is negotiating with 15-20 potential advertisers and is expecting to announce new clients in the next few months. These figures are dwarfed by what the South Korean publisher, JCE, is making in South Korea. The company already signed up more than 20 million registered users, with a concurrent user base of 300,000. The game is free, but JCE is generating more than $1 million per month just in advertising revenue. In addition, it’s making $2 million a month in other value-added features such as selling cool virtual jerseys and shoes.

As more US companies start paying attention to alternative online gaming business models such as in-game trading, value-add, and in-game advertising, it seems Asian gaming companies are again leading the way. With early success in South Korea, it is no wonder many Chinese companies, including Shanda Networks, are following the lead and diversifying their business models.


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