I don't write ads for Electronic Arts (Nasdaq: ERTS ) , but there's something about the news that EA wants to sell ad-supported games that brings me back to my marketing and PR days:
Ads. They're in the game.
Yeah, I know. Save your email. I'm aware that I need my day job as a Foolish stock analyst. So let's get to what this news means, beginning with the facts. This summer, EA will release a version of its Battlefield Heroes series as a free download. Revenue will come from in-game sales of virtual gear and via advertising.
Three things strike me about this announcement. First, in-game advertising is a big enough business that Microsoft (Nasdaq: MSFT ) spent hundreds of millions to acquire Massive in 2006 and then $6 billion for ad designer aQuantive last year.
Second, distribution-dependent yet ad-supported business models can work when there's a viral component to the product being offered. Just ask the good folks at Facebook and YouTube. Addictive applications and goofy videos bring in legions of users.
Third, in-game purchases are common when the experience is addictive. Witness virtual world Second Life, which has a real-world economy valued in the millions -- enough that the IRS has taken notice.
So has the Korean government, which is layering a tax on in-game transactions annually, which in 2006 accounted for $1 billion in real moola. EA, meanwhile, says that it earns $1 million per month via in-game transactions in its free FIFA soccer game, which was launched in Korea in 2006.
What the heck took EA so long to make this game available? And when will Electronic Arts and gaming peers Activision (Nasdaq: ATVI ) , Take-Two Interactive (Nasdaq: TTWO ) , Nintendo, and THQ (Nasdaq: THQI ) begin offering their popular titles for free?
Probably a lot sooner than any of us think.
Get your clicks with related Foolishness: