MediaMedia PlanningNew Content King of the Living Room

New Content King of the Living Room

Console makers are racing to become the preferred entertainment device of choice. Where do advertisers fit into that picture?

There may be a new king of content in the living room.

After arriving home last night from a few days of travel, I was greeted by a nearly full DVR lineup of my favorite television shows. I spent my evening sitting on the couch getting caught up (on my terms, of course, which includes few advertising interruptions — an interesting preference for a guy in brand marketing). As most people have experienced, I had to clean out my DVR before any shows were lost because of space limitations. Despite this constraint, our generation is lucky to have innovations such as DVRs, video iPods, video content sites, and even broadcast channel Web sites that have drastically transformed how we view our favorite episodes of “The Office” or “Grey’s Anatomy.” This transformation is one that video game console manufacturers hope will carry their devices to the center of every living room.

A Frank N. Magid Associates study finds that among adults 21 to 34, nearly a third of those who own HDTVs were motivated to purchase their TV sets because of video game consoles. The link between consoles and HDTVs explains the increasing interest in console manufacturers’ ability to provide quality entertainment content.

In the past, the likes of Atari, Sony, Nintendo, Sega, and Microsoft competed to be the top gaming console. The battles were determined by such key features as image quality, processing speed, and available games. But the most recent release of gaming consoles introduced a new battlefront.

No longer are consoles competing just in the gaming world. They’re also competing in the larger entertainment world. Microsoft, Nintendo, and Sony each recently added entertainment content stores where gamers can download not only gaming content (game trailers, additional levels, etc.) but also movies and television programming directly to their consoles for about $3 to $5 per download.

Video game companies have quickly recognized that the downloadable content model can be financially rewarding, given its ability to supply desired content for purchase and, more important, its ability to help subsidize purchase costs via advertising partnerships. The model has worked well for online video sites such as Hulu. The only limiting factor is that the average consumer is required to view the content from her computer.

Game consoles, however, are conveniently connected to the television that sits at the center of the household.

An example of this powerful convergence surfaced earlier this year with the rumor that Microsoft wanted to partner with Netflix to bring its service directly to Xbox Live customers. If this alliance were to happen, it would create a win-win for each company, as Xbox Live would suddenly have an enormous library of available movies and Netflix would instantly have access to the key movie-watching demographic, men 15 to 34.

Gaming consoles are attempting to provide proprietary programming on their devices, learning from the mistakes of online video destinations (think Microsoft has announced a project to produce 10-minute original programs exclusively for Xbox 360. It’s partnering with Peter Safran, a well-recognized Hollywood producer and talent manager, to create appealing content for the primary Xbox audience. If successful, this project could further differentiate Xbox Live as the leading online service among gamers and potentially attract additional consumers. As Sony and Nintendo modify their plans for online services, it’s safe to assume they’re monitoring the efforts of their leading competitor, Microsoft, and will eventually include their own solutions for custom entertainment content.

With these breakthrough features being delivered directly to the gaming consoles, advertisers will soon be able to purchase media on these devices not much differently from how they currently buy online media. Because gamers have become comfortable with the pay-for-content model on their consoles, marketers have the opportunity to leverage the positive value associated with delivering these coveted experiences for free. Unlike television programming where consumers have the tools needed to skip ads, the opportunity on video game consoles allows brands to tie directly to the entertainment content.

Advertisers have another opportunity: in-program advertising. They can sit down with the content creators to brainstorm ways to include products or marketing messages within actual programming, similar to product integration in movies and television. Relevant partnerships will be available and more likely well received by creators given the need to subsidize production costs. Advertisers need to remember that gamers are very savvy and will quickly share compelling content with friends but will also identify forced integrations and pass on the negative feedback to their peer group.

In the future, I hope not be forced to run through hours of programming because of memory limits. Instead, I’ll go to my gaming console to pull down the season finales of my favorite shows, courtesy of [Insert Brand], and enjoy them at my leisure.

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