Game consoles positioned to dominate 'digital living room'

Explosive growth in the electronic gaming industry - fueled by accelerating technological advances and huge revenue potential - will transform the media, advertising, and entertainment industries while dramatically altering the leisure habits of millions, according to a new research report from Deloitte's Technology, Media & Telecommunications Group.

This new gaming world promises to open up a flood of advertising opportunities, according to the report. Because of the heavy costs associated with producing software that can keep up with ever-improving hardware, "Game publishers looking to recoup their spiraling development costs are increasingly receptive to product advertising in games," the report says.

It is still too early to tell what form this new advertising will take--whether gaming will be closer to movies, which accommodate mostly product placements and a few ads, or TV, with frequent interruptions.

"We are not there yet," says Scott Singer, head of Deloitte's Media & Entertainment Corporate Finance Group. "Advertisers, agencies--I don't think they have figured it out yet. I think it's all TBD." Deloitte predicts that spending on advertising in console games will climb from just $10 million in 2002 to $45 million in 2007. Similarly, they say that advertising within online games (ad-supported games and 'advergames') will rise to $230 million in 2007, from $75 million in 2002.

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