Advertising-Based Payments and Secondary Markets

“I think advertising-based payments are going to be a major revenue stream in the next three years,” says Billy Pidgeon, analyst with M2 Research. “It’s been slow so far, but I think it is going to grow strongly, and advertising is already a major revenue stream in some countries, like China.”

Things like magic swords, virtual fashion with extra frills, etc.

By advertising, Pidgeon means offers in exchange for virtual goods, long a common method of monetizing Facebook games, which he believes will gain traction in web games. “[S]o it’s important to support all forms of advertising and tokening for payment for goods and services,” he says. For instance, a consumer buys a soft drink that has an affiliate deal with a web game developer. The bottle contains a redemption code, which can be redeemed for the game’s fancy items.

Another variation of this, which Pidgeon also thinks will be big, is the brand-to-player payment. This is where companies “[r]un ads in one game for other games, offering virtual currency for other games.” Pidgeon says, “Supporting ads for other games might sound counterintuitive, but there’s money to be had in this play.”(Chartboost and Kiip are two companies offering this service for mobile devices.) Although this kind of service is more applicable to in-app offers in mobile or in social games at this point, he adds that web-based games are likely to add support for things like this.

Beyond this, Pidgeon ...

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