The television industry has known for years that video games are a threat to viewership, but a new pilot program might finally give some insight into exactly how big that threat is.
The Nielsen Company and Microsoft are teaming up to study the reach of in-game advertising in the second season of "1 vs. 100" on Xbox Live. This will be the first time Nielsen has measured content delivered through a video game.
Microsoft's target with the program isn't so much to take viewers away from the broadcast networks. It's to steal away advertisers.
"In the U.S. today, digital advertising spends are about $20 million, while television ad spends are about $75 million," says Dean Carignan, director of advertising business strategy at Microsoft. "We think that larger pool is very much untapped by us today. And this is the first step in uncorking that. Without putting a number on it, I would say if we could get all of this right, it could lead to a dramatic grown in terms of revenue."
Chasing traditional advertisers has been historically challenging for gaming services, since there was no direct way to compare the return on in-game ads to that of television.
Nielsen numbers are the industry standard in television. And by incorporating them, Microsoft hopes it will be able to showcase the strength of its audience.
"Our goal is to replicate the success we've had with digital market buyers with traditional TV advertisers," says Carignan. "The price of entry to them is having [numbers] from Nielsen. It's the basic buying currency they use. … So we think this is a huge breakthrough in being able to speak to that market."
The two companies will gather data over a 14-week period. After it's verified, Microsoft plans to approach potential advertisers as the broadcast and cable networks prepare for their upfront presentations next spring. (Upfronts are when companies typically commit large percentages of their advertising budgets to broadcasters.)
The data gathered in the pilot program will not be released, but if Nielsen and Microsoft expand the program, as they plan to do, ratings information for Xbox Live will be listed alongside prime time television ratings.
"1 vs. 100" is a bit different than most titles on the Xbox 360. Free to download and play, the game recreates the television game show on a larger scale, letting thousands of people play at once — while 101 of them are able to vie for "real world" prizes ranging from download credits to physical items. The game gave away a car last season.
Sponsors play heavily into Microsoft's strategy with the game. Live two-hour games feature seven minutes of commercials, while the 30-minute episodes have 3 minutes of ads. (Players are able to check their statistics and chat during the ads.)
Sprint Nextel is returning this season as a premier sponsor, with the company's logo omnipresent in the game.
After the pilot, Carignan says Microsoft plans to expand Nielsen ratings to all of Xbox Live — letting the service measure things like Netflix usage and audio streaming. It would also give advertisers more detailed information about the ads they're running, such as what time of day they're being seen, what demographics are viewing them and at what frequency.
It remains unclear at this point, though, if Microsoft will also gather ratings information on the popularity of traditional titles sold at retail.
Ultimately, that decision rests in the hands of the publisher. Activision, for instance, would need to strike a separate deal with Nielsen to gather ratings data for "Modern Warfare 2".
Carignan was unwilling to say if Microsoft would gather ratings on its self-published titles, including the popular "Halo" franchise, which has a major release due next year.