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Free-to-play, ad-supported games the winners?

Getting gamers addicted is the key to monetization, according to PC Gaming Alliance's chief technology officer. But the business model hasn't proven popular outside Asia.

Nvidia Vice President and PC Gaming Alliance Chief Technology Officer Roy Taylor thinks that video game companies are missing out on future revenue growth.

"The West needs to recognize that the free-to-play model is the future, before it's too late," Taylor said, citing the massive growth of gaming across Asia.

I wrote recently about a report stating that the PC gaming market generated $10.7 billion worldwide during 2007. Half of that came from Asia, where, according to Taylor, "the free-to-play microtransaction and ad-supported model has found huge success." But it seems that outside of Asia, that model isn't nearly as popular.

What we must do as an industry is really start thinking about how we make money from games. When we figure this out, what we're going to see is a resurgence in PC gaming. These new business models, such as free-to-play, can take better advantage of the huge scalability provided by a massive worldwide PC installed base. Think about what that means: those 20 million Xbox users are a fraction of the audience that you can reach on (a) PC.

This is an interesting idea, but it's unclear how you can insert actionable advertising into video games. You do see ads in games, but they tend to not be too dynamic, and they are rarely actionable--you are unlikely to click on a Coke ad in your FIFA soccer game, as you are there to play a game, not click on ads.

On the other hand, a huge number of proof points exist to show that ad-supported, free-to-use products can garner huge traffic and generate significant revenue. I agree with Taylor that there are some very large opportunities on the horizon.