In-game ad estimates "wildly optimistic," says EA CEO

EA CEO John Riccitiello thinks that in-game advertising revenue forecasts are wildly optimistic.

According to a CNN Money report, Riccitiello told Dow Jones that in-game advertising will eventually emerge as a key source of revenue for publishers, but it will take much longer than many are anticipating.

"You can't be as bullish as analysts are on in-game advertising and be sane," he said. "In-game ad expectations are wildly high."

Riccitiello's comments are in contrast to other industry insiders such as Bernie Stolar, the head of Google's AdSense for Games, who recently suggested that videogame ads will become a USD 1 billion industry by 2010.

Analysts at technology research firm Yankee Group earlier this year predicted in-game ads could climb to USD 971 million by 2011, up from USD 77 million in 2006.

EA's CEO attributed inflated expectations to the hype generated last year by attention-seeking start-ups angling to go public or attract potential buyers or investors. In 2006, Microsoft purchased in-game ad group Massive and NBC Universal invested in rival IGA Worldwide.

For the moment, in-game ads are a USD 30 million-a-year business for EA, Riccitiello said, which is just a tiny fraction of the company's USD 3.1 billion in sales in fiscal 2007.

He admitted that EA had been slow to create enough advertising space when it first developed games for the Xbox 360 and PlayStation 3, underestimating the difficulty involved in working with the latest generation of consoles. Riccitiello said that the industry needs to "execute" better to create sufficient room to place ads within games.

He also said the lack of independent auditors to measure and verify exposure to ad spots is a deterrent to in-game advertising, although he is aware of several efforts aimed at meeting this demand.