Too bad no one listens to me, what I wrote about Facebook-oriented funds when they launched, I believe the title was “Why not flush money down the toilet, pal?“. Was I being too nice?
Today:
Some in Silicon Valley have speculated that MySpace isn’t willing to pay more for iLike because it fears Facebook will boot iLike once its main rival takes control of the service. But that doesn’t go far enough in describing the situation, said one of the sources. What has pushed iLike’s valuation down is a problem with control. The company’s managers have no way to prove to potential acquirers that their business model has a bright future because they can’t predict from one day to the next which direction Facebook’s Platform will go. The source said that leaders at iLike, or any other company on the platform, are not truly in control of their fate–Facebook’s Mark Zuckerberg is.
“The cash flow of any company doing business on Facebook’s API, or Facebook Connect, or Facebook platform is inherently at risk,” said the source. “The multiple that an investor can place on that cash flow is not that much greater than 1, because you never know at which point Facebook could change the terms of the relationship or change the technology and cut off that cash flow.”
But seriously, don’t listen to me…
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When IGN Entertainment bought my old company AskMen, it was to consolidate the men’s 18-34 market. They owned the #1 site in gaming (IGN.com) and had merged with the #2 Gamespy. They followed that merger up with the acquisition of Rotten Tomatoes to own the movie vertical, too.
When they approached us, we knew it was to own the lifestyle category, too. But maybe it was also because the average gamer was [allegedly] “fat, old and depressed”? Read more.
But jokes aside, this might explain why the hype surrounding in-game advertising has waned, at least a bit off its peak, no?
In-game advertising, widely seen earlier this decade as the next big thing for marketers, has predictably felt the pinch of the recession.
But while other forms of advertising have seen retraction in sales volume, and in some cases historic reductions, in-game advertising has experienced a slower but still existent growth curve.
Estimates of the size of the developing market for in-game advertising vary widely depending on individual measurement agencies; there exists no de facto industry standard system of measurement. Consensus figures point to the market being worth $120 million to $150 million per year, up from $80 million two years ago. The meteoric projections of growing to $1 billion in total revenue by the 2010-12 time frame, however, are being scaled back.
Barack Obama’s use of ads in video games brought extra attention to the industry.
“The category continues to grow, but the clock is definitely being set back a bit on hitting that $1 billion mark. It may be another couple years beyond [2012],” said Jonathan Epstein, president and chief executive of Double Fusion, a San Francisco-based agency working extensively in in-game advertising. “But sports in particular still lends itself very strongly to in-game advertising given what’s happening out in the real world with sports and advertising.”
Read more (subscription required).
