Seeking to lift ad dollars, Sony to track user data
Goal is to revive sales of PlayStation 3 by luring game makers
The video game industry has become a force to be reckoned with in the entertainment business. Now it wants a share of the advertising pie.
Sony Computer Entertainment America Inc. yesterday disclosed a data-sharing agreement with Nielsen Co. designed to attract advertising revenue and bring life back to sluggish PlayStation 3 sales.
Dave Karraker, spokesman for Sony, said Nielsen will have access to data from the PlayStation 3 systems as well as the PlayStation Network, which enables users to play against one another online. The data will allow measurement of gamers' behavior patterns, the effectiveness of advertisements in games, and some basic demographic information such as the user's age.
"This gives us the measurement statistics that we need to go out and sell advertising," he said.
Although the US video game market was estimated to be worth $9.03 billion in 2006 by PricewaterhouseCoopers LLP , the amount of money spent by advertisers in video games was only $80 million in the same year because advertisers would not spend large amounts in the absence of sophisticated data on gamers. Most advertising in games currently revolves around in-game product placements such as commercials at virtual sports stadiums and billboards in the streets.
Michael Pachter , a video game industry analyst for Wedbush Morgan Securities Inc. , said the lack of data on gamers has kept advertisers away, but that Sony has put itself in a good position by reaching a deal with Nielsen.
"Nielsen has no objective to make the numbers up," Pachter said. "Advertisers want that third party validation. They just want to know who's watching what, who's playing what, and who's seeing what."
Pachter said the agreement is an attempt by Sony to bolster PlayStation 3 sales by attracting more third-party game publishers with a new revenue stream that will defray some development costs. Only 1.36 million units of Sony's next-generation console have been sold in the United States since its release in November , as opposed to 2.8 million Nintendo Wiis in the same period as well as 5.6 million Microsoft Xbox 360s since that system's release in November 2005 . PlayStation 3 has been hampered by its relatively weak game library as well as the steep $599 price.
"In order to induce publishers to make software for the console, Sony is smart to be able to say to publishers, 'We can make more advertisement revenue for you because we have more data,' " Pachter said.
Nielsen will use the data gathered through Sony's console network in conjunction to information gathered through its sensors installed in the televisions of 12,000 homes to publish a monthly report on gamers' behavior and effects of in-game advertisements called GamePlay Metrics. Jeff Herrmann, vice president of Nielsen Games, said the first GamePlay Metrics report will be released July 25 and that the report will contain a specific section for PlayStation 3 starting in the fall.
Pachter said the detailed measurements also could lead to future revenue through negotiations with game publishers.
Sony could also potentially benefit directly though advertising; Karraker said Sony develops more games than other first party developers -- Nintendo and Microsoft -- although he said the company does not make public how much it makes from self-developed games. But he said the most important reason for the agreement is to make advertisers recognize the video game industry as a legitimate and significant medium.
"In the long term, what we hope it'll do is create some kind of a standard benchmark," Karraker said. "The video game industry is right now bigger than the motion picture industry, but somehow we don't seem the get the same credit."
Se Young Lee can be reached at vlee@globe.com. 
