An Endemic Problem

An enlarged and framed EGM cover hangs in the lobby of 1UP’s downtown San Francisco office, highlighting a feature on “The Future of Videogames.” It’s a bit of unintentional gallows humor at the former editorial headquarters of the Ziff Davis Game Group. Just a few years ago, it would have been hard for long-time fans to envision a future of videogames that didn’t include EGM. Now, following the death by a thousand cuts of a publisher that defined American games journalism, that confidence is harder to come by. In the face of so many layoffs and closures within the enthusiast press, quality coverage of the games industry seems threatened by shaky business models and a bad economy.

A few days after Ziff Davis announced they were shuttering EGM, 1UP Editor-in-Chief Sam Kennedy spoke with MTV’s Stephen Totilo about the company’s decision. Kennedy’s assessment? “The games industry didn’t support it.” But other game journalists weren’t satisfied with that appraisal. Variety‘s Ben Fritz expressed many people’s feelings when he asked why Ziff’s Games Group found itself so vulnerable in the first place.

“The obvious retort is: Why did you need the games industry so badly?” Fritz said. “That shouldn’t have been a problem for EGM. Their core readership is teenage boys and young men. 18- to 35-year-old men are the No. 1 most desirable demographic for advertisers, as they’re so hard to reach since they’re often doing things like, well, playing videogames. EGM had that audience. Game Informer and GameSpot and Kotaku and others have it. Yet I rarely see ads beyond game companies and, occasionally, military recruiters. A few times I remember seeing car companies and a TV show or two, but that’s about it.

“Of course it’s easy for me to sit here and say what the ad sales people shoulda/woulda/coulda done,” Fritz continued, “but to me, the fact that they were unable to crack that nut is the true tragedy, because it could have turned publications like EGM, and thus quality videogame journalism as a whole, into a much more viable business.”

Fritz’s complaint is not a new one. Shortly after Jeff Gerstmann’s controversial departure from GameSpot, N’Gai Croal wrote a grim assessment of the relationship between the gaming press and the companies who advertise in it, which he feared was increasingly marked by intimidation and ethical compromise. Similarly, when Games for Windows Magazine closed last spring, the GFW Radio podcast discussion focused on the obviously dysfunctional business structure that most American gaming magazines rely upon, which uses high circulation and endemic advertising (the practice of selling ad space to companies within the same industry as the one a publication covers) as cornerstones.

On the Gamers With Jobs Conference Call the week after EGM closed, the participants were both outraged and mystified by gaming journalism’s over-reliance on advertising from within the industry. Sean Sands summed up the reaction a lot of adult gamers have to the advertising reaching them through gaming outlets: “I don’t know if you’re aware of this, but I actually use other products besides videogames. I purchase other things. … I once actually bought, and used, a bar of soap.”

Despite the amount of ink spilled over the financial and ethical problems endemic advertising causes the gaming press, there has been surprisingly little progress toward a solution. If the gaming press needs more advertising from outside the industry, and if advertisers want to reach more 18- to 35-year-old males, then why haven’t these interests aligned?

A common view, implicit in Fritz’s EGM post-mortem and more clearly spelled out in Totilo’s interview with Kennedy, is that ad salespeople are simply not making an effective case for their outlets to media buyers. Kennedy was eager to correct this sentiment when we discussed advertising and the Ziff-UGO transition in early April.

“We can point fingers at the sales team all we want, but they did a good job. The ads just weren’t there,” he explained. “It’s not just up to your sales team. It’s up to your product.”

The dilemma for any outlet targeting “core gamers,” Kennedy said, is that “for whatever reason, advertisers like to advertise around their own content. With EGM, Sales was always asking, ‘How much mobile content can we get into the magazine?’ – the idea being that if we covered more mobile gaming, like cell phone games, we would get more ads for mobile products. Now remember, the audience hadn’t changed – it’s not as if people were buying more copies of EGM because there was a mobile game previewed in the mag. But the way a lot of advertisers think is that unless they’re advertising around their own content, their message isn’t getting through.”

This is why, according to Kennedy, sites like UGO were financially healthier than 1UP even though they generally had lower traffic figures. Simply by covering things beyond videogames, a gaming outlet attracts advertisers outside gaming. This is especially true when a site belongs to a larger online publishing group, as UGO does.

Gary Goldsheyd, Media Supervisor at Tangible Media, argues that publications aren’t giving advertisers enough reasons to put their message into the games space. “The lack of advertiser diversity is a shared burden,” he argued. “Content publishers are not coming to the table with elegant, custom solutions, because agency folks are unable to measure these programs in scale with more traditional forms. In turn, clients are comfortable in focusing on less risky communications, planning and coping with the diminishing rewards this brings.”

The real problem, according to Goldsheyd, is that consumers’ habits and their relationship to marketing has changed dramatically, but neither content producers nor advertisers have adapted to the new landscape.

“Major advertisers, for all their talk, still cater to the masses,” he said. “Yahoo, AOL, MSN, networks, et cetera. This is not a knock on any perceived lack of effort on the part of the advertiser, it’s just a simple truth that the advertising industry is still caught with its pants down and trying to sort through new media strategies. You have your big agencies which, by nature of bureaucracy, can’t keep up with the changing landscape, and you have your clients which have made their bones on what I’ll refer to as ‘easy marketing.'”

Goldsheyd concluded that there’s a “golden opportunity” for advertisers to gain mind share for the brands they represent by going against people’s expectations. But the current economic climate has made advertisers reluctant to test out new strategies.

There’s another more practical reason why non-endemic advertisers with limited budgets often choose to forgo the gaming press. A former advertising executive explained that while the average reader of a gaming publication surely uses the same goods most other people do, a more important question for an advertiser is whether or not many gamers are the ones making the purchasing decisions regarding these goods. On that score, gaming outlets are less appealing to advertisers. If you want people to pick up a product on their next grocery run, you want your ad in Better Homes and Gardens rather than Game Informer, because Better Homes will put your product in front of more likely consumers.

This kind of calculus matters more now than ever as the economy has placed everyone under stricter limitations. Unfortunately, that means the pursuit of non-endemics has gotten harder despite gaming’s growth in popularity and mainstream acceptance. “A good part of [the solution] depends on the budgets these companies have,” Kennedy pointed out. “Gaming is looked at as a luxury. When they have more money, you see more non-endemic ads.”

However, this may be changing as consumer patterns shift. Goldsheyd explained that the challenge of reaching consumers has dramatically increased in the past several years and marketers have to take new approaches.

“The way to view the hardcore gamer isn’t as an individual inside a vacuum, but part of a group of his or her peers that can evangelize a brand. The old advertising methods used to be about broadcasting your message via one-way communication: We talk, you listen/buy,” he explained. “The new media techniques in reaching an increasingly segmented audience involve embracing a two-way approach. Social media dictates that the advertiser’s message is no longer about what we say but what the consumer hears and interprets. One very efficient way to do this is by targeting a niche audience with a relevant and sharable communication that they can evangelize out to their peers.”

There are, however, some problems with the premise that gamers make good trendsetters. Particularly surprising are some of ATTIK Creative Director Simon Needham’s observations about what has happened to gaming in the past decade, and what they imply for how advertisers currently perceive that audience. ATTIK is an international marketing firm best known for its work on the Scion automobile brand, particularly the “Love it/hate it” themed ads.

“If you’re targeting trendsetters, and gamers were trendsetters, gaming has become a little more difficult because, well, everyone is a gamer now. It doesn’t mean the same thing as it used to,” Needham said during a phone interview. “Especially with the Wii … that really undercuts the credibility of gaming as a cool activity for the people we want to reach, because you’ve got moms using the Wii Fit and exercise videos on the internet. It’s just not as cool to be a gamer nowadays as it was when I first got into computer games.”

The industry’s reliance on expensive blockbusters is a further turn-off to trendsetters, according to Needham, because it makes gaming a bit too shallow. “With music, there’s always the search for the next great band, and they can come from anywhere. A few guys in a garage could be the next cool thing that people are going to pick up. That element of discovery that is so important to trendsetting is not there.”

Needham’s comments suggest that for advertisers, gaming currently lies in a no man’s land between niche appeal and mainstream acceptance. It’s become too prevalent to court the interest of the early-adopters and trendsetters that are so important to advertisers, but it’s still not popular enough to reap the benefits of widespread penetration.

What we’re left with is a catch-22. Editors say, “Our audience is desirable, therefore we should get more advertising.” But advertisers still wonder, “How are you going to connect us with that audience?” A desirable audience isn’t enough anymore. Until advertisers and content producers bridge this divide, they will be unable to solve each other’s problems.

Rob Zacny is a freelance writer. When not focused on gaming, he pursues his interests in Classics, the World Wars, cooking and film. He can be reached at zacnyr[at]gmail[dot]com.