But we
believe that with the growing profile of the Polish video game sector
and its positive reception, interest in placement of ad content in video
games will grow. Thus it would be useful for game publishers and
advertisers to know what to pay attention to in contracts for in-game
advertising.

What is in-game advertising?

We should
first explain that we use the term “in-game advertising” to refer to
placement of ads for goods or services in a video game, so that the ads
become an integral part of the world or universe of the game and play a
certain function in that world. This function may be static, e.g. when a
billboard advertising a product is part of the background or setting of
the game, or dynamic, when advertised goods or services are used by the
characters or the characters interact with the product. In-game
advertising is thus similar to product placement.

We don’t regard
ads appearing in the game menu on startup or during breaks to be in-game
advertising. Such ads don’t make goods or services an element of the
game content.

In-game advertising should also be distinguished
from “advergames.” They usually have little to do with games, but are
created by companies solely to promote their own goods or services.
Traditional advertising and advergames will not be the subject of the
following discussion.

A few examples of in-game advertising

Typical productions that have used in-game advertising for years include racing games (such as Need for Speed, where players can drive a BMW, a Nissan or a Porsche) and sports games (e.g. from the FIFA and NBA series, where the stadium banners reflect the advertising from the real world).

In the longstanding production Tom Clancy’s Splinter Cell: Pandora Tomorrow,
the player’s avatar uses phones from Sony Ericsson to take pictures of
terrorists and transmit their photos to headquarters for identification,
and to communicate with other characters. In the game Worms 3D, a worm directed by the player consumes Red Bull to speed up and gain energy. In Super Monkey Ball,
the bananas collected by the player were originally branded Dole, but
in sequels the producer Sega announced a partnership with Dole’s main
competitor, Chiquita. And in Crazy Taxi, the player drives passengers around town, including to KFC or Pizza Hut restaurants or Levi’s clothing stores.

Another good example is The Sims.
Among other things, Sims have used Intel computers to quickly increase
their resources of knowledge, a Renault Twizy electric car to increase
the player’s prestige and optimise expenses, and equipment from the Dove
Hair Spa serving as a shower and hair protector. Second Life
became an equally popular ad platform, where for example Calvin Klein
promoted his new perfumes and Lacoste promoted its spring clothing
collection. Indeed, Second Life includes some modest Polish ad themes, such as the mobile phone operator Play and even the Catholic intellectual weekly Tygodnik Powszechny.

As
should be apparent from this brief overview, the range of brands using
computer games for advertising is broad, and the types of games offering
ad platforms are varied.

What to pay attention to in a contract for in-game advertising

• Subject of contract—what goods or services are to be presented in the game

It
might seem obvious—the product should simply be depicted in the game.
Nothing could be further from the truth. Before an advertiser decides to
include an ad in the world of the game, it should first get to know the
characters, conventions, setting and mechanics of the game. This is
even more important when the advertised product is to enter into
interaction with the characters. Then issues such as which character
uses the product (e.g. a crook or a policeman), what the product is to
be used for and under what circumstances, whether alternative products
are provided for in the game (and if so, whether they are from other
brands or are “no-name” products), whether the advertised product is the
only one of its kind used for a specific function, will all be
relevant. These aspects and the publisher’s undertaking to implement the
product in the game in the specified way must all be precisely set
forth in the contract. Oversights in this respect may prove fatal to the
advertised product.

The game Alan Wake offers a good
example. When moving in darkness, the main character uses a magic
flashlight that protects him against dangers and serves as his main
weapon. It might seem like an ideal advertising platform for Energizer
batteries. The problem was that in the game, the advertised batteries
quickly ran out. The effect of the message? Players regarded Energizer
batteries as a product of poor quality. Undoubtedly that was not the aim
of the brand’s owner. This blunder could have been avoided if the life
of the batteries were specified in the contract (e.g. to reflect that
guaranteed by the manufacturer in real life) and if the advertiser had
ensured that the flashlight could also be powered by other generic
batteries, which could highlight the difference in durability between
ordinary batteries and the advertised ones.

• Advertiser’s liability for advertising not complying with contract

The
publisher’s liability for carrying out the advertising of the good or
service in the game not in compliance with the contract should also be
considered. If the advertiser asserted such a claim under Polish law, it
would be based on the general provision for breach of contract (Civil
Code Art. 471). The advertiser would have to show non-performance or
improper performance of the contract by the publisher, the occurrence of
an injury on the part of the advertiser (e.g. a decline in sale of
batteries), and a causal connection between the in-game advertising as
implemented and the injury. Thus the point of departure for the
possibility of effectively pursuing such claims is precise agreement in
the contract on the rules for presenting the advertised product in the
game.

This can be illustrated by the contractual dispute that
arose between the group No Doubt and game publisher Activision. The
contract did not involve advertising, but the use of the images of the
band members in the game Band Hero; however, the issues are
analogous. After Activision published the game, the group challenged the
fact that their virtual counterparts performed works in the game not
only by No Doubt, but also songs by other groups. The case was settled.
However, in this case, as in the case of in-game advertising, the key
would be to pay close attention to the contractual provisions and the
terms of cooperation agreed by the parties.

• Integrity of game and introducing ads into the game

A
condition for safely conducting in-game advertising by the publisher is
not only to ensure that it has been transferred the economic copyright
from the authors involved in creating the game, such as graphic
designers, programmers and scriptwriters, but also to correctly handle
issues of their exercise of moral rights to their work. This aspect can
sometimes be overlooked in contracts. Theoretically it can be imagined
that for some reason the publisher may wish, for example, after
completion of the work on the game, to commission third parties or only
some of the authors to introduce product advertising into the game which
was not originally foreseen. In such case, if the publisher fails to
address the copyright issues in advance, it may expose itself to claims
by authors for example for infringing the authors’ moral rights to the
integrity of their work.

• A few other tips

There
are a number of other issues which advertisers should pay attention to
in the contract, such as the platforms in which the game is to be sold
or delivered to players, the publisher’s plans for promoting the game,
and how much time the publisher intends to devote to promotional
activity. The territory where the game is to be offered should be
verified, particularly to determine whether the product advertised in
the game is suited to the given market and is culturally appropriate, is
sold in the given market under the brand used in the game, etc. It is
also worthwhile to consider the advertiser’s own promotional campaign
(particularly if the product placement in the game is part of a broader
campaign, e.g. connected with the launch of the product on the market in
question) and its consistency with the publisher’s actions. If in its
own promotion of the product the advertiser wishes to use elements of
the game world in its own message (e.g. characters using the product in
the game), the rules for use of such elements and the terms of the
relevant licence for the advertiser should be established.

Legal classification of in-game advertising

The
contractual issues also include adapting in-game advertising to comply
with the applicable law. In Poland there is no single law
comprehensively addressing advertising. Regulations concerning
advertising are found in several different acts, some of which may apply
to in-game advertising. These are primarily acts imposing bans or
restrictions on advertising certain goods or services, such as alcohol
(in the Act on Sober Upbringing and Combating Alcoholism of 26 October
1982), tobacco (Act on Protection of Health against the Consequences of
Use of Tobacco and Tobacco Products of 9 November 1995), drugs
(Pharmaceutical Law of 6 September 2001), and gambling (Gambling Act of
19 November 2009). Most of these acts provide for criminal liability for
violation of prohibitions, which should be borne in mind by both game
publishers and advertisers using games as an ad platform.

The
Unfair Competition Act may also apply to in-game advertising, imposing
liability on a business (potentially both the publisher and the
advertiser) e.g. for advertising that is misleading or contrary to fair
practice, advertising encouraging audiences to acquire goods or services
while posing as neutral information, or impermissible comparative
advertising.

Considering the growth of the game development
sector, including in-game advertising, it cannot be ruled out that in
the future some industry self-regulation will arise in this area of
advertising or that video game entities will join existing
self-regulation systems. In Poland this function is fulfilled primarily
by the Advertising Council, which was established by the advertising and
marketing community and provides oversight of issues such as the ethics
of advertising content.

When considering the requirements of
in-game advertising under Polish law, another controversial issue should
be mentioned, namely notifying players that the game contains
advertising content or product placement. Must the game include
information on this topic? No such requirement is expressly provided for
under Polish law with respect to video games. But this encourages
hidden advertising and hidden product placement, which can have costly
consequences (also in cooperation with influencers).

(In
Poland, the same problem and lack of regulation affects all messages
online, such as on blogs, forums, and video-sharing platforms. The
situation of video-sharing platforms, which include such sites as
YouTube, may change in connection with the November 2018 amendment of
the Audiovisual Media Services Directive, which introduces informational
obligations for video-sharing platform providers with respect to
advertising, sponsoring and product placement. The member states are
required to implement the amended AVMSD by 19 September 2020.)

The
Broadcasting Act, which does address this issue, has a narrow scope of
application (covering only TV and radio broadcasters and providers of
on-demand audiovisual services) and does not cover advertising messages
in games. Nonetheless, it appears that placement of ads in games should
be subject to certain principles and conditions. Thus it would be
reasonable to call for clear regulation for example of publishers’
obligations in this area. Under the current regulations, hidden
advertising messages in a game could be challenged under the Unfair
Competition Act or in some instances under the Unfair Market Practices
Act.

Benefits from in-game advertising for both parties to the contract

For
the publisher, in-game advertising can be an additional source of
financing for the game. Moreover, placement of real products in the game
increases the realism of the game’s universe (according to 60% of
players surveyed by Nielsen in 2008),
and consequently increases players’ immersion in virtual reality. This
is vital for sports games, racing games, simulators and all other games
set in the present day.

For the advertiser, the game is a platform
for establishing or raising brand recognition. First, it allows the
advertiser to reach a promising target group (the average player
is a well-situated man, or less often woman, around age 35). Second,
the playing time (averaging some 12 hours or more, or even days) ensures
long exposure to the product. Third, thanks to virtual interaction with
the product, the player can learn key attributes of the product (e.g.
durability and energy-efficiency) and test it virtually in the game.
Fourth, because games attract a large community exerting influence over
players, in-game advertising opens the way to exploiting word-of-mouth
or whisper marketing.

Obviously, it is possible to achieve these
benefits only when certain fundamental conditions are met: the ad
content and the manner of presentation must be consistent with the
conventions of the game, properly suited to the audience, unobtrusive,
and simply of high quality. But undoubtedly, in-game advertising that is
well conducted from a marketing perspective and properly secured from
the legal side can generate benefits impossible to achieve in any other
way.

Lena Marcinoska