Once confined to basements and bedrooms, video gaming has exploded into the cultural and commercial mainstream, shedding its niche hobby status to become a central pillar of modern entertainment.

That influence now stretches far beyond interactive screens, seeding blockbuster movies and hit television series, reflecting a fundamental shift in how younger generations consume media. The Super Mario Bros. Movie grossed over $1.3 billion worldwide and games are also becoming TV shows, like HBO’s The Last of Us.

“Gaming isn’t just games anymore,” Pete Basgen, global gaming and esports lead, Wavemaker, said in this video interview with Beet.TV’s Lisa Granatstein. “It’s this source of IP that starts in one medium and has taken over all the other media… They see gaming the way that previous generations saw reading books and listening to music and watching television. It’s just a ubiquitous media behavior.”

For advertisers aiming to tap into this burgeoning market, estimated by Statista to reach $282.30 billion globally in 2024, the path requires careful navigation.

Ad agencies didn’t always used to employ gaming specialists, suggesting games have become an important new surface for marketers. Basgen has held roles at Twitch, Twitter, General Mills, PlayStation, Stream Elements and the IAB.

According to him, the gaming audience possesses an unparalleled level of advertising literacy, born from an environment where content creation and monetization are intrinsically linked. Many players are creators themselves or are highly aware of the ecosystem.

“No audience is more ad-savvy, or has been ad-savvy in the history of modern advertising… than the gaming audience,” Basgen said. “They are aware of ads when they show up, why they show up, how they support the content that they love,” he added.

Consequently, Basgen advised that gamers “aren’t against ads, but they are against ads that are tone deaf or out of place.” He stressed the importance of authenticity and understanding the nuances of different gaming communities: “The number one thing as an advertiser you could do… is make sure that you’re grounded and have an understanding of who these audiences are.”

Immersive platforms as the new social hubs

While the promise of virtual reality advertising remains on the horizon pending wider hardware adoption, Basgen pointed to the explosive growth of immersive platforms like Roblox, Fortnite, and Minecraft as the current frontier for innovation. These platforms have evolved beyond gaming into sprawling digital social spaces, attracting vast user bases – Roblox alone reported 71.5 million average daily active users in late 2023.

“We call them digital third places on our team,” Basgen explained. He likened these platforms to the shopping malls of previous generations – the primary locations for young people to socialize outside of home and school. “That’s where kids hang out, it’s where they spend their time, it’s where they socialize,” he said.

This concentration of social activity presents a significant opportunity for brands, provided they approach it with the same cultural sensitivity required elsewhere in gaming. Basgen noted that innovative advertising formats are constantly emerging within these immersive environments, offering brands new ways to engage with young audiences where they are increasingly spending their leisure time.

AI promises deeper personalization

Looking ahead, Basgen identified artificial intelligence as the key technology poised to reshape the gaming landscape, particularly through enhanced personalization. While AI has long been a component of game design, typically driving non-player character behavior, its newer generative capabilities promise more dynamic and individualized experiences.

Wavemaker has recently launched a new initiative focused on integrating artificial intelligence into gaming advertising strategies. This program aims to enhance personalization and engagement by leveraging AI to analyze player behavior and deliver tailored advertising content.

Basgen said he envisions scenarios where AI could generate game elements, like character dialogue, in real-time based on a player’s specific actions and choices within the game world.

“As we move into this space where a game can be writing dialogue for a character in response to your actions in real time… your experience in a game is completely unique to you,” he said. “We’re moving into this era where games, more and more will be sandboxes where people can spend an infinite amount of time having new experiences.”

You’re watching “Game Changers: The New Age of Gaming,” a Beet.TV Leadership Series, presented by Microsoft Advertising. For more videos from this series, please visit this page.

By Robert Andrews on    @robertandrews