Live service games are dominating the video game industry. In 2022, 9 out of the top 10 games (peak monthly active users) were live-supported games that had launched in previous years.

Unlike traditional video game releases which require a one-time purchase, live service games are usually free to download and play and regularly receive new in-game content, referred to as downloadable content (DLC), to keep players coming back. These games make the majority of their revenue via in-game microtransactions, which often range between $0.99 and $99.99 and give players the opportunity to unlock additional DLC by spending real currency.

At first glance, it may seem impossible for these smaller transactions to carry the weight of a game's financial success. Yet in 2022, in-game spending accounted for nearly 50% of PC and console revenue in the US market, with microtransactions alone taking up 32% and 37% of PC and console yearly revenue respectively.

One type of downloadable content called in-game cosmetic items are a large driver of microtransactions, and have seen a rise in popularity in recent years, especially thanks to major titles like Fortnite and Roblox. These items have no impact on gameplay but allow players to express themselves and customize their gaming experience through in-game outfits, weapons, vehicles, accessories and more. Players can claim these items by purchasing in-game currency with real funds.

Why are in-game cosmetics so popular?

Players invest a lot of time in their favorite games, becoming attached to the world and characters. That makes them eager to invest (sometimes significant amounts of) real money on these virtual cosmetic items.

• Players of Counter-Strike: Global Offensive, a game that has held the most popular game spot on PC game marketplace Steam for years, reportedly spent over $100 million on microtransactions in March 2023. These transactions allowed them to open in-game cases that include a variety of weapon skins and accessories.

On the publisher side, in-game cosmetics provide a significant, consistent revenue for live service games beyond the initial purchase of the game. They are also a relatively low-lift way to keep the game feeling fresh and engaging.

The benefit for brands:

In-game items are a great opportunity for brands to authentically reach the gaming audience by adding value to their experience, creating an interactive brand touchpoint, and potentially claiming revenue through a rev-share deal with the publisher.

Here are three key things Allied keeps in mind when integrating brands into gaming via custom cosmetics:

• We find the right game. At AGM, we seek out games whose audiences align well with the brand's to drive meaningful ROI.

  • For example, we secured a partnership between Ford and Ubisoft for the Riders Republic video game. The game itself and the brand, Ford, shared a similar audience, and the campaign let these "adrenaline-junkies" play indoors to help the outdoors.

• We emphasize authenticity. To ensure player engagement with the brand, we match the game's tone and content to the brand's. If a game is set in a fantasy setting but the brand is very modern (eg. futuristic-looking fashion), the integration will feel out of place and might turn players away.

  • A great example of an authentic gaming integration came from Gillette Venus, who partnered with Animal Crossing to co-create a collection of clothing, as well as diverse skin types and skin tones.

• We expand the integration beyond the game. To maximize impact, we recommend launching a physical component that promotes the in-game integration, such as creation of capsule collections of any in-game cosmetics or an IRL pop-up experience.

  • For example, BAPE teamed up with PUBG to release a capsule clothing collection featuring BAPE's Ape Head and PUBG MOBILE's Level 3 helmet graphics together.

Taking the right approach

Gamers are a valuable audience that responds best to authentic marketing that improves their experience, but the world of gaming can often feel vast and unpredictable.

Allied's dedicated Gaming Partnerships Team has secured many brand in-game integrations for major gaming publishers, such as Tencent's PUBG MOBILE x Amazon' The Boys, which led to significant player and brand engagement in and out of the games. We utilize this extensive expertise to help your brand navigate this space and pinpoint the best way to reach your desired demographic. Click here to get in touch.