In-game advertising and doing business in virtual economies such as Second Life is an area of new media that is about to explode.

“The audience is already there and they are connected. This market is growing fast”, says Mitchell Davis, CEO, Massive Incorporated. 

One interesting panel at Forbes’ MEET Forum in Los Angeles on Wednesday discussed the video games business.

The gaming industry has grown as big as the U.S. theater business and we are just seeing the beginning of it. Especially when it comes to advertising and product placement opportunities.

Sure, it is still pocket change as compared to the total television advertising market, but consider this: According to Pew Institute research, videogames is the single medium that is growing the fastest with the millennial generation (young people born in between the years 1980 and 2000).

As the millennials grow up, they will replace the tv-loving “MTV Generation” as the most valuable consumer group that the advertisers want to reach. Who says that the market for in-game advertising does not have the potential to outgrow the television market? Think about it.

Today, millions of players are logging on to massive multi-player games and as they do so, they are trading weapons and spending real money to equip their avatars (virtual alter egos).

“The secondary market in video game is worth $2 billion, that is people selling stuff to each other in the virtual world”, says Brock Pierce, Chairman and CEO, Affinity Media.

One sign of that this market is for real is that Nielsen the other day announced that they will start a ratings service for video games.

“Advertisers are telling us that they want to get in on this market. But they want to buy it like television, based on ratings and impressions. That is happening we are seeing that in-game advertising is becoming a line item”, says Mitchell Davis. 

Joakim Baage