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The topic can be contentious. Is advertising in games inevitable, abominable, disastrous, or some combination of all three?

The premise, that product can be distributed for free when supported by advertising, is nothing new. Newspapers, radio & television have been sold that way for decades, and advertising props up the biggest internet company of all time - Google. Advertising as a revenue medium is currently in vogue, and several companies are focused on using this model for mobile phone games, including Kalador, with its FreePlay technology, as available on the MobileRated free mobile games storefront. Other examples include GameJump and Hovr.

“In the current climate, ad-wrapped games will be pretty much limited to off-portal distribution, and while this is growing in strength daily, it’s not a big audience yet,” says Jim Blackhurst of Eidos, reporting to Pocket Gamer.

“Mobile games are already cheap but they’ve not been free til now, so this will open up the ‘Trial’ market completely,” Christopher Kassulke, Managing Director of HandyGames tells Pocket Gamer. “At the end the day, customers will be the winners.”

“The idea that game publishers can milk dollars on paid downloads that are in the public domain – for games like Sudoku, or Tetris clones – that’s over folks,” says GDC Mobile boss Robert Tercek. “This is a fact, a certainty. We are at the end of the golden age of paid downloads.”

Will people download and play games supported by advertising? The answer is a definite yes. MobileRated has seen huge sales volumes with this model. Off-deck downloads in the US are estimated at 26% of total downloads and growing rapidly.

Will advertisers entertain buying in this space? Again, the answer is a resounding affirmative. Advertisers on MobileRated include both international brand name businesses through to niche start-ups. As with web advertising, the ability to precisely target and track consumers and advertising impact are key drivers of advertising campaign success, and a variety of models are still being developed and tested in the marketplace.

To the first question then, is in-game advertising inevitable, I believe the answer is yes. However, does this mean all games will be free? Perhaps not. Blockbuster games may always demand a premium, and whether they contain ads or not, they may not be free. Customers may even be willing to pay as an assurance of sorts that the game quality is high - an implication of branding, so to speak.

Is in-game advertising an abominable race to the bottom? Some people may altruistically state that advertising has no place in games. Others are happy to view advertising to remove a purchase price. At Kalador, FreePlay technology allows the best of both worlds. FreePlay enables free game downloads with advertising, but also allows consumers to turn off advertising at any time by purchasing the game outright. Consider it a free trial period. In the end, different tastes for different folks provides the best overall value for everyone, and no one need feel forced into a model they are uncomfortable with.

Will advertising prove disastrous to the mobile phone games industry? With game development costs rising and some carriers demanding deck placement fees, will pursuit of advertising models drive the profit out of the industry, cause a dearth of quality content, and saturate the market with mediocre content?

Certainly, the console game industry experienced such a breakdown with the early Atari when product quality was not controlled. The answer can also be derived from the same context. Nintendo demanded rigorous quality controls and consumers responded. Sites like Kalador provide game ratings and reviews to help customers find the games they are looking for, and provide enough information to make intelligent selections. Games must maintain a level of quality to be including in our portfolios. It is the responsibility of every game business to preserve quality, and those that don’t may cause temporary industry discomfort, but they will also be the first to disappear.

If advertising cannot generate sufficient returns to recover costs and generate profits, the model is certainly unsustainable. This is no different than with game purchases. The key is to price appropriately for each product such that the marketplace grows to its potential with rewarding returns.