Wednesday, December 26, 2012

How might Google monetize Ingress?

The first question I had when I heard about the Ingress beta was: why is Google doing this?

Face it: there's a real dollar cost to anything Google does, so it has to do one of the following:

  1. Generate more revenue than it costs
  2. Enable other Google products and services to make more revenue than it costs
  3. Improve Google's positioning relative to its competitors, in order to generally benefit their other products more than it costs
  4. Meet one of Google's non-monetary goals in a way that they feel is "worth" the cost and is offset by other income
In my opinion, Google rarely does anything unless it's likely to provide returns in at least two of these categories. For example, their clean energy programs might seem a bit off the map, but it meets criteria 4 by costing fairly little and improving long-term sustainability (something Google's founders believe in, strongly). It also meets criteria 3 by making Google's search engine more environmentally friendly than their competition (along with all of their other services). It meets criteria two because it reduces costs for other services while allowing them to maintain the same levels of output. And finally, there is the potential that such efforts will net their own profit, meeting criteria 1.

So, what about Ingress? I'm dubious about Ingress ever meeting criteria 1. I doubt that they will charge for access to the game, directly, though they could sell upgrades and such in the Play Store, which might defray some costs (standard F2P/P2W MMO model). Advertising is also a possibility, but I'll come back to that...

Criteria 2 might not be possible, or it might fold into my observations, below, visa vis advertising.

Criteria 3 would almost certainly come from boosting adoption of the Android platform, but that pre-supposes that they won't release a client for other platforms, and that limits adoption of the game. It will be interesting to see which way that goes.

Criteria 4 is certainly part of why Google has embraced the augmented reality model. Giving people a reason to get up and go outside is a great thing, and I think it fits in well with their core values.

Now, back to advertising: I have to wonder what the advertising tie-ins might be. Would Google sell portals? Want more foot traffic at your mall? Pay Google and get a portal installed that's named for your mall. But is branding portals the only advertising tie-in? What about co-branding? I think it was Mountain Dew that did some limited run of a World of Warcraft-themed soft drink where each of the two factions got their own color of soda. Easily done by Ingress as well. Imagine Enlightenment green Gatorade or Resistance blue Doritos!

There's also the murky waters of how valuable the location data is to Google. Certainly there's a wealth of data flowing in to Google about where people move about in urban areas from the game, and they could use that for estimating travel times in their mapping software; marketing to advertisers in specific areas; and even the ethically murky area of associating individual players' Google accounts with regional preferences such as "outdoors", "shopping", "commuter" and "student" and then applying that knowledge to what ads to display on any site using Google's advertising services.

There's a whole lot of things Google could use the game for, but only time will tell which of these roads it goes down (likely once it's out of beta).

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