Why Gaming Looks Like the Future of Advertising

By Jon Scarr

The advertising world is going through a major shift as traditional TV moves into streaming, and it’s leaving a noticeable gap in available ad space. According to Terry Kawaja, founder and CEO of LUMA Partners, gaming is positioned to fill that gap in ways many marketers still don’t understand. In a recent interview with Beet.TV, Kawaja broke down why gaming represents an overlooked opportunity for advertisers dealing with shrinking television inventory and increasing pressure to show performance results.

This shift also reflects broader trends across the industry, including moves like PlayStation’s work on AI-driven game technology, which we recently covered in our piece on how PlayStation is teaching AI to play games smarter.

Gaming’s Scale and Engagement Levels Are Hard to Ignore

Kawaja says gaming combines a rare mix of attributes. It has the kind of reach you normally associate with giant social media platforms, but the engagement level is far higher. In games, people aren’t scrolling through endless feeds. They’re focused, involved, and actively participating in what’s happening on screen.

He also pushes back against the long-standing misconception that gaming is only for young males. Billions of people across age groups play games, and many of them fall into demographics that are harder to reach through traditional media channels. This makes gaming one of the few places where advertisers can consistently reach wide and varied audiences without dealing with passive behavior.

Why Advertisers Haven’t Understood Gaming

Kawaja believes Madison Avenue has misunderstood gaming for years. He describes a kind of “oil and water” separation between mobile advertising for games and mobile advertising everywhere else. That gap prevented many general marketers from paying attention to the innovation happening inside the gaming world, specifically around performance advertising.

Gaming companies perfected the relationship between customer acquisition cost (CAC) and lifetime value (LTV). They built near-closed-loop data systems that showed exactly how much a new user was worth, making ad spending feel more like buying revenue than gambling on exposure. Kawaja mentions that this model is the reason companies like AppLovin have skyrocketed in value. They built systems that let advertisers essentially “pay a dollar and get two back.”

He argues that more general advertisers should study what gaming has done here, especially as the industry enters what he calls the “outcomes era,” where brands want clear proof that advertising works.

The Dual-Screen Advantage

One of the more interesting points Kawaja raises is how gaming mirrors traditional TV behavior through dual-screen usage. Whether watching a show or playing a game, most people have their phone nearby. This gives advertisers a natural conversion path without needing awkward tools like QR codes.

The main screen, whether a console or TV, shows the experience. The phone handles identity, messaging, and conversion. This setup lets gamers keep playing without interruption while still giving advertisers a way to track behavior and drive action.

TV’s Supply Problem Is Becoming Gaming’s Opportunity

As TV continues shifting from linear broadcasts to streaming platforms, ad inventory becomes limited. Streaming services generally have lower ad loads, and many rely on subscription models that limit ad placements even further. Kawaja calls this a “supply-constrained” environment.

Gaming, however, has no such constraint. Console gaming in particular offers a large screen experience similar to connected TV (CTV), and Kawaja believes it’s time advertisers view it that way. If marketers need high-impact, scalable ad channels with strong demographics and engagement, gaming is an obvious fit, especially now that traditional channels can’t meet demand.

A New Category for Big Budgets

Kawaja suggests that marketers should consider treating gaming inventory like CTV inventory. That simple reframing gives gaming access to much larger budgets that were traditionally reserved for television. With TV supply tightening and outcome-driven marketing becoming the norm, gaming is poised to absorb some of that spend faster than people expect.