Computers: Playing place the product: Tim Phillips reports on games advertising

Every Hollywood film cuts its production costs by selling companies the chance to have their brands shown on screen. It is a rare film without brand names on caps, drink cans or cars, carefully displayed to blend in while getting their message across.

The same process has now reached computer games, but in a game, where the world can look any way the programmers want it, advertisers often have no need to be so subtle.

Most of the UK's computer game product placement is done by Microtime Media, a company set up five years ago to market products on interactive media, including cable television and touchscreen kiosks. Daniel Bobroff, a director, has seen computer games develop into his first mass market.

According to Mr Bobroff, 87 per cent of five to 19-year-olds play computer games. Bobroff sells advertising for from pounds 13,000 for a simple product plug, to more than pounds 100,000 for a completely customised game. 'We are much more tightly targeted that other advertising media: James Pond 2 for instance sold 750,000 and reached 40 per cent of five to 14-year-olds. Users are turning from couch potatoes to couch commandos. Increasingly they won't want to see television adverts,' he said.

James Pond 2 was sponsored by Penguin, the chocolate biscuit. 'Our product was becoming a little bit unexciting, a bit staid. Getting involved in the game gave Penguin a bit of street cred,' according to Martin Ogden, Penguin's marketing manager.

James Pond 2 could hardly be described as a subtle plug. As well as showing logos, one entire level is given over to saving lovable Penguins. This type of product placement is not unique in mass-market games: Chupa Chup lollipops are everywhere in million-seller Zool, the Munch Bunch yoghurts star in Pinball Dreams.

Advertisers have found some games designers extremely accommodating. When Coca-Cola sponsored Olympic Gold it was not allowed to use its logo in the computer-generated Barcelona Olympic stadium, so Microtime arranged an advertising blimp to drift across the computer screen during each medal ceremony.

But not every games developer is willing to embrace advertising. Charles Cecil, managing director of Revolution, is in the games charts with the advertisement-free Beneath the Steel Sky. 'We would spoil our games if we had a level full of penguins. I don't think it is possible to do subtle advertising in the games we write, so it would be detrimental to our product,' he said, while admitting that the large sums of money available always tempted him.

Fearful of customer backlash, Electronic Arts has tried to restrict its advertising in Fifa International Soccer. Adidas, the sportswear company, booked the hoardings around the football pitch in the game, but this adds realism, Chris Thompson, European marketing manager, claims.

'We are generally opposed to advertising in our products. The whole idea is to bring realism to them. If we were doing an arcade action title and British Airways offered us pounds 1m to fly one of their planes across the background sky, we would turn that down. If customers are paying up to pounds 60 for a game, they don't want to see an advertisement.'

Electronic Arts is also advertising in 'grown-up' games. The designs of Pringle, the clothes manufacturer, are worn by the animated players in European PGA Tour Golf for example and soon it releases Theme Park - a business simulation branded by a bank.

Mr Bobroff is confident that self-regulation will prevent users being exploited - 'We have turned down approaches from alcohol and tobacco companies' - but sees a growing market. 'We may not be experts in print advertising or TV marketing, but we have put products into 12 number one games. TV is a 1980s way of selling things.'