Microsoft plans to pay between $200 and $400 million for the purchase of Massive Inc., a privately held company that places ads in video games, according to a
Wall Street Journal report published on Wednesday.
A Microsoft spokeswoman said the story is based on rumor and declined comment. A spokeswoman for Massive also declined comment.
Clients of Massive, a two-year-old company which uses always-on Internet connections to place real-time ads in games, include Coca-Cola, Honda Motor. and other advertisers that are spending more and more money to advertise in video games.
In-game advertising offers the possibility to reconnect with the young male audience, which has been abandoning television and other traditional media in favor of the Internet and video games.
In an interview with Reuters in December, Massive Chief Executive Mitchell Davis said forecasts from a variety of industry sources call for real-time game advertising revenue to grow into a $3 billion-plus global market by 2010.
The new generation of in-game ads offered by Massive and rivals like Double Fusion allow advertisers to run campaigns for specific periods of time, rather than buying a slot that is hard-coded into a game. That means billboards and storefronts in games can change over time to more closely resemble the real world that some games attempt to recreate.
Double Fusion board member and spokesman Jonathan Epstein told Reuters that the deal would "confirm the inevitability of the in-game ad market" and set a price benchmark for similar acquisitions that may come in the future.
Video game publishers, who are struggling with rising game development costs, hope that in-game advertising will come to represent a meaningful source of revenue.
Massive's advertising partners include game publishers THQ Inc., Vivendi Universal's games unit, Take-Two Interactive Software Inc.'s 2K Sports, NCsoft Corp. and Konami Corp.