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Thursday, April 27, 2006 - Page updated at 12:00 AM

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Microsoft reportedly buying in-game advertiser Massive

Seattle Times technology reporter

Microsoft Chief Executive Steve Ballmer told advertisers last month that for years, the company's "bedrock" had been "getting after developers to extend our platform."

"Developers! Developers! Developers!" he famously chanted in 2001.

"But not any more, baby," Ballmer yelled at a conference in Miami last month, fists pumping. "It's Advertisers! Advertisers! Advertisers!"

The software giant could be taking another major step in that direction with the acquisition of Massive, a 2-year-old New York company that places advertisements in video games. The Wall Street Journal, citing "people familiar with the situation," reported Wednesday that Microsoft will announce the deal, worth $200 million to $400 million, next week.

A Microsoft spokesman said the company doesn't comment on acquisition rumors, and Massive did not return calls.

In-game ads range from static billboards to contextual elements such as branded cellphones that game characters use. Attractive to advertisers, this channel is poised to grow dramatically with the proliferation of online video gaming on computers and networks like Xbox Live.

"Big advertisers are looking at it as a way to capture some of the young audience that is leaving television and other more traditional types of media," said Paul Nastu, an editor at MediaBuyerPlanner.com, a news site for ad-placement professionals.

Michael Goodman, a media and entertainment strategy analyst with the Yankee Group, said in-game ad revenues were $56.5 million last year and are expected to more than triple this year. He forecasts a market worth more than $730 million by the end of this decade. Other sources put that figure at $3 billion-plus.

Goodman said Microsoft would get "the pick of the litter" among in-game ad companies with Massive, which he called the market leader.

It's no surprise that Microsoft wants to execute its own in-game ad service. The question was whether it would acquire or build its own.

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"Historically, Microsoft would have built this kind of plumbing themselves in a heartbeat," said Alex St. John, who worked on game strategy at Microsoft in the mid-1990s, and now heads Redmond online game publisher WildTangent. St. John speculated that Massive may have intellectual property Microsoft wants.

In-game advertising could fit nicely with Microsoft's effort to develop adCenter, a targeted advertising service to rival competitors such as Google and Yahoo!

When adCenter was first announced, it was viewed as a search-advertising technology, but now it's emerging as more, said Jeff Lanctot, vice president and general manager of Avenue A | Razorfish, the marketing agency that organized the conference where Ballmer spoke last month.

"It's across multiple platforms," he said, adding that that's attractive to advertisers.

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com

Researcher Miyoko Wolf contributed to this report.

Copyright © 2006 The Seattle Times Company

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