Microsoft expected to buy Massive

Move may trigger in-game advertising chase


Just three week’s ago Faultline said the US in-game advertising networks were so well established that instead of Microsoft and Sony building their own networks, they would do better to buy the existing players.

Microsoft has now moved for market leader Massive Inc, which already delivers advertising into 70 games, many of them exclusively on the Xbox version of the game. So far the deal is at the rumor stage, but we expect this is just while paperwork is worked through and should it go ahead, the rumored price of $200 to $400m gives an idea of how important this market segment is going to be. Faultline happens to believe it will become a $3bn market while other research groups are predicting it to be far smaller at present.

In-game advertising networks rely on an online connection being used with the games console. At game start up, the console issues a request for any new adverts that are supposed to go with the game, and they are sent online.

They used to be simple 10 to 20 kilobyte files of text, audio and graphics, callable from a remote library as the game plays, but back in August Massive added TV style video ads into its gaming system. These can be downloaded in the background, rather than delaying the game start up.

Then as players reach a specific part of the game used for advertising, and this might be an advertising hoarding, the sides of a race track or a TV screen in the gameplay, the advert will begin to play. The system is careful not to put gamers off by intruding on their game time, and surveys have been carried out that support the notion that gamers actually like real ads, because they make the game appear more life like.

When Massive began life in 2004 the entire in-game ad market was just $10m it said. Yankee Group now says that the market will grow by more than five times to reach $732m by 2010 from $56m last year.

So far Massive has had no more than $30m invested in it, with $10m spent in a third round this January. The company reckons that each game will yield between $500,000 to $1m of extra new revenue for each game. With 70 live games over the past two years, and an average revenue generating lifetime of four to five months per game, this suggests that Massive has revenues of no more than $35m, with half of that having to go back to the games publishers it partners with. That would make the rumored valuation between six and 12 times revenues.

Massive has signed up deals with Vivendi Universal Games, UbiSoft, Acclaim, Konami and Legacy Interactive, and the US part of Atari, it told us last year.

It offers advertisers "reach" calculations based on the title's sales and then a percentage of these which are online and a calculation of how many playing hours that games will generate in its first month.

Massive reckons it has four to five months of advertising inventory to sell before people stop playing the game in large numbers, but the company will continue to serve adverts to the games whenever they are played, which will provide a kind of "long tail" for game advertising.

At the moment gamers do not universally register their games online, and this can reduce the amount of demographics that is available to advertisers. Usually they try to get players to register the first time they use them, but this is notoriously unreliable. This means that there is very little guidance for the types of advertising that can be sent in-game.

However, if Microsoft goes ahead and buys Massive, it can take its device registration details and mix them with the advertising demographics to considerably improve this small chink in in-game advertising.

After Massive, both Double Fusion and IGA are also compelling acquisition targets, and we would expect that Sony might at some stage move to either acquire or build its own service, perhaps not a US based service though, and that Google, the doyen advertising based services, will be immediately on the scent of some form of move here.

We suggested previously that Google's way of getting into the gaming business would be to give games away for free, and sell adverts in them. If Microsoft completes his deal, the urgency to enter the game market at Google, and elsewhere, may go up considerably.

Copyright © 2006, Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.


Other stories you might like

  • Prisons transcribe private phone calls with inmates using speech-to-text AI

    Plus: A drug designed by machine learning algorithms to treat liver disease reaches human clinical trials and more

    In brief Prisons around the US are installing AI speech-to-text models to automatically transcribe conversations with inmates during their phone calls.

    A series of contracts and emails from eight different states revealed how Verus, an AI application developed by LEO Technologies and based on a speech-to-text system offered by Amazon, was used to eavesdrop on prisoners’ phone calls.

    In a sales pitch, LEO’s CEO James Sexton told officials working for a jail in Cook County, Illinois, that one of its customers in Calhoun County, Alabama, uses the software to protect prisons from getting sued, according to an investigation by the Thomson Reuters Foundation.

    Continue reading
  • Battlefield 2042: Please don't be the death knell of the franchise, please don't be the death knell of the franchise

    Another terrible launch, but DICE is already working on improvements

    The RPG Greetings, traveller, and welcome back to The Register Plays Games, our monthly gaming column. Since the last edition on New World, we hit level cap and the "endgame". Around this time, item duping exploits became rife and every attempt Amazon Games made to fix it just broke something else. The post-level 60 "watermark" system for gear drops is also infuriating and tedious, but not something we were able to address in the column. So bear these things in mind if you were ever tempted. On that note, it's time to look at another newly released shit show – Battlefield 2042.

    I wanted to love Battlefield 2042, I really did. After the bum note of the first-person shooter (FPS) franchise's return to Second World War theatres with Battlefield V (2018), I stupidly assumed the next entry from EA-owned Swedish developer DICE would be a return to form. I was wrong.

    The multiplayer military FPS market is dominated by two forces: Activision's Call of Duty (COD) series and EA's Battlefield. Fans of each franchise are loyal to the point of zealotry with little crossover between player bases. Here's where I stand: COD jumped the shark with Modern Warfare 2 in 2009. It's flip-flopped from WW2 to present-day combat and back again, tried sci-fi, and even the Battle Royale trend with the free-to-play Call of Duty: Warzone (2020), which has been thoroughly ruined by hackers and developer inaction.

    Continue reading
  • American diplomats' iPhones reportedly compromised by NSO Group intrusion software

    Reuters claims nine State Department employees outside the US had their devices hacked

    The Apple iPhones of at least nine US State Department officials were compromised by an unidentified entity using NSO Group's Pegasus spyware, according to a report published Friday by Reuters.

    NSO Group in an email to The Register said it has blocked an unnamed customers' access to its system upon receiving an inquiry about the incident but has yet to confirm whether its software was involved.

    "Once the inquiry was received, and before any investigation under our compliance policy, we have decided to immediately terminate relevant customers’ access to the system, due to the severity of the allegations," an NSO spokesperson told The Register in an email. "To this point, we haven’t received any information nor the phone numbers, nor any indication that NSO’s tools were used in this case."

    Continue reading

Biting the hand that feeds IT © 1998–2021