• by Laurie Sullivan , Staff Writer @lauriesullivan, April 19, 2022

Microsoft in May 2006 announced the acquisition of Massive Inc., a New York-based creator of video game advertising. The idea was to help Microsoft deliver dynamic, relevant ads across Microsoft’s online services, starting with Xbox Live and MSN Games.

Massive’s technology allowed it to dynamically serve brand names on various forms in the game, including billboards, TV screens, soft-drink cans and pizza boxes. Gamers would expect to see these elements in real life to avoid disruption or intrusion to their game.

Microsoft executives, at the time, believed that an ad-funded model would help game developers deliver high-quality games as well as push the creative boundaries to deliver the best gaming experience. It would help publishers offset skyrocketing costs of video game development, keeping game prices affordable and opening the door to free games, free content, tournaments and more.

Then in 2010, Microsoft shuttered Massive. Massive General Manager JJ Richards at the time began looking for another job, and the company's technology and sales team were assigned to other projects.

Richards went on to form his own company, Spontaneous QuirK, as an independent game designer and producer.

Microsoft, apparently, is at it again. The company wants to build a program that will boost Xbox’s limited ad inventory by adding Xbox games where brands can advertise. It also aims to allow more developers to sell ad space. Insider sources expect this capability will go live by the third quarter. 

Xbox allows limited forms of advertising, but Microsoft has been working for years to bring back other advertising options in games.

Advertisers today can buy ads on the Xbox dashboard through Yahoo, and they can buy in-game ads on certain games through Anzu. This move, if it materializes, will provide many more options for developers. 

The question is whether Microsoft can make it work this time around.

“Under different leadership, Microsoft’s entry into in-game display advertising would have signaled yet another ‘un-coolly late to the party’ move,” stated Alistair Goodman, CEO of Ericsson Emodo.

The move would also add additional first-party data.

“They have all the pieces in place -- proprietary first-party data, the programmatic ad marketplace Xandr, and a big head start over Facebook on the metaverse with the Xbox community,” he explained.

Microsoft in December 2021 acquired AT&T’s programmatic ad-tech unit Xandr. The goal was to improve advertising results through the first-party data-buying platform Xandr InvestOpens, as well as strengthening monetization for publishers through Xandr MonetizeOpens, which includes a video solution; increase advertiser and publisher value on the Microsoft Audience Network; enhance retail media with Promote; and enable marketer to reach consumers across the open web through the Microsoft Customer Experience Platform.

The new program could open Xbox to more advertisers wanting to message people in games, according to the report, because it will provide tools any participating game developer can use to sell ads.

Let’s also not forget about Microsoft’s intent to acquire Activision Blizzard in January 2022 for $68.7 billion in an all-cash deal that would add all blockbuster game franchises including "Call of Duty" and "World of Warcraft" to an already impressive lineup that includes "Minecraft."

The deal is getting held up by a group of Senate Democrats, who are urging the Federal Trade Commission to scrutinize Microsoft’s proposed acquisition.

Activision shares have been trading at a substantial discount to Microsoft’s offer price, largely because of worries about regulatory approval for the deal. Traders seemed unsurprised by the senators’ request, with shares of the videogame publisher little moved in Thursday trading.

Two of Activision Blizzard shareholders in February filed lawsuits against the game publisher.