It also enables Microsoft to deliver dynamic, relevant ads across its online services, beginning with Xbox Live and MSN Games. This will continue through September with rollouts across Microsoft Live and MSN and, eventually, it is believed, all Microsoft platforms.
Meanwhile, the deal provides Massive with access to significant technology resources and 900 MSN ad sales personnel, while increasing the company's reach and scope.
It also sends a very strong message to the marketing community that in-game advertising is a serious medium.
"Many people have said that this finally validates the entire medium," comments Nicholas Longano, president of new media at Massive. "The smart marketers, who were already in the process of looking at in-game advertising, are now paying attention to it.
"When you attract the attention of a giant like Microsoft, I think it does attract the attention of brand marketers across all industries. It allows us to scale a lot more rapidly. As opposed to a small start-up trying to expand slowly from one territory into another, this effectively shoots us up very quickly," he continues.
"If you take a look at the statistics, video games are basically the number one leisure activity around the world. This is now the time to be using the in-game advertising as part of the media mix," adds Longano.
The deal also comes at a vital time for the in-game industry, with Sony's PlayStation3 due to be launched in November to rival Microsoft's Xbox 360, which debuted last year.
Perfect timing
Ed Bartlett, vice-president Europe at IGA Partners, which now claims to be the world's largest independent in-game ad company, says the timing is perfect for marketing companies that want to start using in-game advertising.
"In terms of ad-serving networks, we have been focusing on the PC platform and, because it's omnipresent, there isn't a generation issue like you have with game consoles," says Bartlett.
"There are a number of brands that have been looking to commit to this space for some time, but they have been waiting to see what's going to happen with the next-generation platforms. Microsoft's involvement means it is guaranteed a space on the Xbox 360 through this acquisition," he adds. "Sony has also been very vocal about in-game advertising being a big part of its strategy for Play-Station3. So, from a brand perspective, it's very positive."
The in-game ad market has experienced strong growth over the last year. With audiences spending less time watching TV, and more time online and gaming, marketers are recognising the value of placing ads within game content.
Recent research from the BBC reveals there are 26.5 million gamers in the UK; that's 59 per cent of people in the country aged six- to 65-years-old.
At the time of the acquisition, Microsoft said: "Advertisers are having a tough time connecting with the elusive 18- to 34-year-old male demographic because this group continues to spend less time watching TV and more time playing video games".
It said the acquisition would help the company to offer advertisers a "highly effective" way to reach specific demographics in a "largely untapped market".
Not only does in-game advertising offer new audiences, but also audiences who like ads, according to Nielsen//NetRatings, whose research reveals that most gamers find relevant ads enhances the realism of games. A Dunlop ad on a hoarding within a racing game, for example, can add to, rather than detract from, the experience.
"At a time when marketers are asking 'can I get consumers' time to deliver my message?' this deal gives them opportunities to deliver ads to consumers in a relevant way. "It's a very interesting move by Microsoft," suggests Dan Thwaites, director of digital at Hicklin Slade & Partners, a digital and direct marketing agency whose clients include Honda and the National Lottery.
Ad platform
Speaking at MSN's Strategic Account Summit, Microsoft CEO Steve Ballmer said the company aimed to "evolve Microsoft from a software company into the world's largest, most attractive provider of online media through MSN, Windows Live and adCenter."
But, that was before MSN announced the Massive buy and said it was exploring how to make the acquired firm's technology available on the adCenter ad platform.
Coming on the back of the launch of adCenter, the Massive deal will give Microsoft the opportunity to sell media across its entire platform, beginning with Xbox 360. Ultimately, it creates the potential for agencies to make whole media buys across the Microsoft platforms for their clients.
"This acquisition is a bigger picture for Microsoft. It's not just about in-game advertising - it's really about linking in," says Bartlett.
As competition online heats up, Microsoft is understood to be investing in all its applications to give them greater web functionality.
"Microsoft is trying to 'web-ify' all of its applications and it is starting to build in much more online functionality to provide more value to users," reveals Thwaites.
"I think it is obviously trying to get one up on all the other game competitors by having the world's biggest dynamic-server solution for both advertisers and gamers."
Potentially, users may well see pop-up ads or even sponsored ads appear in the 'Save As' window when they are using Office.
"This move says that Microsoft is taking something very seriously and that means everyone opens their eyes. When Microsoft does something, it always means something," says Leo Ryan, business director at digital and design agency Tonic.
"The general rule is that wherever Microsoft is going, you very quickly follow."
UK IN-GAME ADVERTISING FIGURES AT A GLANCE
- In-game ad market predicted to be worth £370 million in 2010
- 69 per cent or 26.5 million people aged six to 65 in the UK are gamers
- The average age of a UK gamer is 28
- 55 per cent are male and 45 per cent female
- 48 per cent of gamers play at least once a week
- Games typically take between 10 to 200 hours to complete
- A top game will sell about five million copies
- Gamers say relevant ads enhance the experience
Sources: BBC/Nielsen/GamesVision Europe.
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