What if – Microsoft’s acquisition of the first in-game advertising company Massive had worked?

Microsoft has framed its Acquisition of $75 billion from Activision Blizzard in a bid for the metaversewith Phil Spencer, CEO of Xbox Speak the company’s plans to build on its newfound wealth of gaming intellectual property.

Perhaps more concretely, however, the acquisition could pave the way for advertising investments. Activision Blizzard comes with its own in-game advertising company, Activision Blizzard Mediawhich means that Microsoft is now equipped with both a host of virtual worlds and tools to help brands get active in them.

This isn’t the first time Microsoft has bought an in-game advertising company. In 2006, Microsoft acquired the first in-game advertising company Massive Incorporated for hundreds of millions of dollars, only for the company to fold. in 2010.

“In short, it was too soon,” said Guy Ben-dov, the co-founder of Double Fusion, one of Massive’s contemporaries in the early game’s advertising space.

With the in-game advertising industry making a comeback, there remain lingering questions about what happened to Massive – and how the landscape of today’s in-game advertising industry Today might be different if Massive and other early players had managed to hold on.

So what happened?

The concept behind Massive – connecting brands with game developers to create in-game ads – was and is a good idea. The proliferation of advertising companies in games these days is proof enough of this. Massive’s inability to achieve sufficient scale after its acquisition was more a matter of unfortunate timing than the result of unforced errors on the part of Massive or Microsoft. “Two major things happened in the decade and a few since then,” Ben-dov said. “Online advertising has become much more automated to support scale, and mobile games and mobile advertising have proliferated. The idea of ​​having brands in games, whether it’s ads interstitial or in-game, is a much more acceptable form of monetization for game developers and publishers.”

Indeed, cultural and technological hurdles stood in the way of Massive’s growth between 2006 and 2010. At that time, misconceptions about gamers’ relationships with brands abounded, and even the brands that today are shamelessly doing advertising players were hesitant to dive into space as a result. “There’s been a huge shift, and now gaming is seen as a social thing, a hobby that helps socialize,” said Natalia Vasilyeva, vice president of marketing at in-game advertising company Anzu. “It helped advertisers realize they should be part of the game because it’s fast becoming the new social medium.”

From a technology perspective, the tools and standardization to scale in-game ads simply didn’t exist in the days of Massive. “At the time, they were on the supply side, on the game developer side. There wasn’t much standardization in game engines; right now you have Unity, you have Unreal, so it’s allowed us to build two integrations and support 80% of the market,” said Samuel Huber, CEO of in-game advertising company Admix. “Back then, game publishers were building their own engines, and you had to build custom integrations every time you wanted to integrate a different game or a different publisher.”

Massive was also crippled by the lack of programmatic ad buying in 2006.

“They had to go get brands and literally put them in the game. There was no delivery mechanism, no ability to target based on users, or even countries or anything like that,” said Huber. “Basically, the lack of maturity in the market, both on the demand side and the supply side, prevented them from running a tech company – they had to be an agency, whereas with us we relied on Unity and Unreal, and we rely on fairly developed programmatic on mobile.

The deal with Microsoft may also have contributed to Massive’s supply issues. Following the acquisition, Massive worked almost exclusively with Xbox titles, while PlayStation had an exclusive deal with competing in-game advertising company Double Fusion. “We split, exclusively, a market that just wasn’t big enough,” Ben-dov said. “Because an advertiser doesn’t really care who the publisher and platform is, they want to be inside the games or inside the genre. The split here was probably something that really put the market on hold.

Despite Massive’s closure in 2010, some pundits were quick to point out that the company was more of a success than a failure, especially from the perspective of its shareholders. “For the founding team, this was an incredible success for them,” said James Draper, CEO of in-game advertising company Bidstack, which previously employed Massive co-founder Katherine Hays as a strategic advisor. “They were only making $1.8 million in actual revenue before release – so for them to sell it for $187 million was an incredible return.”

Given the cultural and technological circumstances in play at the time, it’s unlikely that an in-game advertising company could have taken off in the mid-1990s. What if they had? What would the gaming advertising landscape look like if Massive had managed to survive and thrive in those early years?

A closed space

Had Microsoft’s acquisition of Massive worked, it might have inspired other major game developers to add in-game advertising companies to their holdings as well. Since Double Fusion had an exclusive partnership with PlayStation, this consolidation could have allowed each major developer or console to have their own in-game ad infrastructure. “Hypothetically, that’s plausible; consoles have their own paths they’ve made and their own ways of doing things,” said Fran Petruzzelli, CTO at Bidstack. “If you use the mobile market as an example, it didn’t happen.”

Agencies would have more agency

A successful Massive Incorporated would have convinced ad agencies to investigate in-game advertising sooner and more fervently. “In 2017-18 and early 2019, there wasn’t a single person in any of the major agency holding groups tasked with planning campaigns around the game,” Draper said. “So if they had continued, you probably would have seen that there would be big gaming divisions within the companies – the industry itself would have moved on, I have no doubt.”

Either way, that future has finally come to fruition, and the modern agency landscape is filled with gambling-specific concerns, both independent and under the umbrella of the big five holding companies. Draper gives partial credit to the COVID-19 pandemic for this development – “now you have a captive audience” – but it was only a matter of time before the agency space caught up with the reality of the popularity of the game. Yet, if Massive had been successful in the mid to late years, this evolution could have happened years earlier.

Bring in the big dogs

In addition to attracting more agencies to the space, Massive’s success may have convinced other major hardware companies to also invest in in-game advertising. Microsoft wasn’t the only tech giant to dabble in in-game ads in the past; sony started his own in-game advertising department in 2007, but Darlene Kindler, the executive hired to lead the effort, left the company only a year later.

With the resurgence of in-game advertising – and Microsoft’s return to gaming – it’s likely that Sony will also re-enter the space to take advantage of the gaming IP it has acquired. recent acquisition from game developer Bungie. But if Massive had succeeded in 2006, major hardware makers like Sony might have been more directly involved in in-game advertising years earlier. “Double Fusion continued for five to six years after [Massive closed], just by working with PlayStation,” Ben-dov said. “I wasn’t part of the company at the time, but at one point their CEO was in Japan, just to maintain that relationship.”

A massive evolution

If Massive had made it to the present day, perhaps the most likely outcome is that it would have survived as an agency, not as a dedicated gaming ad agency. After all, in its heyday, the company was already acting more like an agency than a true technology company, making a name for itself by acting as the glue between brands and developers.

Had Massive continued down this path, it could have provided a model for other gaming-specific agencies to follow in the future – and left the door open for its more tech-focused modern-era successors, such as Admix, Bidstack and Anzu, to establish themselves in the space in the years to come. “The older they got, the harder it would have been to suddenly say, ‘hey, let’s ditch the agency,’” Huber said. “If Massive was successful, I don’t see them suddenly becoming a tech company five years from now.”

Despite Massive’s struggles in the mid-2000s, the emergence of a vibrant and lucrative in-game advertising industry was, in retrospect, more fate than question. Even if Massive had succeeded in becoming Microsoft’s in-house in-game advertising arm, it’s likely that today’s in-game advertising platforms would still be around in one form or another – and there would be more dedicated gaming agencies to help generate demand for these businesses. ‘ services.

“The role of the game has changed,” Vasilyeva said. “The pandemic has given us even more incentive to play, and it all came together in a beautiful puzzle.”

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