As was widely expected and reported by us back in February, Google has completed its purchase of Adscape, the in-game advertising network that finally covers the gaming dimension for Google which Microsoft plugged when it bought Massive in May last year.
The amount paid was not revealed but a figure of $23 million was bandied about in February, which is not a lot for a VC backed start up that had spent four years developing its technology and which only came out of stealth mode last year.
The company doesn’t yet appear to have published any game company wins, but says it’s negotiating on more than a couple, and it has filed for 15 patents in in-game technology and says that it can dynamically place advertising into games that run on consoles, on PCs and on handsets.
Other companies chasing this market apart from Microsoft’s Massive include DoubleFusion and IGA and their future must now look less certain now that both Google and Microsoft are already in the game, so to speak. There is a line of thought that Sony must bring advertising revenues to its numerous developers, and despite constant murmurings on gamers web sites about hating advertising, all research seems to show that gamers like ‘relevant’ advertising in games, so real adverts on street posters, and on the sides of racing tracks and racing cars and product placement such as coke machines in a bar, audio adverts on in-game radios etc’ are all okay.
Sony (or Nintendo) may partner one or many of the existing in-game specialists, or buy one of the remaining operations or may go it alone by designing their own systems.
Microsoft bought first to market Massive Inc, which already delivers advertising into over 70 games, many of them exclusively on the Xbox version of the game, leaving many Sony games yet to be spoken for.
We think that in-game advertising will become the standard over time and that each gaming session will involve the delivery of at least 5 adverts, and with almost 200 million consoles out there, and countless handsets and PC games, that suggests a future market upwards of 1 billion delivered impressions a day once all games adopt one or other technology. And that means it has to become a multi $ billion market in the next five years. Most analysts are still seeing this market in the mere $100 millions.
At some stage Google is almost certain to try the idea of giving away games to drive scale, or selling them way under market value, paid for either entirely or almost entirely by advertising. One way for Google to develop is to pay for games to be developed and them own the advertising spaces on the them and distribute them by releasing them free over the web, from the search engine and associated gaming searches.
One interesting point is that AdScape Media has former Sony Computer Entertainment America and Sega of America president Bernard Stolar acting as the company’s chairman of the board.
Does this mean that negotiations with Sony will be easy or tougher due to Stolar’s presence? A partnership between Sony and Google on in-game advertising would be almost irresistible and damage Microsoft’s considerable lead.
Adscape says that its technology also provides an interactive element, a ‘gateway’ that provides publishers and advertisers a way of getting the player to stop and interact within a game, and not just walk past static or video based advertising.
Adscape says it has built many checks and balances into the technology, including opt-ins and feedback mechanisms, that will help partners judge just how far they can go before offering advertising that interferes too much with the gaming experience.