What if – Microsoft’s acquisition of early in-game ad firm Massive had worked out?

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

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

With the in-game advertising industry back in force, there are some lingering questions about what happened to Massive — and how the landscape of today’s in-game ad industry might be different had Massive and other early players managed to stick it out. 

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 in-game ad companies in the present day is evidence enough of that. Massive’s failure to reach sufficient scale following its acquisition was more a matter of unfortunate timing than the result of any unforced errors on the part of either Massive or Microsoft. “Two major things have happened through the decade-and-some since then,” Ben-dov said. “Online advertising became much more automated to support the scale, and both mobile games and mobile advertising just multiplied. The idea of having brands inside games, whether it’s interstitial ads or in-game, is a much more acceptable form of monetization for game developers and publishers.”

Indeed, both cultural and technological roadblocks stood in the way of Massive’s growth between 2006 and 2010. In those days, misconceptions about gamers’ relationships with brands abounded, and even brands that shamelessly advertise to gamers today were wary of diving into the space as a result. “There has been a huge shift, and now, gaming is considered to be a social thing, a hobby that helps to socialize,” said Natalia Vasilyeva, vp of marketing at the in-game ad company Anzu. “It helped advertisers to realize that they should be part of gaming, as it’s on the way to becoming the new social media.”

From a technology standpoint, the tools and standardization to bring in-game advertisements to scale simply did not exist during the Massive days. “At the time, they were on the supply side, the side of the game developers. There was not much standardization in game engines; right now, you have Unity, you have Unreal, so it’s enabled us to build two integrations and basically support 80 percent of the market,” said Samuel Huber, CEO of the in-game ad company Admix. “Back in the day, the game publishers were building their own engines, and you had to build custom integrations every time you wanted to integrate with a different game or different publisher.”

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

“They had to go and find brands and literally put them into the game. There was no delivery mechanism, no ability to target based on users, or even countries or anything like that,” Huber said. “Basically, the lack of maturity of 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 are relying on programmatic being fairly developed on mobile.”

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

Despite Massive’s closure in 2010, some experts were quick to point out that the company was more of a success than a failure, particularly from its shareholders’ perspective. “For the founding team, it was an unbelievable success for them,” said James Draper, CEO of the in-game advertising firm Bidstack, which formerly employed Massive co-founder Katherine Hays as an strategic advisor. “They were only doing like $1.8 million of actual revenue before the exit — so for them to sell it for $187 million dollars was an unbelievable return.”

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

 A siloed space

If Microsoft’s acquisition of Massive had worked out, it may have inspired other big game developers to add in-game ad firms to their holdings as well. Since Double Fusion had an exclusive partnership with PlayStation, this consolidation could have resulted in each major developer or console having its own in-house in-game ad infrastructure. “Hypothetically, it’s plausible; the consoles have their own paths that they’ve carved out, and their own ways of doing stuff,” said Fran Petruzzelli, CTO at Bidstack. “If you use the mobile market as an example, that hasn’t happened.”

The agencies would have more agency

A successful Massive Incorporated would have convinced advertising agencies to investigate in-game advertising earlier and with more fervor. “Back in 2017-18 and early 2019, there was not a single person in any of the major agency holding groups that was tasked with planning campaigns around gaming,” Draper said. “So if they’d continued, you probably would have seen that there would be big gaming divisions at companies — the industry itself would have evolved, I’ve no doubt about that.”

This future did eventually come to pass, regardless, and the modern agency landscape is filled with gaming-specific concerns, both independent and under the umbrellas of the big-five holding companies. Draper gives partial credit to the COVID-19 pandemic for this evolution — “now you’ve got a captive audience” — but it was only a matter of time before the agency space caught up to the reality of gaming’s popularity. Still, if Massive had been successful in the mid-to-late aughts, this evolution may have happened years earlier.

Bringing in the big dogs

In addition to bringing more agencies into the space, the success of Massive may have convinced other major hardware companies to invest in in-game advertising as well. Microsoft wasn’t the only tech giant to dabble in in-game ads in the past; Sony started its own internal in-game advertising department in 2007, but Darlene Kindler, the executive tapped to lead the effort, left the company only a year later. 

With in-game advertising experiencing a resurgence — and Microsoft getting back into the game — it’s likely that Sony will also re-enter the space to take advantage of the gaming IP it gained in its own recent acquisition of game developer Bungie. But if Massive had succeeded in 2006, major hardware manufacturers like Sony might have gotten more directly involved in in-game advertising years earlier. “Double Fusion continued for a good five to six years after [Massive closed], just by working with PlayStation,” Ben-dov said. “I wasn’t part of the company then, but at one point, their CEO was in Japan, just to keep that relationship going.”

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 a dedicated in-game advertising firm. After all, during its heyday, the company already acted more as an agency than a true tech company, making its name by acting as the glue between brands and developers. 

If Massive had 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 technologically-minded modern-era successors, such as Admix, Bidstack and Anzu, to establish themselves in the space in the years to come. “The bigger they would have grown, the more difficult it would have been to suddenly say, ‘hey, let’s drop the agency,’” Huber said. “If Massive was successful, I don’t see them suddenly becoming a tech company five years down the line.”

Despite Massive’s struggles in the mid-aughts, the emergence of a vibrant and lucrative in-game advertising industry was, in retrospect, more of an inevitability than a question. Even if Massive had succeeded in becoming Microsoft’s in-house in-game advertising arm, it’s likely that today’s in-game ad platforms would still be around in some form — and that there would be more dedicated gaming agencies to help generate demand for those companies’ services.

“The role of gaming has shifted,” Vasilyeva said. “The pandemic brought us even more incentives to play, and it’s come together in one beautiful puzzle.”