Online rental service GameFly directly targets gamers
Search giant could be looking at video games as its next frontier

Google, the current force in online advertising, could now be looking to expand its reach into the video game space. According to the Wall Street Journal, Google is in talks to acquire Adscape Media, a company whose technology allows for in-game advertising.

The move by the search giant could be an effort to compete with the software giant. Last year, Microsoft acquired Massive for its technology that allows dynamic delivery of advertisements to gamers in online games.

While Microsoft paid close to $200 million for Massive, Red Herring sources say the Adscape deal may only cost Google a bargain; between $20 million and $30 million USD.

Representatives at Google and Adscape are not commenting on any possible deal, though the search company did not deny its interest in the video game space. “We are always considering new ways to extend Google's advertising program to benefit our users, advertisers and publishers. In-game advertising offers one such possible extension among many others,” said a Google spokesman

Although in-game advertising is still in its infancy, the online capabilities of the new generation of gaming consoles represent a huge opportunity for advertisers. Research firm Yankee Group last year estimated that the in-game advertising market could reach $732 million by 2010.

“Although the in-game advertising market is still relatively untapped, its promising business model will lead to swift market development,” said Yankee Group senior analyst Michael Goodman. “Effectively competing in the interactive gaming market for the video game and advertising communities requires careful attention to the intricacies of the industry.”

Game publishers such as Electronic Arts view in-game advertising as the next big source of revenue, but gamers may see it as the next big annoyance. Those who bought Battlefield 2142 were surprised to learn that the game incorporates technology that tracks certain user information, such as IP address and other information, to aid in the delivery of targeted ads.

IGA, the firm that provides advertising technology to EA’s Battlefield 2142 game and rival to Massive and Adscape, is not surprised to see Google’s interest in the emerging market. “Google and MSN and Yahoo are always looking for different mediums,” said Ed Bartlett, VP publishing for IGA Europe, in a conversation with Next Generation. “There’s been such a marked and rampant decline in effectiveness and eyeballs with traditional media that they’ve had to accelerate, and this is part of that process.”

Bartlett adds, “In-game advertising has suddenly taken off. Our reach this year is going to be in line with a mid-sized T.V. network. We’ve got all these eyeballs that were watching T.V. that are now playing games and they’re in a completely engaging environment. They’re not off making a cup of tea or doing other things, so it’s certainly a very, very interesting space for people who want to be major players in advertising.”

"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer
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