Google’s Next Ad Frontier May Be Inside Videogames
Originally by Nick Wingfield and Kevin J. Delaney of The Wall Street Journal (WSJ.com subscription required)
Google is in talks to acquire closely held Adscape Media, whose technology allows for the delivery of ads over the Internet and in videogames. Google Inc.’s efforts to broker advertisements beyond the Web could soon expand into ads that appear in videogames.
The Mountain View, Calif., company is in talks to acquire Adscape Media Inc., a closely held San Francisco company whose technology allows for the delivery of advertising over the Internet and placement within videogames, according to people familiar with the matter. They added that a deal could be reached as early as next week. While the possible terms of a deal aren’t known, Microsoft Corp. last year acquired Massive Inc., a company that delivers in-game ads, for close to $200 million.
An acquisition of Adscape, if completed, would allow Google to offer the hundreds of thousands of advertisers who currently buy online ads through its system to also buy ads that appear within videogames. The market for delivering ads into games — such as a virtual billboard on a racetrack or a poster in a boxing arena — is still in its infancy, but major games publishers such as Electronic Arts Inc. believe it could be a lucrative business and many are pursuing it aggressively. Sending ads over the Internet is just now becoming more feasible through new game consoles such as Sony Corp.’s PlayStation 3 and Microsoft’s Xbox 360, which are designed to be connected to the Internet.
One person familiar with the matter says Google for months has been discussing with game publishers the prospect of delivering ads over the Internet into the action of their games.
If completed, a deal with Adscape would form part of an ambitious Google effort to broker advertising across many types of media globally. The Internet company, whose 2006 revenue is expected to top $10 billion on the strength of its online-ad sales, currently is testing systems for selling ads in newspapers and on radio, and has said it plans to extend into television ads. People familiar with the matter say it is discussing a possible agreement with CBS Corp. that would include brokering TV and radio advertisements. Both CBS and Google have declined to comment on any talks.
A Google spokesman declined to comment on any talks with Adscape, saying “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.” Adscape Chairman Bernard Stolar said he “has spoken to every major player” about a possible acquisition of Adscape, but there currently is no such deal.
People familiar with the matter say Google had looked at Massive prior to Microsoft’s acquisition of the company. A purchase of Adscape would add a new front to expanding competition between Google and Microsoft, which today stretches from Web search to word processing. Google could look to form an alliance with Microsoft’s archrival in the games console business, Sony.
In-game advertising has attracted an array of contenders, including IGA Worldwide Inc. and Double Fusion Inc. Adscape’s chairman Mr. Stolar is a well-connected veteran of the games business, having previously served as an executive at Sega, Sony’s U.S. games division and Atari, and could help Google form crucial partnerships with publishers.