Microsoft is developing an in-game advertising system for free games

In short: Microsoft is actively working on new tools to allow developers to integrate and sell advertising space in games. While advertising in mobile games isn’t new, the offer would specifically target console (and potentially PC) gamers in free-to-play games. Microsoft does not intend to take a cut of the new ad revenue, but instead focuses on building a strong network and platform to provide more opportunities for free game developers to connect. with potential advertisers.

Sources close to Microsoft recently told Business Insider that the new feature provide a marketplace for ad placement companies to work closely with developers to secure space and place ads in free titles. The move would expand Xbox’s in-game advertising model, historically limited to Xbox Dashboard ads or specialty ads purchased and placed by third parties.

Despite its intention to increase advertising, Microsoft says it understands potential user concerns. It will look for ways to integrate the new advertising model without annoying users with overly intrusive ads.

The concept of in-game advertising is certainly nothing new. Some of the earliest in-game advertisements date back to the game’s humble beginnings in the late 1970s and early 1980s. The practice has since evolved away from the black-and-white text of Adventureland to more direct approaches and visually appealing to engage hard-to-reach audiences. Today’s advertising model has evolved into a much more sophisticated system that doesn’t rely solely on product-centric headlines or static images.

In addition to technical advancements, in-game advertising practices have seen a significant increase due to pandemic-related games becoming a go-to social function for millions of people around the world. Users usually have the option of earning in-game currency or items in exchange for watching advertising videos or clicking on specific advertising links. Some platforms, such as playerWON, provide convenient and sometimes intrusive in-game advertisements or advertisements. Others, such as Anzu, are to attempt take a more subtle and less intrusive approach by selling advertising space such as billboards and scenery in the game environment.

The Redmond-based tech giant’s recent moves support speculation that the company is interested in developing an expansive advertising network and platform. Activision’s recent acquisition steps add an off-the-shelf ad network to the company’s portfolio. The company also has acquired Former AT&T ad market Xandr in December of last year.

Sources close to Business Insider expect the new ad capacity to be live and available by Q3 2022. Microsoft has not officially confirmed or denied the plans, saying, “We are still looking at ways to ‘improve the experience for players and developers, but we don’t have anything else to share.’

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