Microsoft to Shutter Massive Inc.

http://www.mediaweek.com/mw/content_display/news/digital-downloads/gaming/e3i09837ee3d3a16fac687abd46bb6219c3
Looks like Microsoft has a Massive failure on its hands.

The software giant will shutter its in-game advertising unit Massive Inc. before the end of this month, according to sources close to the company. Insiders at Microsoft said that Massive general manager JJ Richards has been seeking another job, while members of Massive’s technology and sales team are gradually being assigned to other projects.

Microsoft had been seeking a buyer for Massive over the past few months, per sources. The company is said to have even approached rival in-game ad vendor Double Fusion, seeking a high six-figure or low seven-figure deal, as well as several other companies in the gaming space. When Microsoft acquired Massive in 2006, the price the software giant paid was estimated to be between $200 million and $400 million. At the time of the acquisition, the exuberance for dynamic in-game advertising was at its peak; former Massive CEO Mitch Davis had predicted a $2 billion market by this year, a level the market never approached. Since then, Microsoft’s gamer-aimed subscription service Xbox Live has taken off—it now reaches 25 million users globally.

Xbox Live—an entertainment hub where gamers can chat, play games and watch movies—is considered a much more attractive advertising option for brands. Plus, Microsoft keeps all ad revenue it earns from Xbox Live, while it must share Massive’s ad revenue with game publishers—publishers who are often more interested in selling hit games than selling ads. Yet Massive had been on a hot streak several years ago, as the company lined up deals to deliver ads within some of the biggest video games on the market, such as Guitar Hero and Madden Football. But earlier this year Electronic Arts, publisher of some of the world's most popular sports and racing games, elected to pull its in-game ad business in-house, which resulted in Massive losing a large chunk of its premiere inventory.

Plus, according to sources, Massive’s ad sales efforts were never fully integrated within the Xbox team. In fact, at the time of the acquisition, several Xbox executives were said to be against the deal, but ex-Microsoft executive Cory Van Arsdale and other members of the company’s business development team had pushed hard to buy Massive, citing the fast-growing interest in the gaming space among brands.Microsoft officials declined to comment for this story.