As game publishers look to other forms of in-game revenue, Microsoft has closed the doors on a company it acquired to bring dynamic advertisements in video games. Microsoft had reportedly been looking to sell off the company but to no avail. Now it appears it will just completely dissolve Massive and spread out whatever employees it can to the rest of the company.
Massive seemed to have an extremely hot idea and was the leader in in-game ads. But the market never took off the way many were expecting it to. It was difficult to track how or if those ads were reaching consumers, but the general consensus was that it was failing to provide much value to advertisers.
That's despite some claims that gamers liked the ads in sports games because it made them seem more realistic. Massive was also noteworthy during the 2008 presidential elections because the Obama campaign invested into in-game ads, making it appear like a very viable ad source. But the end result was that most advertisers were just too cautious about investing in such a largely untested ad environment. Microsoft will reportedly focus its leftover Massive staff attention of Xbox Live services.
In short, in-game ads have started to die off. Instead, game publishers have turned more to offering downloadable content (DLC) to their games to extend the stream of revenue it earns after the game itself is sold.