EA Signs with Microsoft for In-Game Ads

Microsoft has beaten a rival bid from Internet search giant Google to provide advertisements inside upcoming Electronic Arts (EA) video games that run via the LIVE network on the Xbox 360 game console and Windows-based PCs. EA is the largest maker of games on the planet and is responsible for such game franchises as Madden Football, Tiger Woods Golf, NHL Hockey, and NASCAR Racing.

The Microsoft deal is big for two reasons. First, that the company was able to outperform market leader Google here is somewhat surprising. Second, this deal encompasses the entire line of EA titles, which include some of the best-selling games on the planet, many of which are updated every year. "It's a network play," says Cory Van Arsdale, chief executive of Massive, the in-game advertising company Microsoft purchased in 2006. Google purchased a similar company, Adscape, in March.

While in-game advertising has yet to generate significant revenues, that's expected to change in the coming years as game makers and advertisers find innovative new ways to put advertisements and other product placements inside games. Worth over $30 billion annually, the game industry is more lucrative even then the movie industry, and top tier games now cost an average of $20 million each to create.

EA says that the deal with Microsoft only covers LIVE-enabled games because Microsoft's online game service is so pervasive and sophisticated. Console makers Nintendo and Sony offer much more rudimentary services, and EA says that those companies exert more control over the services, making a similar deal with them more difficult. Last week, Microsoft video game chief Peter Moore left Microsoft to take charge of EA's sports games franchises. This deal is apparently coincidental to Moore's hiring.