A “Big” Deal for MSFT?

The Wall Street Journal reported last week (subscription required) that a Microsoft acquisition of gaming ad company Massive was imminent. I know one of the VC investors in Massive, who pointed out that the article was of the “plans to” variety rather than the “has” sort (aka break out the champagne).

Nonetheless, I was keen to hear of the interest in Massive’s gaming ad platform. Though not an area that I’ve invested in to date or worked in before, it’s a space that I’ve been enamored with for a little while. So if you have the next great idea here, please drop me an email 🙂 Seriously though the old approach of hard coding product placement and advertising content in console and PC games is sub-optimal for advertisers, game publishers, and developers alike. A small handful of titles have done this w/ some success historically, among the best examples of which I’m aware is Sony’s Gran Tourismo franchise which has featured auto maker placements for years.

With gaming now predominantly on internet-connected platforms, a much better approach for all parties is possible with a system that dynamically serves ads. Game developers can insert small, standardized bits of code to enable ad insertion. Publishers can more easily monetize titles, even those with a comparatively small installed base which previously may have garnered little if any advertising (e.g. what Google AdSense has done for Joe Blogger or small obscure content sites).

Most importantly it becomes easier for advertisers to reach aggregated audiences. Platforms like this enable ad buying by demographic, time, even geography theoretically in addition to being able to provide more granular impression data. When you consider the fact that the console and PC gaming demographic is one which advertisers are keen to reach (and are having an increasingly difficult time doing so through traditional media channels), the opportunity to broker more and more ad dollars becomes a reality. I have rarely been accused of exceptional foresight or cleverness, but even I can see that the future economics of gaming will involve proportionately less software license fees and more advertising.

At any rate, hats off to you Massive and good luck on closing your deal…

Lee Hower

I’m an investor, entrepreneur, and helper of technology startups. I’m currently a General Partner of NextView Ventures, which focuses on seed stage internet-enabled businesses. I co-founded NextView in 2010 with my partners Rob Go and David Beisel. I started in the VC business as a Principal at Point Judith Capital, an early-stage firm. I joined PJC in 2005 and served as a Principal at the firm through early 2010. During this time I co-led investments in FanIQ, Sittercity, and Multiply and sourced investments in Music Nation and NABsys. Prior to becoming a VC, I was a startup guy myself. I was part of the founding team of LinkedIn, and served as Director of Corporate Development from the company’s inception through our early growth phases. Before that I was an early employee at PayPal, and worked in product management and corporate development roles through the company’s IPO in 2002 and subsequent sale to eBay later that year. I went to college at UPenn and received degrees from both the School of Engineering and Wharton School of Business.