The FTC May Have Opened the Door For More Ads in Games

Microsoft-Activision-Blizzard could make for a powerful combo

It looks like Microsoft is going to finally be able to buy Activision/Blizzard.

Does that mean in-game advertising is finally about to boom?

To state the obvious, Microsoft’s primary motivation to purchase a massive video game publisher was most certainly not advertising-related. It would appear that the deal is much more about finding synergies between Xbox and Activision/Blizzard - even if the swing and miss FTC was strangely focused on other perceived conflicts.

Despite a renewed hype cycle over the last few years, the ad dollars going toward video games have been fairly anemic. No one doubts that gaming represents a massive and still growing audience, but many a brand has seemed puzzled on how best to crack it - do I run ads during games, on YouTube gaming channels, on Twitch?

There are signs of promise. ICYMI right before the 4th of July, the Israeli startup Anzu announced a $48 million series B round a few weeks ago, bringing its total funding to $65 million. Investors must see some sights of real acceleration there - or at least untapped potential - because when it comes to sizing-up the in-game ad market, the numbers from analyst firms are all over the place.

Microsoft could change things - quickly. Not only does Activision Blizzard have an existing team dedicated to bringing brands into games, but as part of its efforts to appease regulators, the company has agreed to distribute its titles such as “Call of Duty” everywhere - including the Nintendo Switch and mobile phones.

The idea has been to send a message to the FTC that Microsoft isn’t looking to build some kind of gaming monopoly via the Xbox - that Activision will still be in business with everyone. Which could be a headache, or provide the newly-merged team with an opportunity.

If you have to distribute games like “Duty” to all platforms, why not also experiment more with ad-supported models? The company already has released a free, Fortnite-esque version of Duty. Could we see free-to-play games released specifically to be ad funded once Microsoft is in charge?

Microsoft can certainly leverage its growing ad clout here. The more it can bring to brands packages that include Xbox ads, MSN, Xandr, Bing etc. the more it can ‘normalize’ in-game spending (The same goes for NBCU, which has a partnership with Anzu).

Still, the real push to make in-game advertising a big deal has to come from developers. So far we just haven’t seen that at a large scale outside of mobile (where consumer spending is declining). Perhaps this changes when an ad company- even a somewhat reluctant one - is running the show.