Major Video Game Maker To Carry Internet AdsMajor Video Game Maker To Carry Internet Ads

Videogame maker THQ Inc. on Monday said it has agreed to carry in its games ads delivered over the Internet by Massive Inc., a deal that reflects the industry trend towards building an online advertising model for videogames.

The deal is important because THQ, based in Agoura Hills, Calif., is the first major videogame publisher to agree to start carrying Internet-delivered advertising. The game maker, whose popular titles include "SpongeBob SquarePants" and "World Wrestling Entertainment," did not disclose financial details.

New York-based Massive is building an advertising network of videogame makers who build games for the PC and other Internet-connected devices, such as Microsoft Corp.'s Xbox or Sony's PlayStation. The company, which launched in October 2004, says it has partnerships with 29 publishers, and more than 60 advertisers, including Coca-Cola, NBC, Nokia, Panasonic and Paramount Pictures.

"We are excited to team with Massive because we believe their network strategy and sensitivity to game play will deliver value to publishers, advertisers and gamers," Kelly Flock, executive vice president of worldwide publishing at THQ, said in a statement.

In-game advertising has been gaining momentum among publishers as a way to offset the high cost of development of next-generation games, Anita Frazier, analyst for The NPD Group, said.

"With development costs escalating, in-game ads offer publishers another way to make money, outside of pure retail sales," Frazier said.

Videogames offer advertisers the ability to reach mostly males between the ages of 18 and 34, a prime demographic that's difficult to reach because they tend to watch less TV than other age groups. "This is an audience that's very difficult to target, but videogames are a tremendous medium for that audience," Nicholas Longano, chief marketing officer for Massive, said.

Showing ads in games, however, presents a risk to publishers, who could quickly turn off players. To avoid that, ads are shown only where they can blend into the game environment. As a general rule, action games that take place in modern times, or the future, make good candidates, as well as racing and sports games, Longano said.

"You don't expect to see advertising in a Middle Earth setting," Longano said, referring to the world created in the "Lord of the Rings" fantasy books. "It wouldn't make any sense."

Pricing for advertising varies according to the size, angle at which it is shown and the amount of time it's on the screen. Ads are usually sold in 10- or 15-second time slots, and can change continuously, according to the dynamics of the game. A Coca-Cola ad, for example, could be on a billboard in one scene and on a Coke bottle in another.

Full motion video ads can also run where it makes sense, Longano said. An example would be in a game that recreates Times Square in New York.

Under the multi-year deal, THQ is expected to start carrying Internet ads in about 10 percent of its games, increasing the pool over time, Longano said.