Call of Duty: WarzoneSource: Activision

What you need to know

  • Per a report from BusinessInsider, Microsoft is building a system for Xbox games.
  • The system would allow specific companies to put ads into free-to-play games.
  • Microsoft is reportedly wary of irritating users and is building a "private marketplace" for this system.

Update, April 20 (12:26 pm ET): Per BusinessInsider, Sony is also planning a similar ad system.

Microsoft may be looking into a new way of providing advertisement services in Xbox titles.

According to a report from BusinessInsider, Microsoft is working on an ad system for Xbox games, expanding its adtech reach and allowing advertisers to display ads within specific games. According to two sources familiar with the plans, this system might, as an example, allow a company to advertise on a billboard within a racing game.

The sources also indicated that this system is meant to be live in the third quarter, and that Microsoft is not interested in taking a cut of the ad revenue right now, with the revenue instead shared between the game developer and the adtech company. The system also seems to be meant specifically for free-to-play games. Microsoft currently allows advertising on the dashboard of consoles like the Xbox Series X|S.

The report also indicates that Microsoft is cautious about building this system, and is wary of irritating players through ads, choosing to build out a "private marketplace" for specific brands to add ads into games without altering the gameplay experience. The ads are also reportedly not based on customer data or behavior research.

The report notes that analysts believe Microsoft's impending acquisition of Activision Blizzard will aid in this pursuit of an building out an Xbox ad network. The deal is worth almost $70 billion and is currently slated to finalize sometime before June 2023.

Update, April 20 (12:26 pm ET) — PlayStation too

According to BusinessInsider, Sony is also planning a similar ad system for PlayStation games. This system, which has been in development for at least 18 months, could reportedly launch by the end of 2022.