Why Would Microsoft Buy Massive?

Ever since it was announced that Microsoft may acquire Massive, speculation has run rampant as to what MS is up to. Mmmmm…. speculation. I want in.

Massive has the following: relationships with most major developers and publishers, a solid ad-sales group, and (presumably good) ad-serving technology. Massive’s expertise and insight has some value as well, though it’s difficult to quantify how much.

But wait: Microsoft already has relationships with most major developers and publishers — more, in fact. And Microsoft already has a (bigger, more experienced) ad-sales group; who do you think is populating the pages of MSN? And that leaves technology. How long do you think it would take Microsoft to duplicate Massive’s technology, if it really wanted to? A year? This isn’t rocket science.

So what is Microsoft thinking? I can hazard a few guesses:

  1. They’ve bought into predictions that in-game advertising will grow explosively in the very near future; so explosively, in fact, that it’s worth ~$300M just to participate more fully right now. Certainly a possibility, but I have reservations. Most major advertisers are still in “test the water” mode. It’ll be another two or three years before the in-game ad market really heats up. (And I’d guess that Massive had less than $10M in revenues last year.) And I’m not sure that first mover advantage matters so much… not when Microsoft already has a direct line to advertisers and publishers, and controls the PC and Xbox platforms. Still, perhaps this really is just a straight-forward, “by the numbers” transaction…
  2. They want to do everything possible to support Xbox Live’s growth, and in-game advertising is an important part of that objective. Remember, Microsoft has never really had more than two major arguments for why it will beat Sony this round: 1) “We were first!” 2) “Xbox Live rocks!” Unfortunately, thanks to a shortage of interesting games (and console units), first mover hasn’t helped Xbox tremendously (so far). That leaves Live. In the near term, Microsoft can (theoretically) use Massive to make life easier for developers and advertisers, be it via better integration and/or subsidized services.

To be honest, I’m really struggling to come up with great explanations. What am I missing here?

PS. A friend of mine has suggested another rationale: Microsoft is struggling to meet internal headcount demands, and would rather acquire a strong team than try to build one in the current environment. Rumors, rumors…

11 Responses to Why Would Microsoft Buy Massive?

  1. 3. (It’s more of an extension of 1, but hey, who’s counting) Perhaps buying out Massive cuts out the company that Microsoft views would turn into their primary competitor, and are buying them out preemptively…

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