Microsoft is reportedly working on in-game advertisements for free-to-play games on the Xbox platform that would allow developers to collect revenue from ad space purchased on in-game billboards and displays.
This comes from Business Insider (and spotted by Video Games Chronicle). Sources speaking to Insider said that Microsoft is moving cautiously, with an eye toward increasing developer revenue with in-game integration. The end result might look like the product placement you see in games based off of licensed sports titles, where brands like State Farm expand their sponsorships of leagues and teams to advertise in digital spaces.
Microsoft's apparent plan is to try and balance advertiser needs against player interruptions, and that it's already anticipating negative reactions to such a move. The company also apparently wants to pass on all revenue to developers, and not take its own cut like a traditional ad platform would.
That latter point is especially surprising, given how Meta and other major tech companies have structured their ad tech businesses. The proliferation of social networks as advertising platforms has had negative impacts on both the broader media landscape and produced unpleasant results in the last few American presidential elections.
The new advertising revenue platform would only invite a select group of brands and companies to advertise on Xbox platforms. This would make it look much different than the in-game ad space as currently experienced no mobile devices.
Hostile reaction from players probably isn't the only thing worrying Microsoft, The Federal Trade Comission came out swinging against mobile ad platform TapJoy for "middleman misconduct," and Apple has tightened its advertising market with new privacy rules and systems on iOS.
Meta (née Facebook) tried to dip its toe into this world of advertising last June with VR game Blastion, but quickly did an about-face when player backlash grew too loud.
We've reached out to Microsoft for comment on this story, and will update it when the company responds.
Update: A Microsoft spokesperson responding to our query provided the following statement (the same that it gave to Insider):
“We are always looking for ways to improve the experience for players and developers but we don't have anything further to share," the spokesperson stated.
If you're curious, that statement is pretty dang close to the one the company gave in response to reports that it was developing a "family plan" for Xbox Game Pass. Not confirming—but not denying either.