Microsoft munches Massive Inc.
by Vladimir Cole 
{ Apr 26th 2006 at 12:16AM }
Just when you thought Microsoft could get no more massive, The Wall Street Journal reports that Microsoft is
acquiring New York-based video game advertising company Massive Inc. for between $200 million and $400 million.
We're not sure what took the Journal so long. We totally saw this one coming, like, four months ago.
What's that sound? It's a cash register ringing up revenue stream #17 for Microsoft's growing gaming business.
Don't remember the others? Here's a refresher on just the Xbox-related streams: (1) Xbox Live subscriptions; (2) royalties from Xbox Live Arcade titles (direct digital distribution 4TW); (3) Xbox Live sponsored weekends; (4) Peripherals; (5) That "artist of the month" music video distribution deal that we've never bothered to write about but that you can be sure Microsoft is getting paid handsomely for; (6) royalties on every Xbox 360 game sold; (7) direct revenues from first-party game sales; (8) Movie trailers (surely, Microsoft's not paying movie theaters to place trailers on the 360); (9) DirecTV on the 360; (10) Xbox gear; (11) game-to-movie royalties; (12) Sound tracks; (13) books based on games; (14) digital tchotchkes purchased with Microsoft points; (15) royalties on content packs and episodic game content (16) sales of the consoles themselves...
We're not sure what took the Journal so long. We totally saw this one coming, like, four months ago.
What's that sound? It's a cash register ringing up revenue stream #17 for Microsoft's growing gaming business.
Don't remember the others? Here's a refresher on just the Xbox-related streams: (1) Xbox Live subscriptions; (2) royalties from Xbox Live Arcade titles (direct digital distribution 4TW); (3) Xbox Live sponsored weekends; (4) Peripherals; (5) That "artist of the month" music video distribution deal that we've never bothered to write about but that you can be sure Microsoft is getting paid handsomely for; (6) royalties on every Xbox 360 game sold; (7) direct revenues from first-party game sales; (8) Movie trailers (surely, Microsoft's not paying movie theaters to place trailers on the 360); (9) DirecTV on the 360; (10) Xbox gear; (11) game-to-movie royalties; (12) Sound tracks; (13) books based on games; (14) digital tchotchkes purchased with Microsoft points; (15) royalties on content packs and episodic game content (16) sales of the consoles themselves...
Reader Comments (Page 1 of 1)
Todd Rabanus @ Apr 26th 2006 12:35AM
why is it that joystiq thinks only microsoft is doing this? hello sony is trying to totally make the whole world switch from dvd to their proprietary blu-ray format. I'm sick of people acting like microsoft is a bunch of money hungry pigs. If you can't handle capitalism move to china you damn communist. Vladimir nobody like a hater. play on microsoft. Thats why bill gates is the richest man alive and we're not. because he's a player! Don't hate the game just cause you can't play. player status
Josh Warner @ Apr 26th 2006 12:44AM
I'd like to see some good come out of this. And here is what I mean: Xbox Live Silver has all the gaming functionality of Gold but now has ads. This would get huge numbers of people onto Live (myself included) that right now aren't interested in paying monthly fees. This isn't unreasonable; mostly because the game hosting takes place on individual Xboxes and not on MS servers.
However, the free service probably wouldn't have HD trailers and perhaps a more limited demo selection. That's because these are NOT distributed but must be hosted on MS servers, costing more.
If anyone from MS is listening, I think I'm not the only one that would really go for this. It would also boost your "online" percentages by a huge margin which can't hurt given that Sony and Nintendo are now both looking to create online analogues for Live.
In contrast, adding ads to the already for-pay Gold while not adding functionality to Silver will probably alienate those who have had ad-free Gold services for several years ... you choose.
shiftup @ Apr 26th 2006 12:57AM
That's quite an aggressive point of view Todd. Were you thinking that before you gave Bill head? cause you won't feel the same after he makes you bend over for XBox live.
Crummy @ Apr 26th 2006 1:20AM
Not so sure about #16 there... ;)
bv @ Apr 26th 2006 1:22AM
Chill out Todd Rabanus, Vladimir isn't "hating" on Microsoft. If anything, he's commending Microsoft's dedication to its gaming sector.
I have one critique i want to mention on revenue stream 16. I thought Microsoft was selling it's console at a loss while capitalizing on live subscriptions, micropayments, and of course, ridiculously expensive 60 dollar games.
Z @ Apr 26th 2006 1:23AM
Xbox Live Gold already has ads...
Notice the banners on the dashboard menus?
Notice the movie trailers for download?
Notice advertisements inside many games already?
How much more intrusive can you get? And why should I pay $50/yr for this?
And about Micrsoft hosting files... it costs them next to nothing for 1GB of bandwidth, by that I mean 0.000001, and I'll bet you they get around $0.50 per download.
In a way, the Xbox 360 is also Microsoft's trojan horse to get inside your living room. Sales of Media Center PCs haven't been too great, so the Xbox 360 is taking its place in Microsoft's plan to dominate every device in the hame. The 360 isn't really a game console at heart, that's just the disguise to sell units.
Smack042 @ Apr 26th 2006 2:07AM
Please.....stop......Microsoft.....
phipscube @ Apr 26th 2006 2:18AM
Whats you point Joystiq? most of that is NORMAL for Nintendo and Sony too... and the rest is a mix of random and rumoured.
Microsoft are doing some good stuff and we all know, you dont have to PUSH it in our faces on the news pages.
Stop with the Brown nosing, ta.
ill trooper @ Apr 26th 2006 3:06AM
Todd you don't know what you're talking about. Get your head right. You won't know why I'm saying this for a decade or more. Bill Gates isn't chunking up dueces, he's snitching on them real playboys, for really. Plus keep the name 'Blue Ray' out ya mouth Todd, you talking silly.
Huh? Sorry man, just playing... listening to too much drrty drrty south tonight.
Anyway... Have fun when some in-game voice-over suggests "taking down the terrorist from the safety of the Subway Brand billboard, don't bother with the Quiznos billboard, its already shot full of holes and offers no cover..."
This in-game advertising is going to get BAD, and if it doesn't bother you yet, it will in a while... 'Need for Speed Underground 2,' anyone?
Ectarth @ Apr 26th 2006 4:03AM
OMFG, #1, I'm wondering if you really know something about China and, by the way, something about comunism. Well, do you know something about any country out the borders of the USA?
Do you know... something?
spoo @ Apr 26th 2006 4:14AM
Z how much do you pay for cable a year to see a hell of a lot of ads (I pay $70)? How much do you pay for broadband to see a hell of a lot of ads (I pay $40)? How much do you pay to go see a movie to see a hell of a lot of ads (I pay $17 for 2)? How much does it cost to go to a sports game to see ads?
Compare all of this to $4 a month. Now do you think Live is expensive.
Gareth @ Apr 26th 2006 4:33AM
#2: Your idea won't work. The reason people buy the Gold service is for online gaming - not for trailers or demos. If they gave away online gaming on the Silver account but displayed a couple of ads here and there, no-one would bother getting the Gold one.
Nice try though.
ozymandias @ Apr 26th 2006 6:48AM
Hopefully if live goes ad supported, we will still have the option to pay to keep it add free. The last thing I need is spyware on my console.
Dt7 @ Apr 26th 2006 7:53AM
Newsflash! Microsoft has a lot of money and wants more!
They're not going to try and take over the world or anything, they're trying to sell their merchandise and make more money to make more merchandise to sell and expand into other markets.
Who gives a crap if the 360 is just a way for MS to get into your living room, of course it bloody is, it's a games console!
Banners saying 'Call of Duty 2 Demo Out Now' on the Marketplace are hardly advertisments, more like notifications, otherwise how would Mr Average Joe know that the CoD2 demo is out?!
The point is Microsoft made a great product, have the best online service available anywhere, and I basically think that the mere £40 a year I'm paying to keep my XBL Gold account going is more than worth it!
The1 @ Apr 26th 2006 9:31AM
$50 dollars a year is nothing to pay for XBL. I would pay $100 dollars a year if MS had dedicated servers that allowed games with 64 players at a time.
Saluki @ Apr 26th 2006 10:23AM
Uhh, Microsoft isn't making any money on all of these revenue streams. The gaming divison has been nothing but a black hole for the shareholder's money. As a gamer I'm happy they are pumping money in, but as a shareholder let's just say I'm not thrilled
MaX PL and the 360 r4pe Tr4iN @ Apr 26th 2006 11:42AM
#2
I dont know what youre trying to pull, but youre not convincing anyone.
$50 bucks a year is like spending that much on some bad Playstation game like Tekken which you'll play for a few weeks and then stop. Xbox Live lasts you a year, and you pay for the service. Not servers, but maintenance, upgrades, 24/7 tech support, etc.
MaX PL and the 360 r4pe Tr4iN @ Apr 26th 2006 11:44AM
#5
Vista will have full Media Center functionality. Then it will have full control of your living room.
Tom @ Apr 26th 2006 11:46AM
#14 you took the words right out of my mouth. Anyone who complains about 50 bucks a year is just being cheap. If you dont want to play online fine, but $50 a year is not that much.
vc @ Apr 26th 2006 2:19PM
Saluki: Microsoft is absolutely earning revenues on all of those streams, they're just not earning enough revenue to turn a profit. Let's not confuse revenue and profit!
As a shareholder, you SHOULD be happy that the company's working on so many different ways to turn the Xbox into a profit center.
Saluki @ Apr 26th 2006 4:04PM
VC, I'm an accountant by education and work as a financial analyst. The game division has over half a billion dollars of losses plus opportunity cost to overcome before anybody claims any victory. Many shareholders wanted them to drop the entire line after all the money they blew on the Xbox.
vc @ Apr 26th 2006 4:09PM
"Many shareholders wanted them to drop the entire line after all the money they blew on the Xbox."
How short-sighted that would have been! A company that does what shareholders want is being managed for certain doom. Managers need to add value by taking on long-term projects that may be negative NPV in the short run, but pay off in spades over the long run.
Nobody's claiming victory, but $500 million bucks is friggin' chump change when you're talking about the battle for the LIVING ROOM. Microsoft paid out the largest corporate dividend EVER ($32 billion) in 2004 because it couldn't find enough projects to invest in. That's the nightmare scenario that should worry shareholders, not a few bets placed on technology that could help the company break into the last open frontier.