Following earlier reports
that Massive, Microsoft's in-game advertising unit, was set to close, the company has confirmed it will wind down its third-party ad business before the end of the year.
Microsoft originally acquired the in-game ad firm for a reported $200 to $400 million in 2006
, at the height of excitement
over the new revenue stream for game makers. Last year the company laid off 28 percent of Massive's staff
A spokesperson for the company said: "Massive technology will be redeployed to our first party ad business, focusing initially on gaming and eventually expanding to other Microsoft opportunities."
"Central to this announcement is our decision to work closely with the Interactive Entertainment Business (IEB) at Microsoft to continue developing and expanding the Massive technology."
While Microsoft plans to "sunset the Massive brand name at year-end", the company pledged to continue developing and expanding the Massive technology to "meet the needs of our first-party gaming advertisers on owned and operated properties like Xbox LIVE and MSN Games".
The consolidation, according to the spokesperson: "represents a tremendous opportunity for Microsoft to further elevate Xbox LIVE advertising as the singular Microsoft in-game and around game advertising platform for advertisers."
This plan to integrate Massive's work with that of the IEB team appears to confirm speculation that the ad unit's work conflicted with that of Microsoft's Xbox Live team, which sells advertisements directly and doesn't share revenue with publishers.