Mediaweek is reporting that Microsoft is in the process of shutting down its in-game advertising arm Massive Inc., having failed to find an interested buyer. If the speculative figures are accurate, it’s some loss for even Microsoft to have to swallow. 

Here’s a 2005 interview with Mitch Davis, then Massive Inc. CEO with some very optimistic projections and also the rather amusing implication that in-game advertising, by increasing realism, increases the satisfaction of the gaming experience. 

In 2006 Davis was still projecting well over twice the revenues by 2010 that the Yankee group were forecasting. The latest tentative figures suggests the market may reach $1bn by 2014.

There are plenty of established and emerging digital media business models beyond solely supported by advertising revenue. Perhaps consumers are also less receptive to advertising delivered to them over or via a service they have already paid for.