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Drink Ovaltine: Microsoft is bringing more advertisements to Xbox Live

While the transformation of video game consoles into multi-entertainment portals has been for the most part welcome—Netflix streaming alone has led more than a few people to cutting their cable subscriptions—it has come with one unsavory side effect: Advertising is now a regular part of console gaming. It was one thing once upon a time to turn on Madden NFL and see a Surge logo in the background of a stadium. These days, though, you can’t turn on your Xbox 360 without having to look at an entire screen of video and image ads for everything from new games to food and deodorant. According to Microsoft, it’s only going to get worse.

Microsoft said this week that NUads, a series of media-rich ads on the Xbox 360 that interrupt users and ask them to answer polling questions, work like a charm at getting people’s attention. The first campaigns started last fall advertising for companies like Toyota and Subway. While ad blindness may prevent Xbox owners from engaging in regular dashboard ads, these got them good. Of those players who saw the ads, 37 percent “engaged” the ad by clicking on it, and 71 percent subsequently participated in the poll that popped up. 97 percent of those people that participated in the poll stuck around to see the results. That’s a lot of eyes-on time for an advertisement, which means Microsoft can convince advertisers to put a whole lot more on Xbox Live.

“When we launched NUads, we redefined the 30-second spot,” gloated Xbox Live Entertainment and Advertising GM Ross Honey, “These results show that NUads is a real breakthrough in TV advertising, and you can expect more investment from us when it comes to this new ad format and video advertising in general.”

Advertising comes part and parcel with entertainment. That is, for the most part, how entertainment has always been paid for. Broadcast radio and television for the majority of the 20th century was funded almost entirely by advertising. As the retail market for video games shrinks, game makers need to find new ways to monetize games. To date advertising in games hasn’t been effective, but now that games are hosted on connected platforms like Xbox Live rather than static machines like the original Xbox, it’s easier.

The problem is this: Xbox Live Gold is an expensive premium service. Microsoft shouldn’t expect two separate sources of revenue from paying players. It’s anti-consumer. If Microsoft insists on investing in invasive advertising like NUads, it should offer Gold members the option to not have to see those ads while using Xbox Live.

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