This week Microsoft announced its plan to share in-game ad revenues with developers of casual games distributed through the MSN Games service. The program offers two tiers of royalties, with the first awarding 10% of advertising revenues to developers with "little to no change" to the games themselves, and the second granting 20% of advertising revenue to developers who adhere to a list of specific criteria such as receiving an ESRB rating and offering a "deluxe" version of the game. Overall, Microsoft expects that the developers of the top five MSN Games will earn a combined $250,000 in yearly revenue from those titles.
One frequently cited potential benefit of in-game advertising has been that it can reduce development budgets, but while publishers are in a strong position to take advantage of in-game advertising, the tangible advantages for developers without publishing control are less apparent. Microsoft's new program seems to be attempting to address that point, though currently only in the casual space as opposed to in large scale game development. It may be only a matter of time until a major publisher attempts a similar program in the core games industry. (Thanks HardOCP)