updated 5/4/2006 8:50:09 PM ET 2006-05-05T00:50:09

Microsoft Corp. said Thursday that it had acquired Massive Inc., a company that inserts advertising into video games, and will work to use Massive’s technology for other online products. Financial terms were not disclosed.

The acquisition is part of the company’s efforts to improve its online advertising and better compete with search rivals Google Inc. and Yahoo Inc.

The deal was announced at an online advertising conference at Microsoft’s Redmond headquarters. (MSNBC.com is a Microsoft - NBC joint venture.)

Advertising has long existed in video games, mostly in the form of static ads and product placements that cannot be changed once the game is sealed for sale.

Massive allows marketers to deliver fresh, new ads into console and PC games via an online connection, including Microsoft’s Xbox Live. In games that incorporate Massive’s technology, advertisers can change the ads around — inserting a movie promotion one day or a soda ad the next, for example — and target ads to specific geographic areas.

Microsoft said in a statement Thursday that it hoped to make such features available in other products, such as its MSN online products. Massive’s technology also will become part of the company’s adCenter sales platform.

Massive, a closely held, 80-employee startup based in New York, says more than 100 titles have signed on to use its in-game advertising network since it launched in October 2004. Massive’s advertising clients include Verizon Wireless, Dunkin’ Donuts, Coca-Cola Co., and the Sci Fi Channel.

Separately, Microsoft also said Thursday that it had acquired Vexcel Corp., a Boulder, Colo.-based company that will provide technology for Microsoft’s local, visual search efforts. Terms also weren’t disclosed.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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