For example, a soft drink maker, through Massive, could put its logo and other branding on a vending machine or billboard that appears in a video game.

The system allows advertising to change, so another player another time might see a different advert.

Such adverts are rare in the current generation of titles from big publishers. But the area could grow quickly and become a key revenue driver as more gaming consoles and hand-held players take advantage of always-on internet connections.

Authenticity

Video game players say that adverts in game genres such as racing, sports and urban action can add authenticity to the experience.

At the same time, a recent study suggested that well-placed adverts can have a positive effect on brand awareness.

THQ, publisher of video games such as Destroy All Humans! and the upcoming Saint's Row, is the biggest catch yet for Massive, which has a team that sells ads in games from 29 publishers. 

THQ executives said they would deliver an action-adventure game in the first half of 2006. 

Games also likely to be added to Massive's network are future versions of racing title Juiced and those from its MX motocross franchise, a THQ spokeswoman said. 

Kelly Flock, executive vice-president of worldwide publishing for THQ, said: "Dynamic, in-game advertising not only offers publishers new revenue opportunities, but when done properly creates added realism that can actually enhance game play."

Attracting advertising dollars

Video game advertising is seen as drawing dollars from television and other more traditional media outlets, as people aged 18 to 34 flock to new entertainment media.

Real-time ads are dynamic, unlike
static ads, which do not change

Mitchell Davis, chief executive of Massive, said forecasts from a variety of industry sources called for the real-time in-game advertising business to grow into a more than $3 billion global market by 2010.

Nielsen Entertainment expects US spending on static adverts in console and PC games to be $75 million this year and to grow to $1 billion by the end of the decade. 

Unlike real-time in-game adverts, static ads are burnt into the game's code and do not change. 

Davis said rates for dynamic ads were very similar to those now charged in the cable television market and said Massive has worked with 40 advertisers, including the Coca-Cola Co.