Computer games are poised to become big businesses for advertisers, as more and more companies pay a great deal of money for virtual ads posted in the cyber-worlds created by gaming companies.

Analysts forecast that the market for in-game advertising is set for explosive growth, with Yankee Group predicting that the sector will jump by 500 per cent to reach $732m by 2010.

As television advertising loses its effectiveness, advertisers must reach a largely segmented audience with discerning tastes.

By the end of 2006, the number of titles with in-game ads is expected to double. Yankee Group anticipates that around 200 titles will contain in-game advertising, representing nearly all the major video game platforms.

As the market becomes more lucrative, it will have a significant impact on the business operations of video game publishers such as Activision, Ubisoft and Electronic Arts, the research note anticipates.

Although console-based in-game ad serving is dominated by independent networks today, Yankee Group predicts that Microsoft, Sony and Electronic Arts will bring in-game ad serving in-house and come to dominate this segment of the market.

Console maker Microsoft is soon to buy Massive, a firm that places adverts into video games. The Wall Street Journal said Microsoft will pay between $200 million to $400 million to snap up the firm.