March 16 (Bloomberg) -- Google Inc., seeking to extend its advertising software into new markets, bought Adscape Media Inc., a privately held company that sells ads in video games.

Terms of the purchase weren't disclosed, Mountain View, California-based Google said today on its Web site.

The acquisition gives Google, owner of the most-used Internet search engine, a new kind of ad revenue and a way to expand beyond the Web. U.S. sales of ads in video games will grow to $732 million by 2010 from $56 million in 2005, according to Boston-based Yankee Group Research.

``This is a very nascent market,'' said Mike Goodman, an analyst at Yankee Group, before the acquisition was announced. ``We're just beginning to head into the period when companies can take advantage of the opportunity.''

The acquisition is more about buying Adscape's technology than the company itself, Goodman said. Adscape is smaller than market leaders Massive Inc., Double Fusion Inc. and IGA Worldwide, he said.

Shares of Mountain View, California-based Google fell $5.34 to $440.85 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have fallen 4.3 percent this year.

``In-game advertising is an area where we believe Google could add a lot of value to users,'' the company said today on its Web site. ``We have been in discussions with many in the game development community and hope to partner with both large and small game publishing companies.''

Individualized Ads

Adscape, based in San Francisco, has developed a way to place ads in games that are suited to players' ages or sex, where they live and the time of the day. Game publishers get a commission when the ads are featured in their games.

The purchase follows Microsoft Corp.'s acquisition of in- game advertising company Massive Inc. in May. Microsoft, developer of the Xbox game console, is trying to boost the percentage of revenue it gets from ads.

``Any time Google makes a move, the folks over at Microsoft pay attention,'' Goodman said. ``In general, Microsoft is in catch-up mode to Google in the ad world.''

To contact the reporter on this story: Jonathan Thaw in San Francisco at jthaw@bloomberg.net

Last Updated: March 16, 2007 21:10 EDT