Take a stroll through "Anarchy Online," and in the midst of the online video game's city of the future, you may stumble across a big-screen TV running 25-second spots for Panasonic. Log in to the game from England, and that same visit to the virtual big city may bring you face to face with a giant commercial for the TV series "Lost."

First they showed up on your TV. Then they came to the movie theater and the Internet. And now, whether they're the reason you watch the Super Bowl or the reason you only watch TV with TiVo, commercials are coming to video games.

And that's only the latest in a growing wave of advertisements designed to capture the attention of players busy scoring touchdowns and saving the world in their favorite video games.

Advertising in video games — ranging from product placement and in-game billboards to brand-pitching adver-games — is expected to grow from last year's $120 million business to an $800 million industry by 2008, according to the Yankee Group, an analyst firm. "There's going to be more ads in games," Yankee Group analyst Michael Goodman said. "The question is: Will [gamers] notice them? If it's done right, you really shouldn't realize you're being marketed to."

Advertising has been seeping into video games for years, but only recently has it gone high profile, often in the form of product placement. Last year's "Need for Speed Underground 2" featured street races in cities replete with Burger King restaurants and Best Buy stores. In "Splinter Cell: Pandora Tomorrow," super spy Sam Fisher used a Sony Ericsson phone. Even Nintendo, maker of typically cartoon-y games that don't lend themselves to real-world product placement, incorporated name-brand yogurt and jar lids in "Pikmin 2."

"The good news for video gamers is that advertising fundamentally adds realism to a game," said Mitchell Davis, CEO of in-game advertising firm Massive Incorporated.

Massive Incorporated's new service enabling in-game commercials in Internet-connected computer games represents one of the technological leaps of a growing field. Controlling an in-game character, a player will spot what looks like a still ad out in the distance. But when they get close, video starts running and audio kicks in. Massive can track not just the number of players who trigger the ad, but even the angle at which they view it.

Massive, along with Double Fusion and WildTangent, is a leading in-game advertising firm, promoting this platform since the spring of last year. Davis said his company hopes to be feeding ads — mostly signs and stills, but video as well — to 60 games by early 2006. Game publishers working with Massive already include Atari, Ubisoft ("Splinter Cell") and Eidos ("Tomb Raider"). The advertisers on board include Coca-Cola, Honda and T-Mobile.

Davis said he saw the opportunity for in-game advertising three years ago while playing a bit of "Grand Theft Auto." "You play the game, and there are all kinds of fake ads in there. And I thought, 'Wow, from a gamer's perspective, why couldn't they be real ads and make a game look more real?' " And from an advertiser's perspective, he said, there was money to be made.

Just three years later, the appearance of ads in games is now business as usual. But that doesn't mean developers don't have jitters about plugging ads into a medium that had long been ad-free.

Terri Perkins, product manager for "Anarchy Online" developers Funcom, said her company started working with Massive seven months ago. The first ads that went live in the game were billboards hawking Sprite and the Mötley Crüe album Red, White & Crüe.

Implementing ads within play was a tricky sell when it came to getting game designers on board. "It was a big move for them," Perkins said. "It was their baby. We didn't want to sell our soul."

Once the ads went live, Perkins received surprisingly few complaints — though one did catch her by surprise. "Some players said, 'The game takes place 30,000 years in the future. I can understand how there's going to be Sprite 30,000 years in the future, but explain to me how there's going to be Mötley Crüe."

When publishers place products or billboards in most games, they have to program the ads into the game's code. "Ubisoft presents concepts to companies approximately a year in advance in order to integrate product into the storyline early in the process," said Monika Madrid, senior manager of strategic sales and partnerships at Ubisoft.

The Massive service works a bit differently. The company provides developers with technology that creates advertising-ready windows in their games, but the title is essentially shipped ad-free. The actual ads only stream their way to players when a user turns on their game and connects to the Internet. That setup allows Massive to offer a tailored selection of ads. They can, for example, detect that a player is logging in from London and zap him or her with the relevant ad for airings of "Lost" on the U.K.'s Channel 4.

Massive doesn't call all the shots. The developers have their say on what ads make it to gamers. Perkins said her team prohibited ads for alcohol and competing video games. And it's not just ads for certain products that won't fly. Perkins said the time and place isn't always right for an in-game ad. She might be able to justify an ad for a metal band in "Anarchy Online," but she said ads will have no place in the world of her company's upcoming "Conan" online game. Even in "Anarchy Online," she said the company wasn't going to let ads spread to every corner. "Ads are all in subways and downtown in cities," she said. "There's not going to be an ad in the forest."

Industry analyst Michael Goodman said that those who advertise in games need to be careful not to provide ads that seem out of place or, worse yet, disrupt the flow of a game. "If you detract from a game, people are going to be very upset with you," he said. "They'll say, 'I just paid $50. What are you doing?' You're going to have a massive outcry by consumers." As a result, Goodman isn't sold on Massive's pitch to run commercials in games, even if the commercials don't technically interrupt a game the way TV commercials stop programs cold.

Instead, he expects many of the new developments involving in-game advertising to involve what he calls "around-game" advertising. These are ad campaigns that tie into a gamer's experience without actually popping up as ads inside of games. One prominent example was introduced into the online game "EverQuest II" early this year. Between swings of their swords, gamers could type "/pizza" and summon a real-life delivery from Pizza Hut. Another example Goodman cited would involve the online spectator mode incorporated into the upcoming Xbox 360. As a spectator, users will be able to log in and watch other players compete — just as they might watch the broadcast of a televised sporting event. Goodman expects Microsoft to festoon those spectator broadcasts with ads.

Massive's Davis has a new technology of his own that he expects will smoothly glide into games without disrupting the flow. He calls it "3-D object replacement." Instead of zapping ads into players' games, the service will inject a new car or ad-themed character for players to look at. The idea, Davis said, is to bring ads to gamers, rather than funneling gamers to ads. "We don't want to take people out of the gameplay," he said. "We don't do click throughs."

The ad companies and game-makers seem interested, but what will gamers get out of this beyond any enhanced realism? Ubisoft's Madrid said that ad revenue may help control game costs. "Gamers have very high expectations for high-tech, high-quality games on all next-generation consoles," she said. "By including some advertising in our games, it allows us to invest in new technologies, cool features and better gaming while keeping the price of our games the same for the consumer."

Better than stemming rising costs, Perkins said the in-game ads in "Anarchy Online" might help her company actually make their games cheaper. Shortly before partnering with Massive, Perkins' Funcom began offering a free version of "Anarchy Online," which allowed users to skip the monthly fee for a trial basis. Once the Massive ads kicked in, paying customers had the option to go ad-free, but those who opted to keep their wallet closed would continue to see the advertising.

Perkins said that she is hopeful, but it is too early to tell if the experiment will work on a long-term basis.