ads in games actually improve the gameplay experience, it's an extremely precarious rope to walk. The very second the advertising steps over invisible line of bad taste, the player base is liable to rebel.
It's difficult then to tell what to make of this new partnership between Paramount and Habbo, where Habbo players will be able to purchase in-game merchandise branded with new Paramount properties like The Spiderwick Chronicles, Beowulf, and Mean Girls. Now, obviously, the fact that Habbo is more of a social networking game aimed at teens changes the equation a little bit, but people have to actually pay for the privilege of shlocking their in-game advertisements around? I want to say it will never work, but young people always manage to surprise me, so I wouldn't put money on it.
[Via Tech Crunch]