On the surface, Eric's take on it is similar to my own, but I have some misgivings about the concept and considering the nature of advertising, I figure the worst possible scenario is the closest to a true prediction. So, I am going to break it down a bit and show what I see as the areas for concern are.
I'm going to assign an "Annoyance Factor" to these issues. That's going to demonstrate how badly I, personally, would be annoyed. Anything that scores over 5, means I wouldn't play.
Product Placement: This is the best, most acceptable form of advertising in my book. In fact, I consider it somewhat enhancing to the experience if real products are mentioned within the context of the game. I think it adds to the realism if the main character is drinking a Coke or Pepsi instead of a Generic Cola. It seems much more reasonable, especially, when you've got automotive products in racing game, for example. Annoyance Factor: 1
In-Game "Billboards": Ugh. I'm not a big fan of billboards in real life. I think they fuck up the scenery, be it mountain, desert or urban. They're not going anywhere though; in fact, they're only getting more and more Bladerunner. In-game billboards/posters/print-ads or whatever are really only as intrusive as they are in real-life, which is to say: significantly. Annoyance Factor: 5
The Immersion Risk: Any in-game advertising must strictly adhere to the game world or risk breaking the immersiveness of the game. Easy to do in any games set on modern, or near future, Earth. Pretty much impossible in a fantasy or distant sci-fi setting. Were an ad for Pepsi to force it's way into my World of Warcraft experience, I'd cancel my account within minutes. Annoyance Factor: 10
"Cut-Scene" Ads: Now we're getting close to worst case scenario. What if, between levels on your favorite shooter, it played a commercial? What if you couldn't skip it? Annoyance Factor: 8
Performance Hit: To keep ads effective, they have to keep them fresh. To do this, they need to download new data. If they opt to do this in the background, during the time the user is running the game then they run the risk of affecting performance. Shooters and MMOs already tax CPU and bandwidth usage pretty heavily. Slow it down with ads and you're going to see some angry gamers. Annoyance Factor: 9
The "Cost to Play" Modifier: If the game in question is free to acquire and play, the score is modified by about -4. If it's a game I have paid for, then it's +4. If it's a game I've paid for AND pay a subscription for, then x2.
Summary: You can pretty easily see where I land on this. If advertising in the games significantly alters the price in the consumers favor, then I'm in. However, if you intend to get me to pay you for the right to sell ad time on my eyeballs then piss off.