Virginie Chesnais serves as the chief marketing officer for the ad‑technology analytics firm Happydemics. For many years, gamers have looked at in‑game advertising with suspicion, and their wariness is understandable. The reputation of ads within video games is mixed at best, often plagued by issues such as redirects to unrelated sites or apps, misleading content, and poorly designed close buttons that are hard to locate. These annoyances have contributed to a general distrust of advertising in interactive entertainment.
A recent study conducted by eMarketer highlighted the severity of the problem: 52 percent of respondents said they would stop playing a title if they encountered multiple intrusive ad elements. Losing more than half of a potential audience at the moment you are trying to engage them is hardly a winning formula.
However, advertisements do not have to be a detriment. The same research revealed a more optimistic finding—one in five gamers indicated they would play a game more often if the in‑game ads were of a high quality and felt appropriate. This suggests that, when executed correctly, advertising can actually enhance the gaming experience rather than diminish it.
Xbox is currently experimenting with a new ad‑supported game‑streaming service at a time when the overall cost of playing is on an upward trajectory. In this climate, well‑crafted ads could find a receptive home within the gaming ecosystem. The rationale behind offering an ad‑based tier for games is not entirely novel; it mirrors a model that has proven profitable for linear media platforms.
Services such as Netflix, Disney+, and other video‑streaming giants have demonstrated that providing a free, ad‑supported tier alongside a paid subscription can generate significant revenue while expanding the audience base. Should Xbox’s experiment succeed, it could preserve existing paying subscribers and simultaneously unlock a fresh, previously untapped source of income—something the brand could certainly use. The importance of this development lies in the fact that console gaming is increasingly positioned as a premium product.
Prices for games, consoles, accessories, and downloadable content have risen steadily, creating a financial barrier for the average player. Xbox itself has acknowledged that, when done responsibly, advertising can lower the cost of entry to gaming.
The mobile‑gaming sector already offers a clear precedent: ad‑supported tiers allow users to try games without committing to large upfront purchases, thereby broadening the market. Crucially, the ad‑supported option would be entirely optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads. By offering a two‑tier system, Xbox hopes to keep its loyal fan base happy while also making its library more approachable for newcomers.
Although there is no published survey data on the specific Xbox announcement yet, it is reasonable to assume that a large majority of gamers would tolerate a brief 30‑second commercial if it granted them an hour of gameplay in a favorite or new title. Happydemics’ own data, drawn from 285 in‑game campaigns across the United Kingdom and North America, consistently show that ads displayed within games outperform traditional TV, social, and online formats in terms of recall and accurate brand attribution.
In other words, gamers are more likely to remember and correctly associate an ad they see while playing with the brand that placed it. Xbox’s “around‑the‑game” strategy—ads that appear before the game launches rather than embedded within the gameplay—adds another layer of intrigue.
Our research indicates that pre‑game placements generate higher recall and attribution scores than intrinsic in‑game placements. This distinction matters because, while we may notice a commercial on television or scrolling through a feed, we do not always link it to a specific brand. Gaming appears to operate in a league of its own on this metric, which likely explains why companies such as Xbox and Electronic Arts are increasingly exploring ad‑based models. It is essential to note that Xbox’s ads are not meant to interrupt the actual gameplay; they will be shown in the lobby or loading screen.
Traditional in‑game ad formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability. A hybrid approach—combining pre‑game and in‑game ads—could theoretically provide the best of both worlds for advertisers, though it also risks heightened pushback from players who value a seamless experience. Xbox has promised that any ads introduced will be non‑intrusive.
By placing them before the game begins, the company aims to preserve the immersive nature of the session. This consideration benefits both the player, who avoids disruption, and the advertiser, who gains a captive audience that is primed for engagement rather than annoyed. Relevance will be key.
Nobody enjoys seeing an advertisement for cat food when they don’t own a cat, or for a game they have already completed. Contextual, well‑targeted ads that make sense for the individual player will be crucial for keeping the experience pleasant and for delivering value to brands seeking new audiences.
Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how the gaming community will react to the presence of ads, and the second is whether the revenue generated will justify a long‑term commitment to the model. The decision to explore ad‑supported game streaming reflects a bold, risk‑taking attitude from Xbox CEO Asha Sharma, who appears willing to experiment with innovative monetisation strategies.
Historically, many of the gaming ad campaigns we have examined relied on a “watch an ad, earn an extra life” mechanic. Xbox’s proposal is different: it asks players to view an ad in order to access a game they already own. Our existing data set does not yet reveal how this particular exchange will be received. Related research on ad‑format perception shows that when participants are asked to describe ads they remember, terms such as “non‑intrusive” and “immersive” frequently emerge as the most positive descriptors.
If Xbox—and potentially other platforms in the future—aim to make gaming ads a lasting success, these two qualities will need to be at the forefront of their design and execution. My forecast is that Xbox will neither be the first nor the last major console to experiment with this approach.
Advertising within games has existed for years, but rarely with the player’s experience as the primary focus. Should Xbox manage to strike the right balance, it could pave the way for similar initiatives across the industry, ultimately making video games more affordable and accessible for everyday gamers.