Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an analytics platform focused on advertising technology. For many years, gamers have looked at in‑game advertising with suspicion, and their wariness is understandable.
The reputation of ads in video games is often tarnished by experiences such as being redirected to unrelated websites, encountering misleading content, or struggling to locate a close button. These annoyances have contributed to a generally negative perception of advertising within interactive entertainment.
A recent study conducted by eMarketer highlighted just how fragile this relationship can be: 52 % of respondents said they would stop playing a title if they were repeatedly exposed to intrusive ad elements. Losing half of an audience at the moment you are trying to engage them is clearly not a sustainable strategy. Nevertheless, advertisements do not have to be a detriment. The same research revealed a more optimistic finding – one in five gamers indicated they would actually increase the frequency with which they played a game if the in‑game ads were of a high quality and felt relevant.
This suggests that, when executed properly, advertising can enhance rather than diminish the player experience. Xbox is currently piloting an ad‑supported game‑streaming service, and the broader context of rising costs for consoles, games, accessories, and downloadable content makes the prospect of well‑designed ads especially appealing. The concept of an "ads‑for‑games" model has already been validated in linear media. Services such as Netflix, Disney+, and other on‑demand platforms have demonstrated that offering a lower‑priced, ad‑supported tier can generate significant revenue while still retaining subscribers who prefer an ad‑free experience.
Should Xbox’s experiment prove successful, it could not only preserve its existing subscription base but also unlock a brand‑new revenue stream at a moment when the company is seeking fresh sources of income. The relevance of this approach is amplified by the fact that console gaming is increasingly positioned as a premium offering.
Prices for new releases, hardware upgrades, and even microtransactions are climbing, creating a financial barrier for the average player. Xbox itself has acknowledged that, when handled responsibly, advertising can reduce the cost of entry to gaming. The mobile‑gaming sector already provides a clear illustration: ad‑supported tiers let users enjoy popular titles without paying an upfront fee, thereby expanding the overall market. Crucially, the system Xbox proposes is optional.
Players who prefer an uninterrupted experience can continue to pay a subscription fee, while those who are comfortable watching ads can access the same content at a reduced price. This two‑tier model aims to keep loyal fans happy while simultaneously inviting newcomers who might otherwise be deterred by high upfront costs. Although there is no published survey data on the specific Xbox announcement yet, it is reasonable to assume that most gamers would tolerate a short, 30‑second commercial if it meant they could play a favorite or brand‑new title for an hour.
Happydemics’ own data, derived from 285 in‑game campaigns across the United Kingdom and North America, show that ads placed within games consistently outperform television, social‑media, and standard online placements when it comes to recall and attribution. In other words, players are more likely to remember and correctly associate an advertisement they saw while gaming with the brand behind it. Xbox’s “around‑the‑game” strategy—showing ads before the gameplay begins rather than embedding them within the interactive environment—adds another layer to this picture.
Our research indicates that pre‑game formats generate higher ad recall and clearer brand attribution than ads that appear directly inside the game world. This distinction matters because, while traditional media can capture attention, it does not always translate into a strong brand link. Gaming appears to occupy a unique niche where both attention and brand connection are unusually strong, which explains why companies like EA and Xbox are increasingly exploring ad‑based monetisation. It is important to note that Xbox’s ads are intended to be pre‑game, not in‑game.
In‑game ad formats tend to excel later in the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability. A hybrid approach—combining both pre‑game and in‑game placements—could theoretically give advertisers the best of both worlds, but it also raises the risk of player pushback if the experience feels overly commercialised. Xbox has pledged that any advertisements will be non‑intrusive.
By placing them before the game starts, the company hopes to preserve the immersive nature of the gameplay itself. This is a win‑win: players enjoy an uninterrupted session, while advertisers benefit from a captive audience that is primed to receive the message without feeling disrupted. Relevance will be key.
No gamer wants to see an ad for cat food when they don’t own a cat, or a promotion for a game they have already completed. Contextual, well‑targeted ads that make sense in the moment will help ensure that players do not abandon the experience at the sight of a commercial, and brands will gain a more effective platform for reaching new audiences. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how gamers will actually respond to this new format; the second is whether the revenue generated will be sufficient to sustain the model over the long term. The move to test ad‑supported streaming reflects a willingness by Xbox CEO Asha Sharma to experiment and take calculated risks, but only time will reveal whether the strategy pays off.
Historically, many gaming ad campaigns have relied on a "watch an ad, earn an extra life" model, where the ad provides a tangible in‑game reward. Xbox’s proposal differs: players would watch an ad to gain access to a game they already own, rather than receiving a direct in‑game benefit. Our existing data set does not yet show how this particular exchange will be perceived.
Research on ad‑format perception does, however, offer some clues. When participants are asked to describe ads they remember, the adjectives "non‑intrusive" and "immersive" consistently rank among the most positive.
If Xbox—and potentially other platforms in the future—are to make gaming ads a lasting success, they will need to focus closely on these two attributes. My forecast is that Xbox will neither be the first nor the last company to experiment with this model.
Advertising has been part of gaming for a long time, but it has rarely been implemented with the player experience as the primary consideration. Should Xbox manage to strike the right balance, it could open the door for other developers and publishers to adopt similar strategies, ultimately making video games more affordable and accessible for everyday gamers.