Virginie Chesnais serves as Chief Marketing Officer at the ad‑technology analytics firm Happydemics. For many years, gamers have approached in‑game advertising with suspicion, and that wariness is understandable.
The reputation of ads in video games is mixed at best: they often redirect users to unrelated websites or apps, sometimes deliver misleading content, and frequently feature hard‑to‑find close buttons that frustrate players. A recent study conducted by eMarketer highlighted the severity of the issue, revealing that 52 % of gamers would abandon a session if they encountered multiple intrusive ad elements. Losing half of an audience at the very moment you try to engage them is hardly an effective strategy. However, advertisements do not have to be synonymous with annoyance.
The same survey noted that one in five gamers would actually increase the frequency with which they play a title if the in‑game ads were of high quality and relevance. This suggests that well‑executed advertising can coexist with a positive gaming experience. Enter Xbox’s experimental ad‑supported game‑streaming service. As the overall cost of gaming—covering consoles, titles, accessories, and downloadable content—continues to climb, the prospect of high‑quality, non‑intrusive ads becomes increasingly appealing.
The model mirrors the approach taken by linear media platforms such as Netflix, Disney+, and other streaming services that offer both ad‑free and ad‑supported subscription tiers. If Xbox can replicate that success, it would not only preserve its existing paying subscriber base but also unlock a fresh revenue stream at a moment when the brand is seeking additional financial footing. The relevance of this development is underscored by the fact that console gaming is evolving into a premium offering.
Prices for hardware, software, and add‑ons are rising faster than many consumers’ disposable incomes, creating a barrier that deters casual or budget‑conscious players from entering the ecosystem. Xbox itself has acknowledged that, when executed correctly, advertising can lower the cost of entry and broaden access to games. Mobile gaming has already demonstrated the viability of ad‑supported tiers: players can download a free version of a game and watch occasional ads in exchange for continued play, bypassing the need for large upfront purchases. Translating that model to console gaming could open a similar gateway for new users, allowing them to experience high‑quality titles without the steep price tag.
Crucially, this approach remains optional. Players who prefer an uninterrupted experience can continue to pay for a subscription that removes ads entirely. By offering a dual‑track system—ad‑supported and ad‑free—Xbox hopes to retain its loyal fan base while simultaneously attracting newcomers who might otherwise be priced out. Although concrete survey data on this specific initiative are not yet available, it is reasonable to assume that a substantial majority of gamers would tolerate a short, 30‑second commercial if it granted them an hour of gameplay with a favorite or newly released title.
Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America supports this intuition: in‑game ads consistently outperform traditional TV, social, and online placements in terms of recall and accurate brand attribution. Xbox’s “around‑the‑game” strategy—showing ads before the game launches rather than embedding them within the gameplay itself—adds another layer of appeal. Our data indicate that pre‑game placements generate higher recall and clearer brand association compared with ads that appear directly inside the game environment. This distinction matters because, while viewers can often remember an advertisement seen on television or scrolling through a feed, they may not always link it to the sponsoring brand.
Gaming, however, appears to create a stronger mental connection between the ad and its source, a factor that likely explains why companies like EA and Xbox are increasingly exploring ad‑based revenue models. It is important to note that Xbox’s ads will be pre‑game, not in‑game. Traditional in‑game formats tend to excel further down the marketing funnel, boosting metrics such as brand uplift, consideration, interest, and overall likability.
A hybrid approach—combining both pre‑game and in‑game placements—could theoretically deliver the best of both worlds for advertisers, but it also risks heightened pushback from players who are sensitive to any interruption. Xbox has pledged that its advertisements will be non‑intrusive, a promise that makes sense when ads are delivered before the gameplay begins. This timing ensures that the immersive experience remains intact, benefitting both the player—who can enjoy uninterrupted gaming—and the advertiser—who wants their message to be part of a positive experience rather than a disruptive one.
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.
By delivering contextual, targeted ads that make sense for the individual player, Xbox can minimize the risk of users abandoning the service at the first sign of irrelevant content, while providing brands with a high‑impact platform to reach new audiences. Nonetheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players will react to a model that asks them to watch an advertisement to access a game they already own. The second unknown is whether the revenue generated will be sufficient to sustain the model over the long term. The decision to explore ad‑supported streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who has shown a willingness to experiment with new business models. Only time will reveal whether this gamble pays off.
Historically, our work in gaming advertising has focused on “watch an ad, earn an extra life” incentives. Xbox’s proposal diverges by asking players to watch an ad simply to launch a game they already possess.
Our existing datasets do not provide a direct comparison for this scenario, leaving an open question about player acceptance. Nevertheless, broader research on ad format perception indicates that descriptors such as “non‑intrusive” and “immersive” rank among the most positively received. If Xbox—and potentially other platforms in the future—aim to make gaming ads a lasting success, they will need to prioritize these qualities. My forecast is that Xbox will neither be the first nor the last company to test this model.
Advertising has been part of gaming for years, but rarely with the player’s experience as the primary focus. Should Xbox succeed, it could pave the way for similar initiatives across the industry, ultimately making video games more affordable and accessible for everyday gamers.