Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an ad‑tech analytics firm. For many years, gamers have been skeptical of advertisements embedded within games, and their concerns are understandable.
In‑game ads have earned a mixed reputation due to issues such as redirects to unrelated sites, misleading content, and hard‑to‑find close buttons that frustrate players. A recent study from eMarketer revealed that 52 % of gamers would stop playing if they encountered several intrusive ad elements.
Losing half of an audience at the moment you are trying to engage them is hardly an effective approach. However, advertising does not have to be a negative experience. The same research indicated that one in five gamers would actually increase the frequency with which they play a title if the ads were high‑quality and well‑integrated.
With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of gaming steadily climbing, premium‑grade advertisements could find a natural home in the console ecosystem. The concept of offering a hybrid model—paid subscription alongside a free, ad‑supported tier—has already proven lucrative for linear media platforms such as Netflix, Disney+, and other streaming services. If Xbox’s experiment succeeds, it could preserve its existing subscriber base while unlocking a fresh revenue stream that the brand urgently needs. The relevance of this development is heightened by the fact that console gaming is increasingly positioned as a premium product.
Prices for games, consoles, accessories, and downloadable content have risen to levels that many casual players find difficult to justify, effectively erecting a barrier to entry. Xbox itself has stated that, when executed correctly, advertising can lower the cost of accessing games.
Mobile gaming already demonstrates that ad‑supported tiers can provide a gateway for players who are unwilling or unable to make large upfront purchases. Crucially, the model remains optional. Players who prefer an uninterrupted experience can continue to pay for an ad‑free subscription, while those who are price‑sensitive can opt into the ad‑supported tier.
By offering a two‑track system, Xbox hopes to keep its loyal fan base satisfied while simultaneously making games more approachable for newcomers. Although no specific survey data on Xbox’s latest announcement is publicly available, it is reasonable to assume that a substantial majority of gamers would tolerate a 30‑second advertisement if it granted them an hour of playtime on a favorite or new title. Happydemics’ analysis of 285 in‑game campaigns across the UK and North America shows that in‑game ads consistently outperform TV, social, and online formats in terms of recall and attribution. In other words, players are more likely to remember an ad they see while gaming and correctly associate it with the brand that delivered it.
Xbox’s “around‑the‑game” approach—showing ads before the gameplay begins rather than embedding them within the interactive experience—adds another layer of appeal. Our data indicate that pre‑game placements achieve higher recall and attribution scores compared with intrinsic in‑game placements. This distinction matters because, while traditional media can generate awareness, it does not always translate into a clear brand link. Gaming, by contrast, appears to excel in creating that connection, which explains why companies like EA and now Xbox are exploring ad‑based monetisation.
It is important to note that Xbox’s ads are positioned pre‑game, not during the actual session. In‑game formats tend to shine later in the marketing funnel, delivering stronger lifts in brand image, consideration, interest, and likeability. A hybrid strategy that combines both pre‑game and in‑game ads could offer advertisers the best of both worlds, though it also risks provoking greater pushback from players who are sensitive to interruptions.
Xbox has pledged that the advertisements will be non‑intrusive. By delivering ads before the game loads, the company aims to preserve the immersive nature of the experience. This approach benefits both players—who avoid mid‑session disruptions—and advertisers, who want their messages to feel like a natural part of the journey rather than an annoyance. Relevance is another key factor.
Nobody 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, targeted ads that make sense for the individual player will help prevent churn and increase the effectiveness of the campaign. Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how gamers will react to a model that asks them to watch ads to access games 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 the boldness of Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment with new business models. Only time will reveal whether the strategy delivers the intended results. Historically, many gaming ad initiatives have been built around “watch an ad, earn an extra life” mechanics.
Xbox’s proposal differs: players would watch an ad to unlock access to a game they already possess. Our existing data set does not yet indicate how this particular exchange will be received. Research on ad‑format perception shows that respondents who recall an ad often describe the format as “non‑intrusive” and “immersive,” two attributes that are currently top‑ranked in user sentiment. If Xbox—and potentially other platforms in the future—aim to make gaming ads successful, they will need to keep these metrics front and centre.
My forecast is that Xbox will neither be the first nor the last to trial such a model. Advertising in games has existed for years, but it has rarely been designed 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 and, more importantly, make video games considerably more accessible to the everyday gamer.