Virginie Chesnais serves as the Chief Marketing Officer at Happydemics, an analytics platform that focuses on advertising technology. For many years, gamers have viewed in‑game advertising with suspicion, and that wariness is understandable.
The reputation of ads in video games is mixed at best; players frequently encounter redirects to unrelated websites or apps, misleading content, and close‑button designs that are difficult to locate, all of which contribute to a frustrating experience. A recent study conducted by eMarketer highlighted that 52 percent of respondents would abandon a game if they were bombarded with multiple intrusive ad elements.
Losing half of your potential audience at the moment you’re trying to engage them is hardly an effective approach. However, the same research also revealed a more optimistic side: one in five gamers indicated they would actually play a title more often if the in‑game advertisements were of high quality and well‑executed.
With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of playing games continuing to climb, there is a genuine opportunity for premium‑grade ads to find a comfortable niche within the gaming ecosystem. The argument for introducing a modest advertising component into the gaming experience is stronger than many assume, and it is already partially validated by the success of linear media models. Services such as Netflix, Disney+, and other streaming platforms have demonstrated that a steady revenue stream can be generated by offering both ad‑free and ad‑supported subscription tiers.
Should Xbox’s experiment prove profitable, it could not only preserve its existing paying subscriber base but also unlock an entirely new revenue channel at a moment when the brand is eager for fresh income sources. This development is significant because console gaming is increasingly being positioned as a premium offering. Prices for games, consoles, accessories, and downloadable content (DLC) keep rising, making it more difficult for the average consumer to justify the expense.
In Xbox’s own announcement, the company noted that, when implemented correctly, advertising can reduce the barrier to entry and lower the overall cost of accessing games. The mobile gaming sector already provides a clear precedent: ad‑supported tiers allow players to engage with titles without having to make large upfront purchases, thereby expanding the market.
Importantly, the advertising model Xbox is proposing would be entirely optional. Players who prefer an uninterrupted experience could simply pay a subscription fee to avoid ads, while those who are comfortable with occasional commercials could enjoy a reduced‑price or even free access to certain games.
By offering a two‑tier system, Xbox aims to keep its loyal fanbase happy while simultaneously making its library more approachable for newcomers. Although there is no specific survey data on this particular rollout yet, it is reasonable to assume that a substantial majority of gamers would tolerate a 30‑second advertisement if it meant they could play a beloved or newly released title for an hour without paying extra. Xbox likely has internal data that supports this hypothesis. Happydemics has compiled data from 285 in‑game campaigns across the United Kingdom and North America, showing that in‑game advertisements consistently outperform traditional TV, social, and online ads in terms of recall and attribution.
In other words, players are more likely to remember an ad they saw while gaming and correctly associate it with the brand that displayed it. This advantage becomes even more pronounced when ads are placed "around the game"—for example, before the game loads—rather than embedded directly within the gameplay. Our research indicates that these pre‑game formats generate higher levels of ad recall and brand attribution compared with intrinsic in‑game placements. The distinction matters because while people can recall ads seen on television or scrolling through a social feed, they do not always connect those impressions to the underlying brands.
Gaming appears to occupy a unique position in the advertising landscape, offering stronger brand‑memory links. This is likely why companies such as Xbox and Electronic Arts (EA) are increasingly exploring ad‑based gaming models. It is crucial to note that Xbox’s initial plan focuses on pre‑game ads, not intrusive in‑game pop‑ups. In‑game ad formats tend to excel further down the conversion funnel, delivering better outcomes for brand‑image uplift, consideration, interest, and overall likability.
A hybrid approach that combines both pre‑game and in‑game ads could theoretically provide the best of both worlds for advertisers, but it also risks provoking greater resistance from players who are sensitive to interruptions. Xbox has emphasized that any advertisements will be non‑intrusive. By positioning ads before the actual gameplay begins, the company hopes to preserve the immersive experience that gamers value.
This approach benefits both the player—who enjoys an uninterrupted session—and the advertiser, who wants their message to be part of the experience rather than a disruptive nuisance. Relevance will be another key factor.
Nobody wants to see an ad for cat food when they don’t own a cat, or an advertisement for a game they have already completed. By delivering contextually relevant ads that are tailored to the player’s interests and behavior, Xbox can minimize the chance that users will abandon the session at the sight of an irrelevant commercial, while simultaneously giving brands a highly effective platform to reach new audiences. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players will react to the presence of ads, and the second is whether the advertising revenue will be sufficient to sustain the model over the long term. The decision to explore ad‑supported game 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 strategy will meet expectations. Historically, many gaming ad campaigns have relied on a "watch an ad, earn an extra life" mechanic. Xbox’s proposal differs: it asks players to view an ad in order to access a game they already own, rather than to earn a bonus. Our existing data set does not yet indicate how this particular exchange will be received.
However, broader research on ad‑format perception suggests that descriptors such as "non‑intrusive" and "immersive" consistently rank highly among positive responses. If Xbox—and potentially other platforms in the future—aim to make advertising a lasting component of gaming, these two attributes will be essential metrics to monitor. In my view, Xbox will neither be the first nor the last company to test this kind of model. Advertising has been part of video games for many years, but rarely with the player’s experience as the primary focus.
Should Xbox succeed in creating a seamless, player‑friendly ad environment, it could pave the way for similar initiatives across the industry and, more importantly, make video games considerably more affordable and accessible for everyday gamers.