Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform that focuses on advertising technology. For many years, gamers have approached in‑game advertising with suspicion, and that wariness is not unfounded. The reputation of ads within video games is mixed at best, often plagued by issues such as redirects to unrelated websites or apps, misleading content, and close buttons that are difficult to locate, all of which generate frustration among players. A recent study conducted by eMarketer highlighted that 52 % of gamers would abandon a session if they encountered several intrusive ad elements.
Losing half of an audience at the very moment you are trying to engage them is clearly a poor strategic move. However, advertising does not have to be synonymous with annoyance. The same research indicated that one in five gamers would actually increase the frequency with which they played a title if the in‑game advertisements were of a high quality and felt relevant. With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of playing continuing to climb, well‑crafted ads could find a welcoming home in the gaming ecosystem.
The argument for introducing a modest advertising component to games is more compelling than many assume, and it already has a precedent in linear media. Services such as Netflix, Disney+ and other streaming platforms have demonstrated that offering an ad‑supported tier can generate substantial revenue while still delivering a reliable service.
Should Xbox’s experiment prove successful, it would not only preserve its subscription‑based revenue but also unlock a brand‑new, previously untapped income stream at a moment when the company could benefit from additional cash flow. This development matters because console gaming is increasingly positioned as a premium product. The price tags attached to games, consoles, accessories and downloadable content have risen sharply, making it more difficult for the average consumer to justify the expense. Xbox itself has acknowledged that, when executed correctly, advertising can lower the barrier to entry for gamers.
Mobile gaming has already shown that ad‑supported tiers can provide a gateway for players who are unwilling or unable to make large upfront purchases. Crucially, any advertising model Xbox adopts would be optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those who are comfortable with occasional commercials could enjoy a lower‑cost entry point. By offering a two‑tier system, Xbox hopes to retain its loyal fan base while simultaneously expanding accessibility for newcomers. Although there is no specific survey data on the current announcement, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second advertisement if it meant gaining an hour of playtime on a favorite or newly released title.
Xbox likely has internal data supporting this hypothesis. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America reveals that in‑game advertising consistently outperforms television, social media, and other online formats when it comes to ad recall and attribution. In other words, players are more likely to remember and correctly associate an ad they see within a game with the brand that placed it. The distinction between “around‑the‑game” ads—those shown before a session begins—and “intrinsic” in‑game placements becomes important here.
Our data indicate that pre‑game formats enjoy a clear advantage in terms of recall and attribution when compared with ads that appear directly within the gameplay environment. This is significant because, while we may remember an advertisement that pops up while watching TV or scrolling through a feed, that memory does not always translate into a strong brand connection. Gaming appears to operate in a different league for this metric, which likely explains why companies such as Xbox and EA are increasingly exploring ad‑based models. It is also worth noting that Xbox’s ads are intended to be pre‑game rather than embedded within the gameplay itself.
Intrinsic in‑game formats tend to perform better further down the marketing funnel, delivering stronger lifts in brand image, consideration, interest, and overall likeability. A hybrid approach that combines both pre‑game and in‑game ads could theoretically deliver the best of both worlds for advertisers, though it might also provoke greater pushback from players who are sensitive to interruptions. Xbox has promised that any advertisements will be non‑intrusive. By placing ads before the game launches, the company aims to preserve the immersive experience that gamers value.
This approach benefits both the player—who can enjoy uninterrupted gameplay—and the advertiser, who wants their message to be part of the experience rather than a disruptive nuisance. 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, well‑targeted ads, Xbox can minimize the risk of players abandoning a session at the sight of an irrelevant commercial, while simultaneously providing brands with a highly effective platform to reach new audiences.
Nevertheless, Xbox is navigating uncharted waters. The first unknown is how players will react to the presence of ads, and the second is whether the revenue generated will be sufficient to sustain the model over the long term. The decision to explore ad‑supported game streaming reflects the boldness of Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment with new revenue streams.
Only time will reveal whether the strategy delivers the intended results. 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 watch an ad in order to access a game they already own. Our existing data set does not yet indicate how this specific trade‑off will be perceived. Research on ad‑format perception—where participants who recall an ad are asked to select positive descriptors—has consistently highlighted "non‑intrusive" and "immersive" as top‑rated attributes. If Xbox and future adopters aim to make gaming ads successful, these two qualities will need to remain at the forefront of their design and execution.
In my view, Xbox will neither be the first nor the last platform to test such a model. Advertising within games has existed for many years, but it has rarely been implemented with the player’s experience as the primary focus. Should Xbox manage to strike the right balance, it could pave the way for other gaming companies to follow, ultimately making video games more affordable and accessible for the everyday gamer.