Virginie Chesnais serves as the chief marketing officer at Happydemics, a platform that specializes in ad‑tech analytics. For many years, gamers have approached in‑game advertising with suspicion, and that wariness isn’t unfounded. The reputation of ads in the gaming world is mixed at best, with common complaints ranging from redirects that whisk users away to unrelated sites or apps, to deceptive messaging and hide‑away close buttons that are difficult to locate. These annoyances have fostered a general distrust of advertising within interactive entertainment.
A recent study conducted by eMarketer highlighted the severity of the issue: 52 % of respondents said they would stop playing a title if they encountered several intrusive ad elements. Losing half of an audience at the very moment you’re trying to engage them is hardly a winning formula.
However, advertising does not have to be a detriment. The same research revealed a more optimistic insight—one in five gamers indicated they would actually increase the frequency with which they played a game if the in‑game advertisements were of a high quality and relevance.
This suggests that, when executed thoughtfully, ads can enhance rather than diminish the player experience. Xbox is currently experimenting with an ad‑supported game‑streaming service, and at a time when the overall cost of gaming is climbing, premium‑grade advertisements could find a welcoming home within the ecosystem.
The rationale for introducing an advertising‑based revenue model in gaming is more compelling than many critics assume, especially when we look at the success of linear media platforms. Services such as Netflix, Disney+, and other on‑demand video providers have demonstrated that offering a lower‑priced, ad‑supported tier can generate substantial income while expanding the audience base. If Xbox’s approach proves viable, it could preserve its existing subscription revenue while unlocking an entirely new, previously untapped stream of earnings—something the brand could certainly use given its recent financial pressures. This development matters because console gaming is increasingly being positioned as a premium service.
The price tags attached to new consoles, full‑price games, accessories, and downloadable content (DLC) are climbing, making it harder for the average consumer to justify the expense. In effect, cost is becoming a barrier that keeps many potential players on the sidelines.
Xbox itself has stated that, when handled correctly, advertising can help lower the barrier to entry for gamers. The mobile gaming sector already provides evidence that ad‑supported tiers can open doors for players who might otherwise be unable to afford a large upfront purchase. By allowing users to access games for free—or at a reduced cost—in exchange for watching ads, developers can broaden their reach without sacrificing revenue. Crucially, participation would remain optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads altogether. This two‑tier model aims to retain the loyalty of existing fans while simultaneously making games more approachable for newcomers who are price‑sensitive.
Although we lack formal survey data on this specific announcement, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second commercial break if it meant they could enjoy an hour of gameplay on a beloved title or a brand‑new release. Xbox likely has internal data supporting this hypothesis. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America shows that in‑game advertisements consistently outperform television, social media, and other online formats in terms of ad recall and attribution.
In other words, players are more likely to remember an ad they saw while gaming and correctly associate it with the sponsoring brand. The distinction between “in‑game” and “around‑the‑game” placements is important.
Xbox’s plan focuses on ads that appear before the game launches rather than embedded within the gameplay itself. Our data indicate that these pre‑game, or around‑the‑game, formats achieve higher recall and attribution scores compared with ads that appear directly inside the game world.
Why does this matter? While we can often recall a TV commercial or a banner we scrolled past on social media, those memories do not always translate into a clear brand connection. Gaming, by contrast, seems to create a stronger link between the ad and the brand, which explains why companies like Xbox and Electronic Arts (EA) are increasingly exploring ad‑based revenue models.
It is also worth noting that Xbox’s ads would be pre‑game rather than in‑game. In‑game formats tend to excel later in the marketing funnel, boosting brand‑image 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, though it might also provoke greater pushback from players who are sensitive to interruptions.
Xbox has pledged that any advertisements will be non‑intrusive. By placing ads before the gameplay begins, the company aims to preserve the immersive experience that gamers value. This approach benefits both the player—who enjoys an uninterrupted session—and the advertiser, who wants the campaign to feel like a natural part of the experience rather than a disruption. 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 for the individual player will help prevent immediate abandonment and will give brands a premium platform to reach new audiences. Nonetheless, 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 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 shown a willingness to experiment with unconventional strategies.
Whether this gamble pays off remains to be seen. Historically, many of our gaming‑ad projects have revolved around “watch an ad, earn an extra life” mechanics. Xbox’s proposal, however, asks players to watch an ad simply to access a game they already own—a different value exchange that our existing data set does not directly address.
Research on ad‑format perception does offer some insight. When respondents who remembered an ad were asked to describe the format using positive adjectives, terms like “non‑intrusive” and “immersive” emerged as the most popular. If Xbox—and potentially other platforms in the future—wish to make advertising a lasting component of gaming, these two attributes will be critical success factors. My forecast is that Xbox will not be the first nor the last company to test 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, ultimately making video games more affordable and accessible for everyday gamers.