Virginie Chesnais serves as Chief Marketing Officer at the ad‑tech analytics firm Happydemics. For many years, gamers have looked at in‑game advertising with suspicion, and their wariness is understandable. The reputation of ads in interactive entertainment has been tarnished by experiences such as redirects to unrelated websites, misleading content, or the inability to locate a close button when an ad pops up.
These annoyances have contributed to a general perception that advertising is an unwelcome intrusion. A recent study conducted by eMarketer underscores this sentiment: 52 percent of respondents said they would abandon a game if they encountered multiple disruptive ad elements.
Losing more than half of an audience at the moment you are trying to engage them is hardly an effective strategy. However, advertising does not have to be synonymous with irritation. The same research revealed a more optimistic finding: one in five gamers indicated they would actually increase the frequency with which they play a title if the ads presented were of high quality and relevance.
This suggests that, when executed thoughtfully, ads can enhance rather than diminish the gaming experience. Enter Xbox’s newest experiment—a streaming service that includes an ad‑supported tier.
As the overall cost of playing continues to climb—thanks to rising prices for consoles, games, accessories, downloadable content, and subscription services—high‑quality advertising could find a natural home within the gaming ecosystem. The logic behind offering an ad‑supported option mirrors the model that has proven successful in linear media.
Services such as Netflix, Disney+, and other video platforms have demonstrated that a tiered approach—combining a premium, ad‑free subscription with a lower‑cost, ad‑supported alternative—can generate substantial revenue while broadening the audience base. Should Xbox’s experiment succeed, the company would not only preserve its existing subscriber base but also unlock a brand‑new, previously untapped revenue stream at a moment when additional cash flow is especially welcome.
This development matters because console gaming is increasingly being positioned as a premium product. The cumulative expense of purchasing a console, buying new releases, acquiring accessories, and paying for DLC creates a financial barrier for many casual players.
In its own announcement, Xbox acknowledged that, when handled correctly, advertising could help lower the cost of entry and make gaming more inclusive. 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, the ad‑supported model would be entirely 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 reduced price point.
By offering a two‑tier system, Xbox hopes to retain its loyal fan base while simultaneously attracting newcomers who might otherwise be deterred by price. Although no formal survey data on this specific rollout exists yet, it is reasonable to assume that a large majority of gamers would tolerate a brief, 30‑second advertisement if it meant gaining an hour of playtime on a favorite or newly released title. Xbox’s internal data likely supports this hypothesis.
Happydemics has analyzed 285 in‑game campaigns across the United Kingdom and North America and found that in‑game advertising consistently outperforms traditional TV, social, and online formats when it comes to ad recall and attribution. In other words, players are more likely to remember an ad they see while gaming and correctly associate it with the sponsoring brand.
Xbox’s “around‑the‑game” approach—where ads appear before the game loads rather than embedded within the gameplay—adds another layer of advantage. Our data indicate that pre‑game placements generate stronger recall and attribution than intrinsic, in‑game placements. This distinction matters because, while we may notice an ad while scrolling through a social feed or watching television, we do not always connect that ad to a specific brand. Gaming, by contrast, appears to create a stronger mental link between the ad and its sponsor, which explains why companies like Xbox and Electronic Arts are increasingly exploring ad‑based monetisation strategies.
It is essential to note that Xbox’s ads are not meant to interrupt the actual gameplay; they will be shown before the game starts. This pre‑game positioning helps preserve the immersive experience that gamers value.
At the same time, it offers advertisers a captive audience that is already primed for entertainment, increasing the likelihood that the ad will be perceived positively. For the ads to be effective, relevance is key. No player wants to see a promotion for cat food when they do not own a cat, or a trailer for a game they have already completed.
By delivering contextual, targeted ads that align with a player’s interests and circumstances, Xbox can minimise the risk of users abandoning the experience at the sight of an irrelevant commercial. This relevance also benefits brands, giving them a more efficient platform to reach new, engaged audiences. Nevertheless, Xbox is venturing into largely uncharted territory. The first unknown is how gamers will react to the presence of ads in a console environment that has traditionally been ad‑free.
The second unknown is whether the advertising revenue generated will be sufficient to sustain the model over the long term. The decision to explore an ad‑supported streaming tier reflects the boldness of Xbox CEO Asha Sharma, who has demonstrated a willingness to experiment with new business models. Whether this gamble pays off remains to be seen, but it signals a willingness to adapt to the evolving economics of the gaming industry. Historically, many of our own gaming‑ad projects have relied on a “watch an ad, earn an extra life” mechanic, where the ad provides a tangible in‑game reward.
Xbox’s proposal is different: players would watch an ad to gain access to a game they already own, without any additional in‑game benefit. Our existing data set does not yet reveal how this trade‑off will be perceived by gamers.
Related research on ad‑format perception shows that when participants are asked to describe ads they remember, the terms “non‑intrusive” and “immersive” frequently emerge as the most favourable descriptors. If Xbox and future platforms aim to make advertising a lasting part of the gaming experience, they will need to focus on these two qualities. My forecast is that Xbox will not be the first nor the last major publisher to test this kind of model.
Advertising has existed in games for decades, but it has rarely been implemented with the player’s convenience as the primary design goal. Should Xbox manage to strike the right balance—delivering ads that are brief, relevant, and placed outside the core gameplay—this could pave the way for other companies to follow suit, ultimately making video games more affordable and accessible for everyday players.