Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an ad‑tech analytics firm. For many years, gamers have been skeptical of advertising that appears within games, and their concerns are understandable. In‑game ads have earned a mixed reputation, often because they redirect users to external sites or apps, present misleading content, or feature hard‑to‑find close buttons that frustrate players. A recent study by eMarketer highlighted that 52 % of gamers would abandon a session if they encountered several disruptive ad elements.
Losing half of an audience at the moment you’re trying to engage them is hardly a winning strategy. However, advertisements do not have to be a nuisance. The same research revealed that one in five gamers would actually increase the frequency with which they play a title if the in‑game ads were of high quality and relevance. With Xbox currently piloting an ad‑supported game‑streaming service and the overall cost of gaming continuing to climb, there is a genuine opportunity for well‑crafted ads to find a comfortable niche within the gaming ecosystem.
The logic behind offering an "ads‑for‑games" model is more compelling than many assume, and it has already been demonstrated in the world of linear media. Platforms such as Netflix, Disney+, and other streaming services have shown that a hybrid approach—combining a premium, ad‑free tier with a lower‑cost, ad‑supported tier—can generate substantial revenue while expanding the audience base.
If Xbox’s experiment proves viable, it could not only preserve its subscription‑based income but also unlock an entirely new revenue stream at a moment when the brand is seeking fresh financial inflows. The significance of this shift lies in the fact that console gaming is increasingly being positioned as a premium service. Prices for games, consoles, accessories, and downloadable content have risen steadily, making it harder for the average consumer to justify the expense.
This price inflation creates a barrier that excludes many potential players. Xbox itself has acknowledged that, when executed correctly, advertising can lower the cost of entry to gaming. The mobile gaming sector already provides evidence that ad‑supported tiers can invite users into the ecosystem without demanding large upfront payments. It is also crucial to note that any advertising model would be optional.
Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those who are willing to tolerate short commercials could enjoy a reduced cost. By offering a two‑tier system, Xbox aims to retain its loyal fan base while simultaneously making games more accessible to newcomers. Although formal survey data on this particular initiative is not yet available, it is reasonable to assume that most gamers would tolerate a 30‑second ad if it meant gaining an hour of gameplay on a favorite or new title. Xbox likely has internal data supporting this hypothesis.
Happydemics has analyzed 285 in‑game campaigns across the UK and North America and found that in‑game advertising consistently outperforms TV, social, and online display ads in terms of recall and attribution. Players are more likely to remember an ad they saw while playing and to correctly associate it with the brand that served it.
This advantage becomes even more pronounced with "around‑the‑game" formats—ads shown before the game launches rather than embedded within the gameplay. Our data indicate that these pre‑game placements generate higher recall and attribution scores compared with intrinsic in‑game spots.
The distinction matters because, while we can often recall ads seen on television or scrolling through social feeds, we do not always connect them to the sponsoring brand. Gaming appears to occupy a unique position where recall and brand linkage are stronger, which likely explains why companies such as Xbox and Electronic Arts are exploring ad‑based models more aggressively.
It is worth emphasizing that Xbox’s plan focuses on pre‑game advertising, not intrusive in‑game pop‑ups. In‑game ad formats tend to excel further down the conversion funnel, delivering better results for brand‑image uplift, consideration, interest, and likeability. A hybrid approach that blends both pre‑game and in‑game ads could theoretically offer advertisers the best of both worlds, but it also risks provoking greater resistance from players who are sensitive to interruptions.
Xbox has pledged that its ads will be non‑intrusive. By placing ads before the 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 the campaign to feel integrated rather than disruptive. Relevance will be another key factor. Nobody enjoys seeing an advertisement for cat food when they don’t own a cat, or for a game they have already completed.
By delivering contextually appropriate ads—perhaps based on player preferences, recent activity, or demographic data—Xbox can keep the experience pleasant and give brands a highly targeted platform for reaching 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 revenue generated will be sufficient to sustain the model over the long term. The move toward ad‑supported streaming is a bold, risk‑taking decision by Xbox CEO Asha Sharma, reflecting a willingness to experiment with new business models. Only time will reveal whether the strategy pays off.
Historically, many gaming ad campaigns have been built around the "watch an ad, get an extra life" concept. Xbox’s proposal is different: it asks players to watch an ad in order to access a game they already own. Our existing data set does not yet show how this particular trade‑off will be received. However, broader research on ad‑format perception indicates that descriptors such as "non‑intrusive" and "immersive" are among the most positively received.
If Xbox—and potentially other platforms in the future—aim to make gaming ads successful, these two attributes will be critical metrics to monitor. In my view, Xbox will neither be the first nor the last company to experiment with this approach. Advertising in games is not new, 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 developers and publishers to adopt similar models, ultimately making video games more affordable and reachable for the everyday gamer.