Virginie Chesnais serves as the chief marketing officer at Happydemics, a platform that specializes in ad‑tech analytics. For many years, gamers have looked at in‑game advertising with suspicion, and the wariness is understandable.
The reputation of ads in the gaming world is mixed at best, often plagued by redirects to unrelated sites or apps, misleading content, and frustratingly hidden close buttons that are difficult to locate. A recent study conducted by eMarketers revealed that 52 percent of players would stop playing a title if they encountered several intrusive ad elements.
Losing half of your audience at the moment you’re trying to engage them is hardly an effective approach. However, advertisements do not have to be a nuisance.
The same research indicated that one in five gamers would actually increase the frequency with which they play a game 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 steadily climbing, there is a real opportunity for well‑crafted ads to find a welcoming home within the console ecosystem.
The logic behind offering an ads‑for‑games model is more compelling than many assume, and it has already been demonstrated to some extent in the realm of linear media. Services such as Netflix, Disney+, and other streaming platforms have shown that a hybrid model—offering both ad‑free subscriptions and lower‑cost ad‑supported tiers—can generate substantial revenue while expanding the audience base. If Xbox’s experiment proves successful, it could not only preserve its paying subscriber base but also unlock a brand‑new, previously untapped revenue stream at a moment when the company could use the financial boost.
The significance of this development lies in the fact that console gaming is increasingly being positioned as a premium experience. Prices for games, consoles, accessories, and downloadable content continue to rise, creating a financial barrier for the average player.
Xbox itself has acknowledged that, when executed correctly, advertising can help lower the cost of access to gaming. Mobile gaming has already illustrated how ad‑supported tiers can provide a gateway for players who are reluctant to make large upfront purchases, allowing them to enjoy content in exchange for viewing short ads. Importantly, any advertising model Xbox introduces will be optional. Players who prefer an uninterrupted experience can continue to pay a subscription fee to avoid ads.
By offering a two‑tier system, Xbox hopes to keep its loyal fan base satisfied while simultaneously making games more approachable for newcomers who might otherwise be deterred by high entry costs. Although there is no concrete survey data on this specific announcement yet, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second commercial if it meant gaining an hour of playtime on a favorite or newly released title. Xbox’s internal data likely supports this hypothesis. Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America demonstrates that in‑game advertisements consistently outperform traditional TV, social, and online ads in terms of recall and attribution.
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 a session starts—rather than embedded within the gameplay itself. Our data show that these pre‑game formats achieve higher recall and attribution scores compared with intrinsic in‑game placements. Why does this matter?
While we can often recall ads seen on television or scrolling through a social feed, those memories do not always translate into a clear brand connection. Gaming, on the other hand, appears to occupy a unique space where ad recall is strongly linked to brand identification.
This is likely why companies such as Xbox and EA are increasingly exploring ad‑based gaming models. It is crucial to note that Xbox’s ads will not interrupt gameplay; they will appear before the game begins. In‑game ad formats, by contrast, tend to excel later in the marketing funnel, delivering stronger lifts in brand image, consideration, interest, and likeability.
A combined strategy—leveraging both pre‑game and in‑game ads—could offer advertisers a comprehensive solution, though it may also provoke greater resistance from players who value an uninterrupted experience. Xbox has pledged that its ads will be non‑intrusive, a promise that makes sense when ads are shown prior to the game rather than during it.
This approach safeguards the immersive nature of the gaming session, which benefits both the player and the advertiser. Advertisers want their messages to be part of the experience, not a disruptive interruption. Relevance will be another key factor. No gamer wants to see an advertisement 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 keep players engaged and prevent them from abandoning the session the moment an ad appears, while simultaneously providing brands with an effective platform to reach fresh audiences. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players will react to pre‑game advertising; the second is whether the revenue generated will be sufficient to justify a long‑term commitment to the model. The move toward ad‑supported game streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who appears willing to experiment with new business models. Time will reveal whether this strategy pays off. Historically, our work in gaming advertising has focused on “watch an ad, get an extra life” type incentives.
Xbox’s proposal is different: it asks players to watch an ad to gain access to a game they already own. Our existing dataset does not contain clear evidence of how this particular trade‑off will be received. However, broader research on ad format perception indicates that descriptors such as “non‑intrusive” and “immersive” rank among the most positively received attributes. If Xbox—and potentially other platforms in the future—aim to make gaming ads successful, these two metrics will be essential to monitor closely.
My forecast is that Xbox will neither be the first nor the last company to experiment with this approach. Advertising within games has existed for many years, but it has rarely been designed with the player’s experience at its core. 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.