Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an analytics platform that focuses on advertising technology. For many years, gamers have looked at in‑game advertising with suspicion, and their wariness is understandable.
The reputation of ads in video games is mixed at best; players often encounter redirects to unrelated websites or apps, misleading content, or poorly designed close buttons that are hard to locate, all of which generate frustration. A recent study conducted by eMarketer highlighted that 52 % of respondents would abandon a game if they were bombarded with multiple intrusive ad elements.
Losing half of the potential audience at the moment you are trying to engage them is hardly an effective approach. However, advertising does not have to be synonymous with annoyance. The same research revealed that one in five gamers would actually increase the frequency with which they played a title if the in‑game advertisements were of high quality and well integrated. This suggests that, when executed correctly, ads can enhance rather than detract from the gaming experience.
Xbox is currently piloting an ad‑supported game‑streaming service at a time when the overall cost of gaming is climbing steadily. In this environment, premium‑quality advertisements could find a natural home within the ecosystem.
The concept of offering a hybrid model—combining a paid subscription with an ad‑supported tier—has already proven successful in linear media. Services such as Netflix, Disney+, and other streaming platforms demonstrate that a stable revenue stream can be generated while also providing a lower‑cost, ad‑supported option for price‑sensitive consumers. Should Xbox’s experiment succeed, it would not only preserve its existing subscriber base but also unlock a completely new source of income, something the brand could certainly use. The relevance of this shift is underscored by the fact that console gaming is increasingly being positioned as a premium product.
Prices for games, consoles, accessories, and downloadable content have risen to levels that many casual players find difficult to justify, erecting a barrier that keeps a sizable portion of the market on the sidelines. Xbox itself has stated that, when implemented thoughtfully, advertising can lower the barrier to entry for gamers.
The mobile‑gaming sector already illustrates how an ad‑supported tier can provide a gateway for players who are unwilling or unable to make a large upfront purchase. By offering a free or low‑cost option that is supported by short, non‑intrusive ads, developers can attract a broader audience while still monetising the experience.
Crucially, this model would remain optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those who are comfortable with occasional ads could enjoy the same content at a reduced price. This two‑tier approach aims to retain loyal fans while simultaneously expanding accessibility for newcomers.
Although there is no specific survey data on the newest Xbox announcement, it is reasonable to assume that a large majority of gamers would tolerate a 30‑second advertisement if it granted them an hour of gameplay on a favourite or brand‑new title. Happydemics’ own data, derived from 285 in‑game campaigns across the United Kingdom and North America, show that in‑game advertising consistently outperforms TV, social, and standard online ads in terms of recall and attribution. In other words, gamers are more likely to remember an ad they see while playing and correctly associate it with the sponsoring brand. Xbox’s “around‑the‑game” strategy—placing ads just before the game loads rather than embedding them within the gameplay itself—adds another layer of appeal.
Our research indicates that these pre‑game placements achieve higher recall and attribution scores compared with ads that appear inside the game environment. This distinction matters because, while traditional media can be memorable, it does not always create a clear link between the ad and the brand.
Gaming appears to excel in this metric, which may explain why companies like Xbox and Electronic Arts are increasingly exploring ad‑based monetisation. It is important to note that Xbox’s ads are not meant to interrupt the core gameplay. By delivering advertisements before the game starts, the company aims to preserve the immersive experience that gamers value. This approach benefits both players—who enjoy an uninterrupted session—and advertisers, who want their messages to be part of a positive experience rather than a disruptive one.
Relevancy will be key. No gamer wants to see an advertisement for cat food if they do not own a cat, or for a game they have already completed. Contextual, well‑targeted ads that align with a player’s interests will be essential to prevent churn and to provide brands with a high‑quality audience. Nonetheless, Xbox is venturing into relatively uncharted territory.
The first unknown is how players will react to the presence of ads in a traditionally ad‑free environment. 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 unconventional strategies. Only time will reveal whether this gamble pays off. Historically, many gaming ad campaigns have relied on a “watch an ad, earn an extra life” mechanic. Xbox’s proposal differs: players would watch an ad to gain access to a game they already own, a scenario that our current data set does not directly address.
However, broader research on ad format perception shows that descriptors such as “non‑intrusive” and “immersive” rank among the most positively received attributes. If Xbox can deliver on these promises, it may set a benchmark for future ad‑supported gaming initiatives. In my view, Xbox will not be the first nor the last platform to test this hybrid model.
Advertising has existed in games for years, but rarely with the player’s experience as the primary focus. Should Xbox succeed, it could open the door for other companies to adopt similar strategies, ultimately making video games more affordable and accessible for everyday gamers.