Virginie Chesnais serves as Chief Marketing Officer at Happydemics, an analytics platform that focuses on advertising technology. For years, many gamers have viewed in‑game advertising with suspicion, and their concerns are understandable. The reputation of ads in the gaming world is mixed at best, often plagued by issues such as redirects to unrelated websites or apps, misleading content, and hard‑to‑find close buttons that frustrate players. A recent study conducted by eMarketer highlighted that 52 % of gamers would abandon a session if they encountered multiple intrusive ad elements.
Losing half of your audience at the very moment you’re trying to engage them is hardly an effective approach. Nevertheless, advertisements do not have to be detrimental.
The same research indicated 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 a new ad‑supported game‑streaming service and the overall cost of playing games on a steady upward trajectory, there is a genuine opportunity for well‑crafted ads to find a welcoming home within the gaming ecosystem. The argument for introducing a modest advertising component into the gaming experience is more compelling than many anticipate, and it is already partially validated by the success of linear media models.
Services such as Netflix, Disney+, and other streaming platforms have demonstrated that a dual‑tier model—offering both ad‑free and ad‑supported options—can generate substantial revenue while expanding the audience base. Should Xbox’s experiment prove viable, it could not only preserve its subscription‑based revenue but also unlock an entirely new, previously untapped source of income at a moment when the brand is seeking fresh cash flow. This development matters because console gaming is increasingly being positioned as a premium product. The price tags attached to games, consoles, accessories, and downloadable content (DLC) are climbing, making it more difficult for the average consumer to justify the expense.
This creates a barrier that keeps many potential players on the sidelines. Xbox itself has acknowledged that, when executed correctly, advertising can lower the cost of access to gaming experiences. The mobile gaming sector already provides a clear example: ad‑supported tiers allow players to engage with games without paying a large upfront fee, thereby opening the market to a broader demographic.
Crucially, the ad‑supported option would be entirely optional. Gamers 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 core fan base while simultaneously making games more approachable for newcomers.
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 advertisement if it meant gaining access to an hour of playtime on a favorite title or a brand‑new release. Xbox likely has internal data that supports this hypothesis.
Happydemics’ analysis of 285 in‑game campaigns across the United Kingdom and North America reveals 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 to correctly associate it with the sponsoring brand. This is where Xbox’s “around‑the‑game” strategy—showing ads before the game launches rather than embedding them within the gameplay—becomes intriguing. Our data indicate that pre‑game placements achieve higher recall and attribution scores compared with intrinsic in‑game placements.
The distinction matters because, while we can often recall ads that appear on television or in our social feeds, we do not always link those impressions to the correct brand. Gaming appears to occupy a unique niche where ad recall translates more directly into brand awareness, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based models. It is important to note, however, that Xbox’s ads are not intended to interrupt the actual gameplay; they will appear before the session begins. In‑game ad formats tend to excel further down the conversion funnel, delivering stronger lifts in brand image, consideration, interest, and overall likability.
A hybrid approach—combining both pre‑game and in‑game ads—could theoretically offer advertisers the best of both worlds, though it also raises the risk of player pushback. Xbox has promised that the advertisements will be non‑intrusive. By positioning ads before the game starts, the immersive experience remains intact, 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 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. By delivering contextual, audience‑specific ads, Xbox can keep players engaged rather than prompting them to quit, while simultaneously offering brands a high‑impact platform to reach new consumers. Nevertheless, Xbox is venturing into largely uncharted territory.
The first unknown is how players will react to this new ad format; 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 a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who appears willing to experiment with innovative monetisation strategies. Only time will reveal whether this gamble pays off.
Historically, many gaming ad campaigns have relied on “watch an ad, earn an extra life” mechanics. Xbox’s proposal differs: players would watch an ad to gain access to a game they already own, rather than receiving a small in‑game reward. Our existing data set does not yet show how this model will be received.
Nevertheless, broader research on ad format perception shows that descriptors such as “non‑intrusive” and “immersive” rank among the most positively received terms. 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 has existed for years, but it has rarely been designed with the player’s experience at the forefront.
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.