Virginie Chesnais serves as chief marketing officer at Happydemics, an ad‑tech analytics firm. For many years, gamers have viewed in‑game advertising with suspicion, and their concerns are understandable. The reputation of ads in video games is mixed at best; players often encounter redirects to unrelated sites, misleading content, or close buttons that are difficult to locate, all of which fuel frustration. A recent study by eMarketer highlighted that 52 % of gamers would abandon a session if they ran into several intrusive ad elements.
Losing half of your audience at the moment you are trying to engage them is hardly an effective tactic. However, advertisements do not have to be a negative experience. The same research indicated that one in five gamers would actually play a title more often if the in‑game ads were of high quality and relevance. Xbox is currently piloting an ad‑supported game‑streaming service at a time when the overall expense of gaming is climbing steadily.
In this environment, well‑crafted advertisements could find a welcoming niche. The logic behind offering an ad‑supported tier for games mirrors what has already succeeded in linear media.
Services such as Netflix, Disney+, and other streaming platforms have demonstrated that a mixed model—combining a paid subscription with a lower‑cost, ad‑supported option—can generate substantial revenue while broadening the audience. Should Xbox’s experiment prove viable, the company would not only preserve its paying subscriber base but also unlock a fresh, previously untapped source of income—a development the brand could certainly use. The relevance of this approach is underscored by the fact that console gaming is increasingly positioned as a premium product.
Prices for games, consoles, accessories, and downloadable content continue to rise, making it harder for the average consumer to justify the expense. Xbox itself has stated that, when executed correctly, advertising can lower the barrier to entry for gamers.
Mobile gaming already offers a proof point: ad‑supported tiers let players experience a game without paying an upfront fee, thereby expanding the market. Crucially, the model would be optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee, while those who are comfortable with occasional ads could enjoy a reduced‑cost or even free option.
By providing a two‑tier system, Xbox hopes to keep its loyal fan base intact while simultaneously opening the door for newcomers who might otherwise be deterred by cost. Although no formal survey data exists yet on this specific rollout, it is reasonable to assume that the majority of gamers would tolerate a brief 30‑second commercial if it granted them an hour of gameplay on a favorite or new title. Xbox’s internal data likely supports that belief. Happydemics has analyzed 285 in‑game campaigns across the United Kingdom and North America and found that in‑game advertisements consistently outperform TV, social, and other online formats when it comes to ad recall and attribution.
In other words, 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 begins—rather than embedded directly within the gameplay. Our data indicate that these pre‑game placements generate higher recall and attribution scores than intrinsic in‑game spots. The distinction matters because, while we can often remember a commercial we saw on television or a sponsored post while scrolling through social media, we do not always link those impressions to the corresponding brand.
Gaming appears to operate in its own league for this metric, which likely explains why companies like Xbox and EA are increasingly exploring ad‑based revenue models. It is also important to note that Xbox’s ads will not interrupt the actual gameplay; they will appear before the game loads.
This pre‑game approach is designed to preserve immersion, a key concern for both players and advertisers. Advertisers want their messages to be part of the experience, not a disruptive interruption.
Relevance will be another critical factor. No gamer wants to see an advertisement for cat food when they do not own a cat, or for a game they have already completed.
By delivering contextual, audience‑matched ads, Xbox can keep players from abandoning a session at the sight of an irrelevant commercial while providing brands with a high‑impact platform to reach new consumers. Nonetheless, Xbox is venturing into largely uncharted territory. The first unknown is how players will react to a new ad format; the second is whether the revenue generated will be sufficient to sustain the model over the long term.
The move to test ad‑supported game streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, but only time will reveal whether the strategy pays off. Historically, many gaming ad models have been built around a "watch an ad, get an extra life" premise. Xbox’s proposal is different: users would watch an ad to access a game they already own.
Our existing data set does not yet show how this particular exchange will be received. Related research on ad format perception—where respondents who recall an ad are asked to describe the format—has consistently highlighted "non‑intrusive" and "immersive" as the most valued attributes. If Xbox, and potentially other platforms, aim to make gaming ads successful, they will need to prioritize these two qualities.
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 experience at its core. Should Xbox manage to strike the right balance, it could pave the way for similar initiatives across the industry and, more importantly, make video games more affordable and accessible for everyday gamers.